Sitting of 20 June 1977

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

    Prices
    Mr. David Priceasked the Secretary of State for Prices and Consumer Protection what has been the year-on-year rate of inflation up to April 1977 and May 1977.
    Mr. Martenasked the Secretary of State for Prices and Consumer Protection by what percentage prices have risen in the last 12 months.
    Mr. Durantasked the Secretary of State for Prices and Consumer Protection what has been the percentage increase in the retail price index over the last six months, excluding seasonal foods.
    Mr. Canavanasked the Secretary of State for Prices and Consumer Protection what is the latest rise in the retail price index.
    The Secretary of State for Prices and Consumer Protection (Mr. Roy Hattersley): The year-on-year increase in the retail price index was 17·5 per cent. in April and 17·1 per cent. in May. This improvement results from the May increase of 0·8 per cent., less than one-third of the increase registered the previous month and the smallest monthly addition to the RPI for almost a year. Over the six months to May the RPI, excluding seasonal foods, has increased by 9·5 per cent.
    Mr. Price: I welcome the 0·4 per cent. reduction between April and May, but does the right hon. Gentleman acknowledge that an increase of 17·1 per cent. for
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    the last year means that the cost of living has doubled in just over four years? Is that not a punishing rate of inflation? Will he also acknowledge that until we bring the inflation rate down to about 3 per cent. the situation will not be tolerable?
    Mr. Hattersley: I agree that what has happened on inflation in the recent past is a record that needs substantial improvement. It is easier to describe what has happened in the past than to predict or to make sure that something better may happen in the future. I believe that something better will happen in the future because of the partnership between the unions and the Government. We will stay in office until we bring that situation about.
    Mr. Marten: I recognise that the Government expect inflation from last November to next November to rise by no more than 14 per cent. If there is a significant rise over the 14 per cent. figure before next November, will the right hon. Gentleman think it right to press for an adjustment in retirement pensions and related benefits?
    Mr. Hattersley: Part of the hon. Gentleman's supplementary question is not a matter for me, and the part which is a matter for me is wholly hypothetical. Therefore, for two reasons I should not answer it.
    Mr. Canavan: In view of the justifiable calls for stricter price controls by the TUC and the National Consumer Council, will my right hon. Friend condemn the impertinence of the Common Market Agriculture Commissioner, Mr. Gundelach, who is claiming that British Ministers are breaking the law by speaking out against the common agricultural policy—a policy which has been responsible for many of the food price increases, which can only be described as criminal?
    Mr. Hattersley: The correspondence between Commissioner Gundelach and my right hon. Friend the Minister of Agriculture must be a matter for my right hon. Friend. On the concept of selective price freezes, I have no doubt that in future there needs to be a Government power to enable some prices to be frozen. Many of us will be sitting here tomorrow and probably until the day

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    after to make sure that that power is obtained.
    Mr. McCrindle: As the National Consumer Council has recommended an upper limit of 9 per cent. on price increases, will the right hon. Gentleman say what action he will take if this leads to the erosion of profit margins or to their elimination so that unemployment will increase still further?
    Mr. Hattersley: I do not answer for the National Consumer Council, which expresses the views of the consumer, but I have a great deal of sympathy for its objectives as expressed in a draft paper last week. My only reservation is that a general and arbitrary price freeze could do the economy substantial damage. A selective price freeze is an advantage. That is why we are piloting a Bill that will bring about a selective freeze.
    Mr. Atkinson: Does my right hon. Friend agree that the rate of inflation which he envisages will not happen of its own volition and that there will have to be interventionist policies by the Government? Will he stand by his statement last week that the £ sterling should be allowed to rise to its rightful level? Will he also stand by his statement that it is necessary for us to have a price strategy for the public sector, particularly for the energy industry?
    Mr. Hattersley: Of course I stand by the speech I made last week, but my hon. Friend will understand that some parts of that speech were seeking to draw the attention of the wider public to the fact that decisions on inflation are difficult to take because they are sometimes in conflict with other economic objectives. I tried last week to set out the alternatives. We look forward to hearing from the House, the country and the party about the rival claims on economic resources.
    Mr. Giles Shaw: Will the right hon. Gentleman go further than to express the hope that inflation will come down? Bearing in mind that it is almost midsummer and that we have been promised that inflation would be down to single figures, has the right hon. Gentleman had a midsummer dream about the time at which we might expect a drop to single-figure inflation?
    Mr. Hattersley: I stand by the forecasts which I made during the last nine
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    months. During the late summer and autumn there will be reductions in the year-on-year rate, and I believe that we shall be down to single-figure inflation as a real prospect in the second quarter of 1978.

    Price Commission
    Mr. Shersbyasked the Secretary of State for Prices and Consumer Protection whether he will report to the House on the progress made in the appointment of the new Price Commission.
    Mr. Hattersley: Subject to the Price Commission Bill becoming law, I propose to appoint Mr. Charles Williams, at present a managing director of Baring Brothers, as full-time Chairman of the Price Commission. There will be three part-time deputy-chairmen. I propose to appoint Dr. Gordon Hobday, Chairman of Boots, Mr. John Hughes, Vice-Principal of Ruskin College, Oxford, and Mr. Seamus Sweetman, Vice-Chairman of Unilever. I shall announce names of the other members of the new Commission as soon as possible.
    Mr. Shersby: Is the Secretary of State aware that the House is grateful to him for reporting today on the progress of appointment of Commissioners and that the names that he has announced will be widely welcomed in all parts of the House and the country?
    Mr. Hattersley: I am grateful. I have said from the beginning that the Price Commission Bill and the Commission need the respect of industry and a policy which is well and appropriately applied by people who believe in it. I believe that both the chairman and the deputy-chairmen will fulfil that criteria.
    Mr. Skinner: Does my right hon. Friend recall that last year there were seasonal variations in two quarters of the year when price increases were reasonably favourable? Will he give power to the new Commission to give central directions to freeze prices on a wide range of goods? Does he not agree that that would be electorally sensible, that it would cause the Opposition to squeal blue murder and that it could also result in the survival of the Labour Government?
    Mr. Hattersley: My hon. Friend will discover, once he has survived tomorrow

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    night, that the Price Commission Bill includes substantial price freeze powers over increased prices notified to the Commission and which the Commission believes ought not to be allowed and ought to be frozen. If my hon. Friend wants opposition from the Conservative Party, he is likely to get it for most of tomorrow evening and possibly the day after.
    Mr. Giles Shaw: What will be the period of the chairman's contract and his salary?
    Mr. Hattersley: His salary will be £18,000 a year.
    Mr. Fell: Full-time?
    Mr. Hattersley: Yes, he will be full-time. I am not sure whether it is appropriate to describe his relationship with the Government as a contract, but we have told him that we expect and hope that he will serve for three years.

    Profit Safeguard Regulations
    Mr. Giles Shawasked the Secretary of State for Prices and Consumer Protection whether he will make a statement on the proposals he has made with respect to the profit safeguard regulations under Clause 9 of the Price Commission Bill.
    The Minister of State, Department of Prices and Consumer Protection (Mr. John Fraser): On 15th June my right hon. Friend published a consultative document setting out proposals for safeguard regulations under Clause 9 of the Price Commission Bill. Hon. Members will have an opportunity to discuss the proposals during Report stage and Third Reading of the Bill this week.
    Mr. ShawI thank the Minister for that statement. Is he aware that the estimates of the CBI and of other bodies show that the safeguard levels are substantially worse than those which previously obtained? Why have the Government made the changes in that way and ignored all the consultations on the matter?
    Mr. Fraser: The consultations have not been ignored and we have taken full account of the representations that have been made by the CBI and the Retail Consortium. As for the difference in the safeguards, the Price Code safeguards have served a different purpose. They
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    have protected the generality of industry from overall price control which otherwise would have operated automatically. Under the new investigatory powers, there is no such threat of automatic and general erosion of margins. It is there that the difference lies.
    Mr. Mike Thomas: Is my hon. Friend aware that it would be wrong for us to make reference to the Price Commission Bill and to the Price Commission without this side of the House welcoming the appointment of Charles Williams, who shares the Government's view on intervention in industry and who has wide experience? He will be welcomed on this side of the House as well as by those on other Benches.
    Mr. Fraser: I am grateful for my hon. Friend's support.
    Mr. Molloy: Is my hon. Friend aware that the only interest that the CBI seems to have is that there should be no control over profits but considerable control over wages? If he has a chance to talk with the CBI about its representations, will he ask the CBI to play the game and to see what influence it could have by controlling prices as avidly as it wishes to see wages controlled?
    Mr. Fraser: I am sure that the CBI and the whole country have interest in seeing price restraint. The CBI would do great damage if it saw safeguards as being a profit norm. The CBI ought not to try to undermine confidence in British industry. There is a great danger if the trapeze artist thinks about the safety net all the time, because he then starts to get dizzy.

    Trade and Commercial Practices
    Mr. McCrindleasked the Secretary of State for Prices and Consumer Protection if he plans to introduce legislation giving general powers to regulate trade and commercial practices.
    Mr. John Fraser: Not in the immediate future. But I do think that there is a case for taking general enabling powers to require registration or similar arrangements to cover individual sectors where this seems necessary to protect the interests of consumers.
    Mr. McCrindle: Does that mean that the Government will seek powers to regulate trade and commercial practices

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    generally under one Act of Parliament rather than, as recently, by introducing separate Bills? For example, there have been the Farriers (Registration) (Amendment) Bill and the Insurance Brokers (Registration) Bill—although one of those was a Private Member's Bill. Does not the hon. Gentleman feel that this is a departure from the Government's previous policy and that it indicates dissatisfaction with the Fair Trading Act?
    Mr. Fraser: In a way it does, but it also recognises that the powers of the Fair Trading Act to deal with a number of commercial practices are not as satisfactory as they were intended to be. I have put forward only a tentative proposal upon which I invite discussion, but there are a good many professions and trades that would prefer to have a regulatory system, to protect the vast majority of reputable traders, introduced rapidly.

    Prices
    Mr. Lawrenceasked the Secretary of State for Prices and Consumer Protection what is the increase in the retail price index, excluding seasonal food, over the last three months, expressed at an annual rate.
    Mr. Wakehamasked the Secretary of State for Prices and Consumer Protection what is the current rate of inflation.
    Mr. Rathboneasked the Secretary of State for Prices and Consumer Protection what is the latest year-on-year percentage increase in the retail price index, all items.
    Mr. Hattersley: The current rate of inflation is, as I stated in my reply to the hon. Members for Eastleigh (Mr. Price), Banbury (Mr. Marten), Reading, North (Mr. Durant) and West Stirlingshire (Mr. Canavan), 17·1 per cent. For what it is worth, the increase in the RPI, excluding seasonal food, over the last three months expressed at an annual rate is 19·9 per cent. However, I do not regard the three-monthly annualised figure as a statistically valid indicator of trends.
    Mr. Lawrence: Will the right hon. Gentleman make clear to the House, and especially to his hon. Friends below the
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    Gangway, that the appalling increase in the retail price index during the past three months has not been a consequence of Britain's membership of the EEC?
    Mr. Hattersley: I tried to make that point clear not only to the House but to a wider audience a week ago. The effect of the common agricultural policy, about which there have been many legitimate criticisms, is negligible compared with other factors affecting the increase in the cost of living. Its effect has been about 05 per cent.
    Mr. Heffer: Rubbish!
    Mr. Hattersley: I hope that the hon. Gentleman will not talk about annualised figures in that florid fashion. The annualised rate, based on May figures, shows that inflation is now running at less than 10 per cent., but I do not believe that that is a statistically valid thing to deduce.
    Mr. Rathbone: Does the right hon. Gentleman realise that the figures, annualised or financialised, are in horrible contrast to the expressed intentions of the Government? Will he explain—as he has said that foreign confidence in Britain is very much dependent upon certain aspects of the Government's war on inflation—how that can be squared with the requirements of the Price Commission Bill for permanent powers of investigation, intervention and price control?
    Mr. Hattersley: I must first explain that the figures that I have just announced are in no way in conflict with the Government's previous estimates. The 19·9 per cent. is in conflict with good statistical practice and the other figure of 17·1 per cent. is the sort of figure that we predicted throughout the spring as the level that we expected in the summer. We shall begin to reduce it month by month in the late summer and early autumn.
    As for the Price Commission, I have no doubt that it will play a substantial part in bringing inflation under control. The general need to keep inflation under control must be reflected in our national economic policies, but a part of those policies must be an effective Price Commission, and that is something that we shall create.
    Mr. Ioan Evans: Does my right hon. Friend agree that the common agricultural policy has had an effect and that so also has the harmonisation of prices in this country with European prices, especially for farm produce? Does he not agree that this has had an effect on the RPI? Does he not realise that working people are now saying that we were promised Common Market wages but that all that we have had has been Common Market prices without the wages to go with them?
    Mr. Hattersley: I can give only the statistical facts as calculated in my Department a week ago. Of the 17·5 per cent. inflation over the last year, about 1 per cent. was calculated as being caused by the CAP.
    Mr. Heffer: What about the levies?
    Mr. Hattersley: Yes, I have heard of the levies.
    Mr. Speaker: Order.
    Mr. Hattersley: Since that time, as I am sure my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) will be gratified to know, I have thought it necessary to revise that figure. It is not 1 per cent. It is 0·5 per cent.

    Wholesale Prices
    Mr. Tim Rentonasked the Secretary of State for Prices and Consumer Protection whether he will give the latest year-on-year percentage increase in wholesale prices (all items).
    The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan): The wholesale output price index has increased by 20¾ per cent. year on year since May 1976, showing no change since April. The wholesale input price index has increased by 19¼ per cent. year on year—a fall from the April figure of 22¼ per cent.
    Mr. Renton: As the Minister recognises and admits that the rate of wholesale price inflation is now 20 per cent., can he give us one good reason why the public should believe this desperate and discredited Government when they hold out the mirage that inflation will fall, at some distant date, to single figures?
    Mr. Maclennan: I should have thought that the hon. Gentleman would take some
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    comfort from the fall in the input index which reflects the stability of sterling that has been brought about by Government measures and some stabilisation of world commodity prices. These are reasons for believing that the Government are on target.
    Mr. Skinner: Does my hon. Friend agree with the Secretary of State that the Common Market is to blame for hardly any of the price increases? If so, is not his Department really saying that the Government are to blame for all the price increases? Is the Secretary of State also saying that the transitional arrangements arising from Common Market membership have had little or nothing to do with price increases over the past three or four years?
    Mr. Maclennan: If I accepted my hon. Friend's extension of the responsibility, I could include him and his hon. Friends in that responsibility because of their support for our measures. This is an illogical approach. There are a number of other Questions on the Order Paper concerning the common agricultural policy.
    Mr. Neubert: Does the hon. Gentleman know whether the Secretary of State believes that, given the surplus on the balance of trade over the last three months, it is relatively more important that prices in the shops should be allowed to benefit from the rise in the value of the pound? If so, is the right hon. Gentleman urging that view on his Cabinet colleagues?
    Mr. Meclennan: It is not customary in this House to discuss the level of sterling.
    Mr. Marten: Did the extraordinary figure just given by the Secretary of State include a calculation of world food prices which are much lower than those in the Common Market and which could have benefited greatly the British consumer? Is the hon. Gentleman aware that there is a plentiful supply of food in the world at much lower prices than in the Common Market?
    Mr. Maclennan: I do not see the relationship between that and the percentage increase in wholesale prices with which I have been dealing. But, of course, the factors to which the hon. Gentleman referred were taken into consideration.

    Prices
    Mr. Gorstasked the Secretary of State for Prices and Consumer Protection what has been the percentage increase in the retail price index since February 1974.
    Mr. MacGregorasked the Secretary of State for Prices and Consumer Protection what is the latest annual increase in the retail price index.
    Mr. Maclennan: As my right hon. Friend has informed the House, the latest increase in the retail price index is 17·1 per cent. The index has increased by 78·7 per cent. since February 1974.
    Mr. Gorst: Is the hon. Gentleman proud, satisfied, disturbed or merely complacent about that reply?
    Mr. Maclennan: The Government have made plain the priority they attach to reducing the rate of inflation and have given a firm indication of how that end will be achieved. It is not sensible to be complacent or as extreme as some Opposition Members are about the prospects. If the Government persist in their relationship with the trade unions, whose restraint on wage policy has contributed substantially to the improvement in the situation, we shall succeed in conquering the difficulties that we have been faced with as a result of trends many of which are beyond the Government's control.
    Mr. MacGregor: Can the hon. Gentleman say how many of our competitors in OECD countries have rates of inflation exceeding or anywhere approaching the annual figure that he has announced? To what does he attribute the consistent disparity between their levels of inflation and ours? In view of that disparity, does he think that the Government's target is really adequate?
    Mr. Maclennan: Part of the difference can be attributed to policies pursued by the previous Government including, for example, subsidising and forcing into deficit the nationalised industries, the results of which are still with us, though I am glad to say that the current trend of nationalised industry price increases is substantially reduced.
    Mr. Molloy: Is my hon. Friend aware that many people inside and outside the
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    House believe that there have been dramatic increases in prices which have hit the housewife hard and do not contribute to the possibility of a third phase of the pay policy? Is he aware that, when the Secretary of State says that he does not believe that the Common Market and the common agricultural policy have had an effect on price increases, this may be the reason why many people believe that his Department is not doing a good job? Will he, therefore, take on board the possibility that the CAP and other activities of the Common Market have contributed to increased prices and also work to make his Department more efficient?
    Mr. Maclennan: The prime responsibility for negotiation of the CAP lies with the Ministry of Agriculture, which has been extremely effective in reducing the rate of price increases proposed by the Community to one-quarter of what was originally intended. That is a substantial achievement.
    Mr. Heffer: The Secretary of State just said that there had been no increases.
    Mr. Maclennan: The Price Commission Bill, which has its Report stage in the House tomorrow, will enable us to freeze prices selectively for up to 12 months and will be a substantial contribution to reassuring the housewives with whom my hon. Friend is so rightly concerned, as are we all.
    Mrs. Sally Oppenheim: As the internal purchasing power of the pound has fallen to 55p since the Government came to power, would the hon. Gentleman care to predict how long it will be before it falls to 50p? Does he agree that that would be a highly appropriate date for the Government to go to the country for the "fair test" that the Prime Minister has been talking about?
    Mr. Maclennan: I see that the hon. Lady also reads the Daily Express. She will have seen that paper's predictions. I propose not to comment on them but to treat them with the seriousness they deserve.

    Nationalised Industry Prices
    Mr. Mike Thomasasked the Secretary of State for Prices and Consumer Protection what representations have been made to him regarding taking powers

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    to impose a price freeze on nationalised industry prices.
    Mr. Wigleyasked the Secretary of State for Prices and Consumer Protection if he will seek powers to impose a price freeze on nationalised industry prices.
    Mr. Michael Marshallasked the Secretary of State for Prices and Consumer Protection if he will seek powers to introduce a price freeze relating to products and services supplied by nationalised industries.
    Mr. Hattersley: I have had no recent representations about introducing a general freeze on nationalised industry prices. Powers are not required to impose a freeze, but would be required to compensate the industries for any overall loss.
    Mr. Thomas: I do not wish to return to the policies of the Conservative Party, which tried systematically to bankrupt the nationalised industries, but does my right hon. Friend agree that nationalised industry prices are of great importance, particularly to the low paid or those living on pensions or benefits? Would he accept that there is a danger of some of the industries making entirely unacceptable profits for no good reason? Does he accept that restraint on their prices would be a valuable example for the rest of the business community?
    Mr. Hattersley: Nationalised industries have to set a good example, and that is why I was anxious that the Price Commission Bill should apply to them just as much as to private enterprise, and it will do so. The nationalised industries are moving towards the viability that was denied them by the previous Government and they can have a much more gradual pattern of price increases when such increases are essential. The industries will be controlled by the same Commission and legislation as private industry. That gives me the opportunity to correct an answer I gave in reply to an earlier question. The new Commission will be chaired by Mr. Williams, but his initial term of contract is two years and not, as I said earlier, three years.
    Mr. Neuberf: Does the right hon. Gentleman agree that, with the cost of fuel and light having nearly doubled in the past three years, this is no time to be imposing another tax on North Sea gas?
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    Is he with the Chairman of the British Gas Corporation or the Secretary of State for Energy on this issue?
    Mr. Hattersley: I am with the Government—according to the rules of collective responsibility.
    Mr. Atkinson: Will my right hon. Friend again confirm that the new Price Commission will be responsible for intervention in and supervision of the pricing strategies pursued by the nationalised industries? Does he recognise that, if the Government are to realise their ambition to get down to single-figure increases in the retail price index within the time stated by them, there will have to be some drastic changes in what are now envisaged as price rises in the whole area of rents, rates and public sector expenditure, as well as nationalised industries, together with other items such as transport which go to make up a significant part of the index? Will he assure the House that the Commission will have the right to intervene in the pricing strategies of all the areas that I have mentioned and will be encouraged to do so?
    Mr. Hattersley: My hon. Friend has asked two important questions. I believe that the pattern of increases that we have prescribed and predicted will be achieved according basically to our present economic strategy. There may be some adjustments from time to time, but the basic strategy should remain and, I believe, will remain. I believe that it will produce the prices pattern that I have described.
    As for the Price Commission and the nationalised industries, the position is that the Commission will act generally on its own initiative. It will choose the investigations that it wishes to make when it is notified of a price increase. The initiative that is exercised by the Commission will apply to the nationalised industries exactly as it will apply to private enterprise, which I believe is wholly right.
    Mr. Gow: Will the right hon. Gentleman accept the congratulations of this side of the House, and no doubt the congratulations, too, of the Managing Director of the International Monetary Fund, for the courage that the Government have shown in insisting that there

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    should be a sensible economic pricing policy for the nationalised industries?
    Mr. Hattersley: I am always prepared to accept congratulations, no matter how bizarre the quarter from which they come.

    European Community (Council of Ministers)
    Mr. Biffenasked the Secretary of State for Prices and Consumer Protection what plans he has to attend future meetings of the European Communities Council of Ministers.
    Mr. Maclennan: My right hon. Friend has no immediate plans to do so.
    Mr. Biffen: Is the hon. Gentleman aware that the proposal to require ice cream to be designated as edible ice is bizarre and fatuous even by the generous standards of the European Commission? Will he indicate by what means he intends that those in Brussels should be made aware of this view?
    Mr. Maclennan: The answer to the first part of the hon. Gentleman's question is "Yes". That view has already been made plain to the Commission. I have accompanied my right hon. Friend the Minister of Agriculture, Fisheries and Food to Council meetings of the Agriculture Ministers and there is no doubt in the minds of members of the Council as to where the British Government stand on this issue.
    Mr. Marten: As the Minister has attended Council meetings with the Minister of Agriculture, Fisheries and Food, will he explain why the Government agreed to a tax on isoglucose when, in the week before, the House had voted against precisely that thing?
    Mr. Maclennan: The package as a whole must be considered, and major changes—most notably the payment by the Community of a subsidy on butter worth 10p per pound—were agreed as a result of the strong representations that were made about the importance of bearing in mind the consumer interest in the price settlement. The isoglucose levy was unwelcome, but it must be judged as part of an overall package.
    Mr. Molloy: Will my hon. Friend confirm whether it is in the interests of the policy of detente that the EEC is flogging
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    mountains of beef and other foodstuffs and lakes of wine to the Soviet Union at knock-down prices at the expense of the British consumer?
    Mr. Maclennan: Detente is not a consideration in the minds of Agriculture Ministers attending the Council.

    Consumer Protection
    Mr. Ioan Evansasked the Secretary of State for Prices and Consumer protection what further measures are proposed to improve the protection of the consumer.
    Mr. John Fraser: Good progress is being made on a number of important measures. For example, the Unfair Contract Terms Bill, sponsored by my hon. Friend the Member for Peterborough (Mr. Ward), is well advanced in its passage through Parliament and the Price Commission Bill is before the House. A number of further measures to protect consumers are under consideration, including a new consumer protection Bill on which I am currently having consultations.
    Mr. Evans: As this Parliament may well go on for another year or two years, and as it is unlikely to get controversial legislation through the House in view of the Government's majority, will my hon. Friend and his Department seriously consider bringing forward important consumer protection measures and putting them in the next Queen's Speech so that Parliament may occupy its time dealing with consumer protection matters?
    Mr. Fraser: I have already said that I hope that in the next Session there will be a consumer protection Bill dealing mainly with consumer safety. I appreciate that it is felt on both sides of the House and by outside bodies that urgency should be given to dealing with other measures of consumer protection.
    Mr. David Price: Does the hon. Gentleman agree that so far the best method that has been found of protecting the consumer is by ensuring that there is genuine competition in each product and service sector, and that the greatest problem is where there is not, for various reasons, genuine competition?
    Mr. Fraser: Yes, but we are trying to encourage genuine competition and the

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    Price Commission Bill, when enacted, will add bite to the competitive edge. As the right hon. Member for Down, South (Mr. Powell) said in the House recently, no market is perfect and most markets are far from perfect. We also need consumer protection measures embodied in legislation.
    Mr. John Garrett: Does my hon. Friend agree that a valuable general protection would be afforded to the consumer if there were a rigorous investigation of the retail price mark-ups in the footwear industry, which a recent footwear study report shows to be unacceptably high?
    Mr. Fraser: The Price Commission will investigate those prices where notifications are given under the present system. It will be free to select for investigation that sort of sector under the new régime under the Price Commission Bill.
    Sir A. Meyer: As it is a fact that Government legislation on employment protection has produced a vast increase in unemployment, and as their legislation on rent controls has produced a vast increase in homelessness, what guarantee is there that legislation on consumer protection will have anything other than the contrary effect?
    Mr. Fraser: First, I do not accept the hon. Gentleman's premises based on the legislation that he has mentioned. Secondly, we are usually supported by the mass of consumer organisations and the mass of reputable traders and manufacturers when we bring considered consumer protection legislation before the House.
    Mr. Pavitt: Will my hon. Friend give as much attention to the protection of consumer services as the Department gives to goods? Is he aware that the National Car Parks car park at Euston has been giving no information of the amount that the parker will be asked to pay as he or she drives into the car park? If a car is parked for three hours the charge is £1, but if a car is parked for three hours and five minutes the charge is £5. The parker is not made aware of that fact until he or she is about to leave.
    Mr. Fraser: The Unfair Contract Terms Bill is one example of the priority
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    that is being given to consumer protection in the provision of services. That aspect is being given as much priority as the provision of goods and the provision of information about services. It is as much in our minds as is consumer protection against shoddy goods.

    Food Subsidies
    Mr. Hooleyasked the Secretary of State for Prices and Consumer Protection what assessment his Department has made of the contribution of subsidies towards the stabilisation of prices to the domestic consumer.
    Mr. Maclennan: Over the last three years the effect of food subsidies on the cost of living has varied. At their peak early in 1975 food subsidies were estimated to be saving 1·6 points on the retail price index.
    Mr. Hooley: Does my hon. Friend agree that the maintenance and even the extension of food subsidies would have a useful stabilising effect on the cost of living and would improve the chances of getting a reasonable incomes policy in the third stage?
    Mr. Maclennan: Food subsidies are being maintained, although at a lower level than they were earlier. I have already drawn attention to the particular importance of the butter subsidy.
    Mr. Peter Bottomley: Does the hon. Gentleman agree that stabilisation of consumer prices will be effected by the success of the incomer policy? Having made an assessment on the basis of the Question, will he spell out what level of pay increases generally is consistent with a retail price index increase over the next year of 10 per cent., 5 per cent., or 17 per cent.?
    Mr. Maclennan: Not without notice. That does not relate directly to the contribution of food subsidies towards stabilising the cost of living.
    Mr. Ward: Will my hon. Friend indicate what level of subsidy would have been required of the Government had they tried to protect consumers against increases in food prices since the sterling crisis of last autumn?
    Mr. Maclennan: It would have required a level of subsidy quite inconsistent with maintaining confidence in the £ sterling.
    Mrs. Sally Oppenheim: How much will food subsidies introduced by the Government have cost in total by the time they have been phased out, and what proportion of the total food subsidy has gone to poorer families?
    Mr. Maclennan: As no decision has been taken finally to phase out food subsidies, that answer cannot be given. I can tell the hon. Lady that food subsidies are less regressive than the subsidies that her party when in power gave to the railways.

    Commodity Marketing
    Mr. Robert Hughesasked the Secretary of State for Prices and Consumer Protection what plans he has to control the forward marketing in commodities.
    Mr. Maclennan: None, Sir. I remain quite satisfied that the existing surveillance arrangements are adequate.
    Mr. Hughes: Is my hon. Friend aware of the great increases in the prices of tea and coffee? How far are these the result of genuinely increased costs—[HON. MEMBERS: "The Common Market."] Even I would leave out the Common Market—and how much is due to speculation?
    Mr. Maclennan: Yes, I am aware of the concern about tea price increases. There is a Question on the Order Paper about this matter, which is being considered by the Price Commission. The ingredients or the causes of the increase will be and are being carefully analysed by the Price Commission. When it publishes its report, my hon. Friend will be able to read it.
    Mr. Tim Renton: Has the Minister made any estimate of the likely cost of the common fund on the basic costs of a number of commodities in this country? If the Department has not yet made such an estimate, will it do so over the coming months while the common fund is under detailed discussion?
    Mr. Maclennan: A curious practice seems to be developing of asking ques-
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    tions about almost anything under the sun whether or not it relates to the Question on the Order Paper, which on this occasion concerns forward marketing in commodities. That is a matter for my right hon. Friend the Secretary of State for Trade.

    Price Increase Regulation
    Mr. Neubertasked the Secretary of State for Prices and Consumer Protection whether he will make a statement on his further specific proposals for transitional arrangements under Clause 21 of the Price Commission Bill.
    Mr. John Fraser: My right hon. Friend intends that the provisions in the present Price Code which regulate price increases by reference to increases in costs should come to an end by 1st August 1977 or as soon as administratively possible thereafter. My right hon. Friend has therefore tabled an amendment to the transitional provisions set out in Clause 21 of the Price Commission Bill to ensure that this has to be done by 1st October 1977 at the latest.
    Mr. Neubert: Does not the Minister feel that he is getting dangerously close to the deadline of 1st October? Does he not realise that we may have a new Government by October? Should he not therefore make his proposals clearer much earlier than that time?
    Mr. Fraser: I do not think that we shall have a new Government by that time. The date 1st October is the latest date. Of course, in normal circumstances we would expect to have our proposals ready long before that time.

    Fares (London Underground)
    Mr. Dodsworthasked the Secretary of State for Prices and Consumer Protection when he expects to receive the report of the Price Commission on Underground fare increases in Hertfordshire.
    Mr. Maclennan: The Price Commission considers applications to increase fares from London Transport Executive against the rules set out in the Price Code and does not report to my right hon. Friend or any other Minister the outcome of that consideration.
    Mr. Dodsworth: Will the Minister in future consider the wisdom of matters of this kind being exempt from any veto of investigation? These increases—40 per cent. and 50 per cent. in this case—represent a substantial rise in the cost of living to the individuals concerned. They reflect not only on Hertfordshire but on Essex and Buckinghamshire. Surely this is the kind of matter with which the Department should be intimately concerned.
    Mr. Maclennan: My Department is concerned about these matters, as the hon. Gentleman will know from the debate which he initiated on this subject last week, which, I think, answered his question fairly extensively.
    Mr. Molloy: Is my hon. Friend aware that almost all Conservative Members want some form of price control on services and goods in their constituencies and no such control in other constituencies? Does he agree that if there were no price control whatsoever we should be running into one of the greatest confrontations ever with organised labour and that that would do no good to this House, the nation or, indeed, Europe as a whole?
    Mr. Maclennan: My hon. Friend is right to draw attention to the discrepancies between the views of Conservative Back-Bench Members who call for selective price control when speaking for narrow constituency interests and those of Opposition Front Bench speakers who have opposed the Price Commission Bill, which will enable such powers to be taken. The Opposition must sort out that problem among themselves. They must also recognise that the country is increasingly mystified about their policy on prices.

    Tea Prices
    Mr. Maddenasked the Secretary of State for Prices and Consumer Protection if he will refer to the Price Commission the increase in the price of tea.
    Mr. Gwilym Robertsasked the Secretary of State for Prices and Consumer Protection if he will refer the price of tea for investigation by the Price Commission.
    Mr. Maclennan: My right hon. Friend announced on 30th March 1977 that he
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    had asked the Price Commission to examine and report on prices, costs and margins in the importation, blending, packaging and distribution of tea, including the causes and effects of movements in world prices of tea. The Price Commission has not yet completed its report.
    Mr. Madden: Does my hon. Friend accept that many people, especially the retired, are angry at the way that tea prices have increased? Does he appreciate that they understand that increases in the pay of tea workers in no way account for the increases which have taken place and that their confusion is heightened when the May indices show that the food index increased primarily because of the increased cost of tea, whereas the index for materials purchased, including tea, shows that those prices went down? People believe that there is speculation and that middlemen are having a field day. What will my hon. Friend and his Department do to speed up the inquiry and tackle the problem?
    Mr. Maclennan: We are anxious that the inquiry should be completed not only as soon but as authoritatively and thoroughly as possible. It takes time for forward prices to feed through into retail costs. That explains the discrepancy between the figures to which my hon. Friend drew attention and in particular the decline in the London tea auction prices from a peak in March of 270p per kilogram to 180p per kilogram. That latter figure is still more than twice what the figure was in December 1975. These are complex matters. I believe that in such instances it is right to have a thorough report from the Price Commission.
    Sir A. Meyer: Is the Minister aware that, despite his statement, there is still a widely held misconception that there is some connection between the Common Market and increases in the prices of tea and coffee? Will he dispel that misconception? Will he also explain why the so-called world price of sugar is at present extremely low whereas, because of commodity agreements, the price that we pay remains static and is slightly rising?
    Mr. Maclennan: No one in my hearing today has asserted that the increased price of tea had anything to do with the European Economic Community. Indeed,

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    my hon. Friend the Member for Aberdeen, North (Mr. Hughes) specifically denied that, and he is entirely right.
    Mr. Skinner: Does my hon. Friend appreciate that it is entirely right for a Government who are supposed to be dedicated to the idea of planning and intervention, on occasions of astronomical price increases, for whatever reasons—whether commodity speculation or poor harvests overseas—to intervene and to do something to protect consumers, especially the low paid and those in the pension category? If they could do that for bread to a limited extent, why have they not done it for tea and coffee?
    Mr. Maclennan: My hon. Friend has precisely enunciated my philosophy. [Interruption.] It is because the Government accept the force of his view that there should be the power of selective intervention to deal with unacceptable price increases that they have brought forward the Price Commission Bill, which will give that power, but it will do so on the basis of the evidence of lack of justification for a price increase. We are seeking that evidence in referring matters, such as the tea price increase, to the Commission. The new Bill will give us far greater power to act than we possess at present. We are seeking in that way to strengthen our price control policy to protect the less-well-off members of our society.

    EUROPEAN COMMUNITY (ECONOMIC MINISTERS)
    Mr. Tim Rentonasked the Chan cellor of the Duchy of Lancaster when, in his rôle of economic adviser to Her Majesty's Government, he was last inconsultation with the Economic Ministersof the EEC.
    Mr. Wigleyasked the Chancellor of the Duchy of Lancaster when, in his capacity as the Government's chief economic adviser, he next intends to meet his EEC colleagues.
    The Chancellor of the Duchy of Lancaster (Mr. Harold Lever): I meet Economic Ministers from the Governments of other EEC countries from time to time. I hope that I shall have the opportunity to meet informally any who
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    are visiting London for the European Council at the end of this month.
    Mr. Renton: What are the right hon. Gentleman's views about the EEC's reported intention to raise large sums of money on its own account in international markets? If the Government remain openly and bitterly divided on the question of continuing EEC membership, to what extent will that damage Britain's chances of sharing in the disbursement of the moneys raised by the EEC?
    Mr. Lever: I welcome the constructive achievements of the EEC, including the particular financial one to which the hon. Member referred. My Government are certainly not—[HON. MEMBERS: "My Government?"] The Government of which I have the privilege of being a member are certainly not divided on the question of retaining membership of the European Community. The expressions "bitterly" and "openly" are not apposite to the position of my Government in relation to the EEC. We shall continue as we have done throughout the period of this Government in encouraging all positive achievement that is for the advantage of this country and members of the Community.
    Mr. Heffer: At such discussions with the Council of Ministers, what positive plans were brought forward to deal with the question of unemployment in view of the high level of unemployment in the Common Market? Does my right hon. Friend accept that that level is a basic fault of the capitalist system that operates in the Common Market? What plans do he and the Government have to deal with that problem?
    Mr. Lever: Unemployment is a world problem. The question that all of us in Europe have to ask ourselves is whether we would be better off in a state of anarchic, unilateral rat-racing than in a co-operative attempt to solve these problems. I welcome my hon. Friend's concern that we should tackle these problems co-operatively as a responsible member of the European Community.
    Mr. Biffen: In the right hon. Gentleman's rôle of economic adviser to the Government, does he reflect that as Chancellor of the Duchy of Lancaster he represents a major agricultural, landowning interest? In that capacity, what

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    advice has he offered the Government about the future of the Milk Marketing Board and the Potato Marketing Board within the European Community?
    Mr. Lever: I was aware of the premise on which the hon. Member's question was based, but I had not, I confess, regarded these as areas of my specialist expertise on which to tender advice to the Government.
    Mr. Flannery: When my right hon. Friend meets the Economic Ministers of the EEC, will he tell them to proceed cautiously because of the massive groundswell of disillusionment which is spreading throughout Britain? Will he ask them to adjust their policies accordingly or allow us to get out?
    Mr. Lever: My hon. Friend refers to a massive groundswell of disillusionment. That comes mainly from those who were never illusioned in the first place.
    Mr. Marten: In that case, might I send to the right hon. Gentleman the results of the last few opinion polls, which show that opinion has reversed since the referendum? I turn to the Question on the Order Paper. One of the main aims of the Community surely must be convergence. Since we have joined, there has been nothing but economic divergence. What will be the right hon. Gentleman's advice to the Economic Ministers when he discusses this important question, if the Common Market is to succeed?
    Mr. Lever: The hon. Member is right to say that we shall all benefit if we can increase the amount of economic and financial convergence in our activities. I should give the advice that they should learn from the past. It is no good setting unrealistic targets for advance. But I should tell them that they should not despair of advancing in a commonsense, constructive way. I should tell them that one of the advantages that they hope to get from our arrival is that good faith and common sense will be injected more strongly into the forces of the Community by reason of our arrival.
    Mr. Hooley: In these discussions, will my right hon. Friend tell his fellow Ministers about the importance of the stabilisation of international commodity
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    prices and the value of the common fund as a mechanism to achieve this end?
    Mr. Lever: I certainly take part in discussions about the way in which we can achieve greater security for the world on commodity prices. This question is being dealt with in many different places such as the United Nations, the CIEC and the Common Market. In so far as my hon. Friend is seeking to relate this matter to the Community, I believe that the Community has a constructive part to play in furthering the world judgments which would be useful in this area.
    Mr. Gow: When the Chancellor of the Duchy of Lancaster next meets the EEC Economic Ministers, will he take the opportunity of reaffirming that it is an essential element of the Government's economic strategy that there should be a substantial and continuous reduction in the share of resources required for the public sector?
    Mr. Lever: I know of no advantage that would be gained by such a statement.
    Mr. Skinner: Does my right hon. Friend appreciate that while it is true to say, as he did, that there are those of us who will never be content while we are inside the Common Market, many millions of other people have changed their minds? Is he aware that there is no better illustration than that of Grimsby, where the people were told that they would benefit most from membership because their port faced Europe?
    Will he tell the European Ministers that we are propping up private industry by £10 million a day, whereas before we joined we were spending only £2 million a day on it? Will he tell them that the dole queue has doubled and that inflation is raging at three times the rate it was before we joined? Will he also tell them that we have a trading deficit of £2,000 million a year, which we did not have when we went in? Will he tell them that those of us on these Benches who are campaigning——
    Mr. Speaker: Order. That is enough for any man.
    Mr. Lever: I readily accept that my hon. Friend the Member for Bolsover (Mr. Skinner) will not be content as long as we remain inside the Common Market.

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    What is more open to discussion is whether he would be content even if we came out. In the long list of cumulative woe which my hon. Friend has enumerated, he has omitted the recent increase in wet weather and cold as late as mid-June. On a more cheerful note, my hon. Friend has also omitted the striking improvements in the balance of payments which have been occurring recently and the even greater ones which are now in prospect. None of these matters can be attributed exclusively to the Common Market. To those who are complaining, I can only say that all the more optimistic predictions made in relation to the Market have not been statistically justified and that for me the question is whether we would be better off out of the Market in the short or long term or better off in it. I have not the least doubt that we have been much better off in the short term through being in the Market and that our prospects of being better off in the future are immeasurably enhanced because of the new growing European unity cautiously advanced.

GRUNWICK PROCESSING LABORATORIES LIMITED
Mr. Speaker: Before calling the Private Notice Question, I would remind the House of the considered ruling that I gave on Friday last in relation to this dispute. I then said:
"Issues which touch on the activities of those against whom criminal charges have been brought, and on the civil action pending between ACAS and the firm, cannot be raised in motions or Questions until the cases have been disposed of."—[Official Report, 17th June 1977; Vol. 933, c. 734.]
In allowing the Private Notice Question, I have sought to balance the right of this House to discuss the issue with my duty to protect those involved in litigation arising from the dispute, whose rights to a fair hearing in the courts might be prejudiced by references to their cases in this House. I therefore ask the House not to trespass upon the matters which I denned last Friday and which I have already quoted as being sub judice.
Mr. Whifelaw Mr. Whifelaw (by Private Notice) asked the Secretary of State for the Home Department if he will make a statement on the preservation of law and order outside the Grunwick Processing Labora-
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tories in view of the great increase in picketing.
The Secretary of State for the Home Department (Mr. Merlyn Rees): I understand and share the concern felt by hon. Members in all parts of the House about the events outside the Grunwick Laboratories. The Commissioner of Police of the Metropolis informs me that his officers are attempting to maintain, in conditions of considerable difficulty, both the rights of peaceful picketing and the freedom of those not prepared to be persuaded by the pickets not to enter and leave the premises.
A number of people have been charged with offences arising out of incidents last week. As the police action in these cases will be before the court it would be wrong for me, as you have reminded me, Mr. Speaker, to make any comment about particular incidents.
Complaints which may have been made about the conduct of police officers during incidents last week are already being investigated in accordance with the new complaints procedure, which includes a review by the independent Police Complaints Board.
It is a matter for concern that certain of those present may latch on to industrial action by a trade union as an excuse for breaches of the law, and particularly for violence against the police. This kind of activity, I know, has no place in responsible trade unionism, and I was glad to note the appeal by Mr. Grantham, General Secretary of APEX, for a reduction in the number of pickets.
Mr. Whitelaw: Does the right hon. Gentleman appreciate that we shall firmly accept and support his statement and that of the Commissioner of Police that it is the duty of the police to uphold the law and to ensure that peaceful picketing does not degenerate into plain intimidation? Will he reaffirm his opposition to violence of any sort and express his full public support for the courageous way in which the police are carrying out their clear duty to the whole nation?
Mr. Rees: The law on peaceful picketing is as it has been for one hundred years and is clearly understood by the trade union movement. Of course I am

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opposed to violence and of course I support the police. I support the police whenever they are carrying out their duties. I believe it wrong for a Home Secretary to pick out one case in which he decides to reinforce his support. I support the police on all occasions when they are carrying out their duties, and I would prefer that that was taken as read.
Mr. David Steel: Will the right hon. Gentleman accept that this dispute will be solved only when the parties get around a table and negotiate? To that extent, will he accept that we welcome the initiative taken by the Secretary of State for Employment in an attempt to bring that about and regret that it has not met with success? Nevertheless, will he accept that there is a distinction to be drawn between picketing by people who work in a place and by associated union members and "Rentamob" picketing of the kind we have seen? Will he therefore seek to uphold that narrow distinction in law between one type of picketing and another?
Mr. Rees: The Government certainly welcome the right hon. Gentleman's support. In terms of my right hon. Friend achieving a solution to this problem, what matters is that all involved should sit around a table. That is the best way through the problem in the hours and months ahead. As for a discussion of picketing, and peaceful picketing in particular, the trade union involved clearly understands this problem. It is clear from the report that I have had that if there are 1,500 picketing outside a very small entrance there are bound to be problems. I hope that those involved will listen to Mr. Grantham and understand that the best way is peaceful picketing and a solution such as that which my right hon. Friend is trying to achieve.
Mr. Pavitf: As a frequent eye-witness of this dispute in the last few days, may I welcome my right hon. Friend's statement, with considerable sympathy for both the peaceful pickets and the peaceful police in a rather difficult situation? But may I urge him to understand that there can be problems on both sides and that we shall look with great interest at the reports that he is receiving? However, appeals for the rule of law to be preserved come ill from the mouths of hon. Members when what is happening
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is that the Employment Protection Act is being used by lawyers to try to break that Act, which makes calling upon the rule of law start to look a little hypocritical. Would it not be better, therefore, if the House acknowledged, as the Leader of the Liberal Party has just done, that the way to resolve this conflict is to solve the underlying problem? One should treat the disease, not the symptoms, and the sooner the parties concerned get around the table, the better.
Mr. Rees: My hon. Friend, who, with his colleagues in the area, has been most helpful in recent months, is right to say that the answer here is to solve the basic problem. With regard to the problems at Grunwick itself, there is no doubt that the police and the pickets who are genuinely involved want to "cool it". It needs to be cooled, or there will be further arrests and further injuries to people on both sides. The very nature of the situation at the moment is leading to that.
Mr. Gorst: May I say to the Home Secretary, as someone who experienced the violence—[HON. MEMBERS: "No. Ask a question."] May I ask the Home Secretary whether he is aware that an official of APEX is reported in the Press today as having said that he hopes that 5,000 pickets will arrive one morning and that this will be an opportunity to request the Home Secretary to use his power to order the Commissioner of Police to close the factory? Has the right hon. Gentleman such a power, and, if he has, will he undertake to do no such thing?
Mr. Rees: I have had no such approach. I am not in the business of saying what I would do in response to newspaper reports—just as the report in the Daily Express this morning was not true.
Mr. John Mendelson: When my right hon. Friend said just now that the complaints should be dealt with under the new complaints procedure, does he recall that when, on 9th February 1972, in the House, I related an incident to the then Home Secretary, the right hon. Member for Chipping Barnett (Mr. Maudling), concerning mass picketing outside a power station in Birmingham, and gave a detailed account of what had

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happened there, including criticism of the conduct of police officers, I asked the then Home Secretary whether he would use his power to send guidelines to chief constables about conduct in such cases? The right hon. Gentleman replied——
Hon. Members: Reading.
Mr. Speaker: Order. The hon. Gentleman now has an opportunity to ask a question. In theory, tins is an extension of Question Time, with a Private Notice Question.
Mr. Mendelson: I am just coming to the end.
Mr. Speaker: If the hon. Member will ask a question, everything will be well.
Mr. Mendelson: Since the answer that I received was that such guidelines already exist, will my right hon. Friend say whether the new complaints procedure introduces any difference? Will he also make use of the power to send guidelines so as to ensure that the complaints which have been made do not wait for a long time but are dealt with immediately?
Mr. Rees: With reference to the exchanges with my predecessor, nothing has changed. When I spoke to the Commissioner of Police it was quite clear that he and his men wanted nothing more than to carry out the general law and the law of picketing. They would very much like to see a cooler situation than that which exists at present. The complaints procedure does not alter this at all. All that is involved is the number of complaints since 1st June when the new procedures came in and just before that. Those that are about individual policemen must be investigated in this way. These might end up by being taken to law, because the information may go forward to the Director of Public Prosecutions. But nothing has changed, and I am confident that the Commissioner wants nothing more than to cool the situation in order to allow the normal law to apply.
Mr. Tebbit: How many policemen have been wounded so far in these disorders? Can the Home Secretary say whether it is now possible for anybody working for the company to believe that any member of the Government, with the possible exception—and I say this sin-
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cerely—of the Home Secretary, will be unbiased about the matters affecting this dispute since various members of the Government, including Cabinet Ministers, have been participating in the picketing? Should not those who have participated in the picketing now tell the pickets to obey the law for a change?
Mr. Rees: I have some figures here, and I would not give them to the House unless I thought that they were accurate, although this is a changing situation. Since 13th June, 28 policemen and five demonstrators have been injured. The hon. Member spoke of bias. I have no doubt—and I heard what happened when my colleagues went to Grunwick and what they said on that occasion—that when it comes to the law none is unbiased. There may be more of us on this side of the House who take a different view of the situation when it comes to working conditions in the factory.
Mr. Alexander W. Lyon: What is in the law of picketing that says that a given number of pickets is the only prerequisite for peaceful picketing? How can it be that a local police officer can say how many constitutes peaceful picketing? What about the freedom of the people working in that factory for £25 a week for a full week's work? The real threat to law and order is Mr. Ward's refusal to negotiate with the properly-accredited and very conservative and responsible union in order to get this matter settled. It is significant that the Opposition did not table a Private Notice Question about this 10-month old dispute until there were large numbers of pickets outside the gates.
Mr. Rees: On the number of pickets, these matters are questions of law and questions of the interpretation of the law in the courts. It is a complicated matter. But the police have duties in this respect, and that is much more clearly understood by those who are genuine trade unionists.
On the second point, I am quite clear that the situation inside the factory is best dealt with by negotiation.
Mr. Amery: The Home Secretary said that none of his colleagues was unbiased on the issue. If that is the situation, how can he expect the Secretary of State to

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act as a referee, particularly in view of the action of his Cabinet colleagues in recent times?
Mr. Rees: The right hon. Gentleman misunderstands. We are talking about my responsibilities under the law, and they are quite clear in the support that I get from my Cabinet colleagues. The Employment Protection Act and the conditions inside the factory raise a different matter altogether. There is a strike on, and anyone who has a view about it has a right to express that view.
Mr. Atkinson: May I ask about the law on picketing? Does the Home Secretary agree that it is clearly stated that pickets have a right peacefully to approach those who are trying to get inside the factory to continue working during the dispute? If, by collusion between employers and police—[HON. MEMBERS: "No."] Yes. If by collusion between the police, those who want to work on during the dispute and the employers, who have arranged to transport them into the factory, the police aid entry into the factory of a closed bus and will not allow the pickets to interview people inside the bus, the police are guilty of breaking the law. They are denying the opportunity for peaceful picketing outside the factory by ensuring the transit of a closed bus taking workers into the factory. This is a breach of the law as it is stated.
Mr. Rees: My hon. Friend is interpreting the law in an academic way——
Mr. Atkinson: That is the law.
Mr. Rees: My hon. Friend is interpreting it, as I said, in an academic way. I have to deal with the situation on the ground and to give guidance. This is an extremely difficult environment, with large numbers involved. It would be much better if smaller numbers of people were there. In this very difficult situation, I think that the word "collusion" is wrong—[HON. MEMBERS: "NO."] What is clear as far as I am concerned is that the law must be carried out. Quite clearly there is a right of pickets to try to persuade those who hold a different view from them.
Mr. Prior: Is the Home Secretary seriously arguing that a force of pickets six times the strength of the number of people seeking to go to work does not constitute intimidation of those who are trying to go about their lawful duty? Should he not give much firmer guidance to the trade union movement and the unions involved, advising them that pickets in these numbers are totally intolerable and are an offence against the law? Should he not state that plainly now?
Mr. Rees: The answer is "No". When I discussed the numbers with the police authorities, they said that numbers were a problem but not a problem overall in the interpretation of the law. That is not to say that they would not prefer a smaller number. They would. I was asked about the overall situation and the guidance given to unions. This union, in particular, does not need guidance on this point. It understands the situation clearly. The right hon. Member has had chances in the past to be involved in trade union matters, and they are not as simple as he thinks.
Dr. McDonald: Would the Home Secretary ask the Attorney-General to direct the attention of the Director of Public Prosecutions to a report in The Guardian on 17th June which states that Grunwick has not filed any company accounts at Companies House since 1974? Therefore, we have no up-to-date information about the company's profits, wages bill or number of employees.
Mr. Rees: My right hon. and learned Friend the Attorney-General will take account of what my hon. Friend has said.
Mr. Adley: Is it the Home Secretary's understanding of the position that if a given number of people at a place of work, representing the majority of those at work, decide that they do not wish to join a trade union, they should be able to obtain the protection of the law to see that they are not forced to join the trade union? If that is the position, would the Home Secretary say that it is his understanding of the position and say what he intends to do to see that that freedom is protected?
Mr. Rees: The matter that the hon. Gentleman has raised is not one for the police. It is not a matter for me. It is I hope, a matter for ACAS. It is a matter of the employer and those employed sitting down together and sorting it out. If we treat this situation properly, I believe that there is a chance of that happening. Both sides must sit down and talk. It is intolerable that there are those there who want to make the situation worse. Those who are preventing the parties from sitting down and discussing the problems are playing into the hands of those who do not want a peaceful solution.
Mr. Wrigglesworth: Does not my right hon. Friend agree that it is remarkable that a moderate union with moderate leadership, as this union has in the country, and with moderate members on this side of the House amongst my right hon. and hon. Friends, should find itself in this situation? Does not my right hon. Friend agree that it is a result of deliberate provocation of that moderate union that this situation has occurred? Will he investigate the rôle of Right-wing pressure groups in bringing about that provocation?
Mr. Rees: I say to my hon. Friend, with his association with trade unionism over the years, that the distinction between moderate and otherwise is not perhaps the right one to draw. The word I use is "responsible", and unions of all sorts have understood this over the years—[HON. MEMBERS: "They are all moderate."] There is no need for my hon. Friends to put it that way, because I have agreed that responsibility is clearly understood on this point. On the question of conditions inside the plant, which is the key to this issue, the parties should sit down and talk, because that is the only way in which the dispute will be resolved.
Several Hon. Members rose——
Mr. Speaker: Order. I propose to call two more speakers from each side. This is not the time for a debate.
Mr. Eldon Griffiths: First, could the Home Secretary confirm that those officers who have been injured will qualify for criminal injuries compensa-
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tion? Secondly, will he say how much reduction in police cover there has been in other areas of London so that this situation can be contained, and who will pay the extra cost? Thirdly, will the right hon. Gentleman reject much more clearly than he did the disgraceful suggestion of collusion between the Metropolitan Police and the employers, when in fact the policeman once again is caught as pig in the middle and is there carrying out a most difficult task with exemplary impartiality?
Mr. Rees: I have already made clear my view on collusion. Without advice I would rather not give a view about the question of criminal compensation, but I will have a word with the hon. Gentleman. I was asked the numbers of police. Not necessarily actually at the gates, but ready to be employed if required, about 600 policemen are there now. If there are 600 policemen there, then 600 fewer policemen are being deployed elsewhere.
Mr. Heffer: Would not my right hon. Friend agree that, if there are 600 policemen who have been mobilised to allow these strike breakers to go to work, it is perfectly understandable that responsible trade unionists from every trade union in the country should show their solidarity—[HON. MEMBERS: "No."]—with those workers who have been working to end poor wages and rotten conditions imposed by a rotten boss—[HON. MEMBERS: "Rubbish."]—who by any standards is still living in the last century?
Mr. Rees: Solidarity with the workers on conditions in the factory is one thing, and I understand that. I hope that my hon. Friend will not draw the wrong conclusion about the numbers. I am saying that there are 600 policemen there to be drawn upon, but not all at one time. There were 1,500 demonstrators there on Friday and so far today there are 1,200. Given that situation, the response is in the numbers that I have mentioned.
Mr. Hugh Fraser: First, would the right hon. Gentleman make it clear that it is the duty of the police to see that people are assisted in the exercise of their right to work? Secondly, will he try to expound more clearly what the guidelines are about peaceful picketing? At the moment it is not sufficient to leave

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this to the courts, as I am sure he will agree. A clear instruction should be given to those persons there who are clearly acting not in the interests of either the union or those employed but in the general interests of mass disorder.
Mr. Rees: The police are protecting the right to work. They are also protecting the right to picket. The two go together. With regard to the activities of the police, I have noticed over the years—I noticed it during the miners' strike in the early part of this decade—that it is not so much points made in writing; it is not so much guidelines in that sense of the term. It is also an understanding of relationships between policemen and pickets, and in most cases that suffices. We shall get back to that only if the numbers are reduced.
Mr. Newens: Does my right hon. Friend agree that the basic cause of this dispute is the arrogant anti-trade union attitude of the employer, who refuses to talk about this matter? Will my right hon. Friend take steps to bring forward the High Court action in order that the powers of ACAS can be confirmed and this whole matter settled in a more reasonable manner?
Mr. Rees: The cause of the dispute is clearly in the plant. I have no locus with regard to the High Court. I am not sure what locus my right hon. and learned Friend the Attorney-General has, but his attention will be drawn to what my hon. Friend has said.
Mr. Alexander W. Lyon: On a point of order, Mr. Speaker. I noted your ruling at the beginning of this question about the admissibility of certain matters in discussion in the House and their relationship under the sub judice rule. You will remember that a week ago I applied for leave under Standing Order No. 9 to have an urgent debate on this dispute. You then ruled that no discussion was permissible and that no application for a debate under Standing Order No. 9 could be allowed.
As, Mr. Speaker, you have now recognised that it is possible for the House to discuss the general principles of the issue without impinging upon the right of the court to deal with the alleged offences against particular persons, would it not now be right for you to allow an
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application under Standing Order No. 9 so that the House could express its view upon this issue? It is clearly in the interests of everybody—the police, the strikers and those working at the factory—that there should be an urgent debate in the House so as to put pressure upon all parties to come to a peaceful conclusion to this dispute, which has lasted 10 months. It would, therefore, be in their interests for there to be an early and urgent debate in the House. Would you allow an application under Standing Order No. 9?
Mr. Gorst: Further to that point of. order, Mr. Speaker. For you to rule in accordance with what the hon. Member for York (Mr. Lyon) has argued, it would be necessary for all the matters relating to ACAS which you have ruled are sub judice to be brought into consideration, as no negotiation or search for a compromise is possible until the matter before the High Court is out of the way.
Mr. John Mendelson: Further to that point of order, Mr. Speaker. In view of the submissions now being made to you, may I submit to you that, as it has been established clearly this afternoon that the power and duty of the Home Secretary to issue guidelines during an industrial dispute involving the police have remained unimpaired, as he himself has confirmed, it is essential that it should be possible to question the Home Secretary, who is responsible to the House and not to the courts, during the period of the dispute? Therefore, the right to move the Adjournment of the House under Standing Order No. 9, in spite of what the hon. Member for Hendon, North (Mr. Gorst) has said, must be fully preserved if the responsibility of the Home Secretary is to be maintained in Parliament.
Mr. Atkinson: Further to the point of order, Mr. Speaker. You will recall that during the debates on the formulation of the law as it affects this case, there was some discussion about the use of buses. It is on that, and the guidelines and the necessity to have a debate, that I would strongly urge that we have a chance to look at a practical example of what was in mind in many of the warnings that some of us gave about the use of buses during a dispute to get workers inside a factory—with the assistance of police, I may add. Because of that very point, I

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urge the Home Secretary again to have a look at this business of guidelines, and I ask you, Mr. Speaker, to consider the possibility of an urgent debate.
Mr. Speaker: I spent a considerable time last week examining this question, because, obviously, I want to preserve the rights of the House to debate issues of national concern, and, at the same time, I must honour the protection of those who are charged before the courts. That is why I gave a very careful ruling on Friday. I am sorry that I did not have a full House when I gave it, but if hon. Members will study Hansard they will see that I concluded by saying:
"… The general issue of the strike as such is not sub judice."—[Official Report, 17th June 1977; Vol. 933, c. 734.]
If an application under Standing Order No. 9 is put to me, I shall consider it on its merits. I cannot say now that I should accept it. Nor do I say that I should reject it. It would be dealt with solely on its merits at the proper time.
Mr. Alexander W. Lyon: Further to that point of order, Mr. Speaker. In those circumstances, when is the proper time, in view of the fact that——
Mr. Speaker: Order. The hon. Gentleman, surely, has by now learned that it is when we have finished statements.
Mr. Molloy: In so far as the appeal by the trade union leader for civilised joint discussion with the management has been supported by the Home Secretary this afternoon and by the Leader of the Liberal Party, would it be possible, Mr. Speaker, for you to give an opportunity to the right hon. Member for Penrith and The Border (Mr. Whitelaw), who asked this Private Notice Question, to make his contribution to support that appeal?
Mr. Pavitt: On a separate point of order, Mr. Speaker. May I seek your guidance on the protection of the privileges of hon. Members? Is it in order for an hon. Member to give the impression on radio that he is the local Member for a particular area when in fact he is not? Second, is it in order for an hon. Member to visit the constituency of another Member and to involve himself in local things without first according the courtesy of telling, in this case, my right
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hon. friend the Member for Brent, East (Mr. Freeson) that he is going there?
Mr. Speaker: It is a courtesy that we notify each other when we visit other Members' constituencies. It is not always observed. The hon. Member for Bolsover (Mr. Skinner) was in my constituency a week ago. [HON. MEMBERS: "Hear, hear."] Order. I was very interested to read about it in the newspapers. But] cannot rule on the other abstract issue that the hon. Gentleman put to me.

EUROPEAN COMMUNITY (COUNCIL OF DEVELOPMENT MINISTERS' MEETING)
The Minister of State for Overseas Development (Mrs. Judith Hart): With permission, I should like briefly to report to the House the outcome of the meeting in Luxembourg last week of the Council of Development Ministers.
The Development Council made considerable progress last Thursday. The main item for decision concerned EEC aid to non-associated developing countries, on which no progress was made at the last meeting in March. Last week we did succeed in reaching agreement in principle to the release of the 45 million units of account for the non-associated countries included in this year's budget, and on the general lines of the guidance to be given to the Commission for the expenditure of this money, including that the funds will be distributed to Asia and Latin America in the ratio of 3 to 1.
There remains a problem of securing a draft regulation, and the Council will return to this at its next meeting. What matters is that the non-associated countries can now have this assistance, provided that the European Parliament will accept this procedure, which will, of course, be without prejudice to the future. I very much hope that it will.
We also made further progress on food aid. At our last meeting, some member States were unconvinced of the need for an increasing programme of Community food aid. The Commission withdrew its proposal for this, and we asked for a paper by the Commission analysing the food needs of the developing countries. On the basis of this, we reached agreement that there is certainly a continuing need for food, and, subject to a reserve

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by two delegations, our conclusion was that the Commission should bring forward once again proposals for an increasing programme.
Our last main item was a general discussion, based on an excellent paper from the Commission, on questions of rural development, agriculture and food production in the developing world. We invited the Commission to carry forward our most valuable discussion by arranging a meeting between experts on rural development.
Mr. John Davies: I thank the right hon. Lady for her statement. As regards the first point that she made, does she know that in the House generally there is a considerable measure of interest and anxiety about what appears to be an imbalance between the aid granted to the associated countries of the Community and to the non-associated countries, particularly those in Asia?
In view of what the right hon. Lady says, does the procedure which is now proposed mean that not only would the European Parliament have to accept that it did not discuss this matter before it went into effect but also that this Parliament would not have an opportunity of debating the issue of this aid to Asian countries before the provisional decisions reached by the Council came into effect?
Second, on the subject of food aid, will the right hon. Lady accept that, while being fully sympathetic to the need for a food-rich area such as the Community to make provision for the wants of countries where there is a severe dearth of food, the House generally may feel that there is a greater urgency in ensuring own-production of food within the areas concerned? Would she, therefore, accept that the last paragraph of what she has said has great relevance to the question of the future provision of food for the countries in question?
Mrs. Hart: On the right hon. Gentleman's second point, there is no doubt whatever, and there is general agreement within the Development Council, about the absolute priority to be given to increasing food production within the developing countries. But it is equally accepted, particularly on the basis of the very good Commission paper which was presented to us on this matter, that this takes some time, a matter of years. One
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cannot increase agricultural production overnight. In the meantime, given the great need for food in the developing countries, the Community needs to increase its general food aid.
As I say, two delegations had to lift their reserve on this proposition, but this was the general understanding. It does not conflict one tiny bit with the total appreciation—I think that the British Government have been in the lead on this—that increased food production within the Third World is the key purpose at which to aim.
On the right hon. Gentleman's first point, the 45 million units of account are now to be released. There is a problem in that the European Parliament now has to unblock its disapproval of the procedures. Given the extreme need of the non-associated countries for assistance of this kind—and very rapid assistance—I very much hope that the European Parliament will be prepared, at least on an ad hoc basis, to accept this decision for this year, given that the general framework regulation has still to be resolved.
I completely accept, with the right hon. Gentleman, that there is general agreement in this House about it. He may recall that this was one of the essential questions under debate in our own renegotiations on this matter. We got only a tiny bit of the way there, but we still press on, and a certain degree of progress was achieved last week.
Mr. Spearing: Does my right hon. Friend recall that in the debate last Monday it emerged that there would be an increase in the token amount which she has announced today for non-associated countries only on condition that there was greater harmonisation of policies within the EEC? Can she say a little more about that? Is the United Kingdom approach to overseas aid—that is, to help the poorest in the poorest countries—shared by our other partners in the EEC? If it is not, can my right hon. Friend tell us which are the countries which have the greatest doubts on this policy?
Mrs. Hart: If I may put it in this way, I think that whatever I was required to say last Monday on this matter has to some extent been overtaken by the results of the Development Council meeting in Luxembourg last Thursday. We have

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agreed to release the 45 million units of account. This is not related at this moment to a necessary resolution of the framework regulation question, which, as I have said, we have postponed to a further meeting. We have agreed that the general criteria governing the distribution of this money should concentrate on the needs of the poorest countries and the poorest people. Hence, we have agreed, within the context of the natural problems of actually disbursing the money and identifying projects, that the proportion on a general overall framework should be three to one—three for Asian developing countries and one for Latin America.
This was to some extent a compromise in that the Latin-American countries cannot be regarded as being among the poorest. Nevertheless, what it means is that as a result of this compromise three-quarters of the 45 million units of account stand to be spent on the poorest Asian countries before the end of the year.
Mr. Body: As the right hon. Lady knows better than anyone, in matters of agriculture so many of these countries depend upon monoculture. Does she now say that as a result of the discussions her partners in the Council of Ministers are now more sympathetic towards countries which are dependent on one or two crops and are now more likely to give greater access in future to those crops in order to enable those countries to improve their standard of living?
Mrs. Hart: I think that it is true that there is agreement regarding agricultural production and access to markets. We found this last Thursday in the very general discussion which we had on rural development and agriculture, which I had proposed at our March meeting because, frankly, I felt that it would be good for the Development Ministers to discuss development issues without precise words on a piece of paper to be agreed or disagreed. Clearly, there is very general agreement among the Development Ministers of the Nine on agricultural production and, indeed, there is an understanding that access to markets for developing countries' semi-processed and processed goods is almost a necessary consequence of that. This is very generally understood among Development Ministers. But one of the problems in Brussels and Luxem-
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bourg, as also here in Whitehall, is that there can be an inadequate understanding between various Departments and Councils about particular conclusions.
Mr. Russell Johnston: Will the right hon. Lady take it that we on the Liberal Bench both welcome the decision and congratulate her on the part which she played in it? Could she take the opportunity also of paying a specific tribute to the work of Claude Cheysson, the Commissioner, partly because it is sometimes worth pointing out in the House that the Commission is sometimes right? Finally, in regard to the European Parliament and the procedural problem to which the right hon. Lady drew attention, can she confirm that the Parliament as an institution has played no part in delaying the basic nature of this decision up to now?
Mrs. Hart: I am very glad to agree with the hon. Gentleman in his first point. In my view, Claude Cheysson is one of the best Commissioners of the European Commission. In my experience—I have known him for many years now—he has always offered constructive and, indeed, radical propositions to us. The problem has not been in the Development Council and the Commission. It has lain, as I am sure the hon. Gentleman knows, in certain difficulties on the part of certain member countries.
On his second point, I am sure that the hon. Gentleman is absolutely right. Until now, the matter of the release of the money from this year's budget—that is, the 45 million units of account—was, as it were, blocked as between objections from the European Parliament and difficulties within the Development Council. I should not for a moment say that the European Parliament had so far been holding it up. What I do say, however, is that now we have got the matter through the Development Council I very much hope that even on an ad hoc basis for this year, while we wait to resolve the outstanding problem, the European Parliament will agree that the money can be disbursed. If it does not, the only sufferers can be the poorest countries.
Sir Bernard Braine: Are we to infer from what the right hon. Lady has said that there is nevertheless an impasse between the Council of Development Ministers and the European Parliament, and this is in large measure a reflection

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of the failure of our partners on the Continent to understand the special position of non-associated countries, especially the very poor in Asia? If that be so, is there any special step which we can take in this House? For example, could not the matter be debated, as my right hon. Friend the Member for Knutsford (Mr. Davies) suggests? Is there not some step which we can take whereby the facts of life and the realities of the Third world can be brought home to the European Parliament?
Mrs. Hart: It is certainly true that there has been this continuing problem, throughout this year at least, and at the last Development Council meeting in March, which was the first one at which we held the Presidency, we found that there was an impasse. There was no clear indication that we could find a way through to the release of the 45 million units of account set aside in the budget. We have now found a way in the Development Council. The difficulty is that there is a block at the moment by the European Parliament, which I am sure can be overcome. In precise answer to the hon. Gentleman, I would say that if our delegations from this House, from all parties, to the European Parliament could impress the matter upon our European colleagues there, perhaps in these terms, "All right. There is this procedural problem of arriving at a framework regulation and arriving at the precise nature of the responsibilities as between the Commission and the Council, but can we resolve that a little later and, for the time being, allow the 45 million units of account from the budget to be spent?", I am sure that the European Parliament would respond to the appreciation of all parties in this House of the fact that that is essential.
Several Hon. Members rose——
Mr. Speaker: I propose to call the three hon. Members who are now standing, if we can have brief questions and brief answers.
Mr. Rhodes James: How is the proposed food aid to be channelled? Will it
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be channelled through existing international institutions, or is it seriously proposed that we should have yet another institution for the distribution of food aid?
Mrs. Hart: No, there is no new proposal for the way in which the food aid will be channelled. It will be done according to the traditional precedents of the EEC.
Mr. Costain: In her understandable enthusiasm for encouraging agricultural production in underdeveloped countries, will the right hon. Lady undertake to read the reports of the groundnuts scheme and learn from the mistakes of her earlier Labour predecessor, who had the same enthusiasm?
Mrs. Hart: I regard that as the most trivial comment I have heard in the House for some time. I can assure the hon. Gentleman that the lessons of the groundnuts scheme, both positive and negative, were fully learnt—how long ago was it?—30 years ago.
Mr. Marten: Can the right hon. Lady confirm that she has not had a letter from Mr. Cheysson telling her what she may or may not say in this House? Secondly, on the question of aid and trade, can she say something about the Community's attitude to the Multi-Fibre Arrangement, which does not seem to be doing much good to some of the Asian countries?
Mrs. Hart: I can indeed confirm that what I say in this House is what I say. I tell the House what I think I should tell it, and nobody influences me as to what I should tell it. The Multi-Fibre Arrangement is not my direct responsibility. Naturally, I am concerned about a number of Third world interests in this matter, particularly those of the Asian countries, but, as the hon. Gentleman will appreciate, any questions about it would need to be directed to my right hon. Friend the Secretary of State for Trade.

GRUNWICK PROCESSING LABORATORIES LIMITED
Mr. Gorst: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and urgent matter which should have precedence over business.
The first of the two interrelated issues is that
"members of the Union of Post Office Workers are refusing, in breach of Section 58 of the Post Office Act 1953, to handle mail for Grunwick Processing Laboratories."
The second issue is that
"the picketing at Grunwick"—
where a total of a thousand or more pickets were assembled and 17 arrests were made this morning—
"has created a situation in which intimidation and violence threaten the freedom of Grunwick workers to carry on their legitimate activities as well as constituting a threat to the general maintenance of law and order."
Since I first gave you notice of my intention to raise this matter with you, Mr. Speaker, no undertaking has been given by the Home Secretary that no Cabinet Ministers would join the picket lines. This is of especial importance when the Secretary of State for Employment is seeking to arbitrate in the matter.
Finally, I submit that all these matters, which vitally affect my constituent, Mr. George Ward, the Managing Director of Grunwick, fully justify an application under Standing Order No. 9 as they are specific, urgent and extremely important and should take precedence over other business.
Mr. Speaker: The hon. Gentleman gave me notice early this morning that he would seek to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believed should have urgent consideration. There are two issues. The first is that
"members of the Union of Post Office Workers are refusing, in breach of Section 58 of the Post Office Act 1953, to handle mail for Grunwick Processing Laboratories."
The second issue is that
"the picketing at Grunwick has created a situation in which intimidation and violence threaten the freedom of Grunwick workers to carry on their legitimate activities as well as constituting a threat to the general maintenance of law and order."
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I listened to the long exchanges this afternoon. As the House knows, under Standing Order No. 9 I am directed to take all the factors into account but to give no reasons for my decision. I am aware of the deep interest in this matter, and I have given careful consideration to the application both this afternoon and during the day since I had notice from the hon. Gentleman of his application. But I have to rule that the hon. Gentleman's submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.
Mr. Alexander W. Lyon: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, to call attention to a specific and important matter that requires urgent consideration. My application concerns the Grunwick dispute, but, unlike the application of the hon. Member for Hendon, North (Mr. Gorst), it is about the dispute's wider implications and its nature and the nature of the picketing at the factory. I couch the matter in the following terms:
"the dispute at Grunwick Processing Laboratories Ltd. and the nature of the picketing at the factory."
Such a motion would allow the House to consider all aspects of the dispute, which has now been going on for 10 months. I urge that the wider implications should be considered by the House at an early stage.
I did not make an application this morning, Mr. Speaker, but last week I made an application which you ruled out of order. My application has now become in order only because of the change in your ruling.
I urge that the House should consider the dispute at an early stage, and the earliest possible time is now tomorrow afternoon. If we were to consider it then, the likelihood is that a great deal of the heat now being generated outside the factory could be transferred to this House and sublimated into much more constructive channels.
We have now taken an interest in the dispute for the first time since it began last August, when there were two Adjournment debates about it. Since then it has been simmering on. A number of people have been picketing outside the factory for 10 months in the pursuit of

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justice, and nothing has been done for them, apart from the fact that the Advisory, Conciliation and Arbitration Service has made a ruling which is being disputed by the management.
It is no wonder that in those circumstances a great many people, not all of them members of APEX and not all of them workers at the factory, feel that the only way to right that injustice is to stand in the picket line outside the factory and thereby promote a confrontation between them and the police. If that situation is to be resolved, and quickly, the House must put pressure on not only the Government but the management and the union to come to a peaceful solution. It is for that reason that I suggest that it would be helpful to all if there were a debate tomorrow.
Mr. Speaker: The hon. Gentleman makes his application arising out of the exchanges this afternoon and that obviously puts it in order.
The hon. Gentleman and the House know that I do not decide whether a matter is to be debated in the House. I do not decide whether it is to be debated in the near future. I have to decide only the very narrow issue whether it should have precedence over the business of the House for today or tomorrow. That is the only power that lies with me.
I have listened carefully to the arguments of the hon. Gentleman, who seeks to move the Adjournment of the House to call attention to
"the dispute at Grunwick Processing Laboratories Ltd. and the nature of the picketing at the factory",
but I have to rule that his application does not fall within the provisions of the Standing Order and, therefore, I cannot submit it to the House.

ORDERS OF THE DAY
  SUPPLY
  [23RD ALLOTTED DAY]—considered

  HOUSING (ENGLAND AND WALES)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ashton.]
  4.28 p.m.
  Mr. Michael Heseltine: This afternoon we are to discuss the Government's housing policies and their wider housing implications. Every debate on domestic matters must reflect the international economic crisis of 1973, and housing can be no exception. But we on the Conservative Benches believe that there are three specific ways in which the Labour Party, first in Opposition and now in Government, have worsened the effects of the international economic crisis on this country.
  First in Opposition and then in their early days in Government, between the two General Elections, Labour Members misrepresented to the people the gravity of that crisis, whereas the Conservative Government had begun to take the necessary steps and had put the issues to the country as fairly as we could. It was the Labour Party in Opposition that decried every effort we made to introduce a new awareness of the constraints that would be necessary following the quintupling of the price of oil.
  Labour having misrepresented the crisis, its early economic policies when in Government undoubtedly stimulated the rate of inflation in this country, and the national economic dimension to the international crisis was a great deal worse than it otherwise might have been. It is impossible for the housing programme to remain immune from those broad economic trends. If that was not enough, this Government then proceeded to introduce a series of specific measures which singled out housing for particularly harsh treatment.
  Let us look in greater detail at the three strands to which I have referred. In the days of late 1973 and early 1974.

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  as we have pointed out on many occasions, there was an abundance of promises as to what the housing policies of the Labour Government were likely to be. They had all the ingredients of electioneering and few practical realities. We pointed out frequently the falsity of the claims that there would be cheap land available, that Labour would reverse the decline in the housing programmes and that we would see a stable building industry and a plentiful supply of local authority mortgages. That was the background of the Government's approach to housing in those days.
  But when the Government moved on in their general economic policy, their macro-economics created a climate in which there was no conceivable alternative to a decline in the housing programmes of both the public and the private sectors. With the Government committed to high public expenditure, leading to high inflation and high interest rates, it was inevitable that, with building costs outstripping prices, and with high costs of borrowing and mortgages, coupled, for the free-enterprise building industry, with a diminution in the rate of growth either to nil or to a very low rate, there would be a gradual and increasing downturn in society's ability to pay for extra housing.
  The figures are clear. In the 12 months to the end of December 1976, prices rose by 15·1 per cent. and average weekly earnings rose by 11·8 per cent. That is the background against which the community is not able to find the vital resources for private sector housing. One also saw the makings of the economic crisis which was to lead to the constraints on the public sector. Therefore, the nil or low-growth economy does not provide a background against which it is possible for any politician to claim that there will be a maintenance of hitherto higher housing programmes. Yet the Government gave the impression that that situation could somehow be avoided.
  I am dealing with specific issues applied to housing, and I believe that they and the general economic background, which the Government have worsened, made it obvious where the programmes that the Government introduced must lead. I was re-reading today
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  the remarkable statements which the then Under-Secretary of State for the Environment, the hon. Member for Manchester, Ardwick (Mr. Kaufman), made in going around the country in order, according to his own words, to get the Chancellor into trouble. He was encouraging local authorities dramatically to increase their housing programmes—intentionally, he said, so that the Chancellor of the Exchequer would be faced with a worsening economic problem.
  It is not often that I congratulate the hon. Gentleman on success, but without doubt he achieved success in that direction beyond his wildest dreams. The Government pursued policies which, alone, with the exception of France, among equivalent economies, placed reliance on public sector provision of housing. If one looks at the chart showing the contributions of the public and private sectors, one sees that we are second in relying on the public sector for the provision of new houses. That is an unhealthy over-reliance on the public sector, and it provides the least effective deal from the community's point of view.
  Secondly, partially for reasons to do with the building industry itself and partially for their own egalitarian concepts, the Government have introduced measures which have had a severe demoralising effect upon companies in the building industry. For example, the capital transfer tax, as in so many other industries, has had the effect of making a significant number of medium-size companies wonder what is the purpose of sweating it out and staying in business.
  Then there is the Government's threat of legislation to favour direct labour organisations. Nothing is more revealing of the Government's cynical approach to politics than their method of solving the direct labour problem. We made it clear that, if the Government's words about direct labour measures meant anything, their legislation could find its way through the House, because we are as keen as the words used by the Labour Party in its policy document on finding a solution. If it were a question of improving efficiency and getting an element of accountability in direct labour organisations, as the Government said it was, there would be no difficulty in persuading the House to pass such a measure. We made it abundantly clear

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  that such a Bill would have been acceptable with that express objective. But that was not the true objective.
  The true objective was dramatically to extend the powers of direct labour departments of local authorities, and we made it clear that there was no way in which we were prepared to tolerate such a doctrinal extension of Socialist powers. The Government abandoned the opportunity that we would willingly have given in order to improve the efficiency of direct labour organisations, and now the Leader of the House has made it clear that the moment there is a majority—if ever there is—behind a Socialist Government we shall again be faced with the threat of legislation to extend the power of direct labour departments.
  Thus, everyone involved in deciding whether to invest in a building company or to remain in the industry knows that it is the express purpose of the Labour Party to give a special and privileged position to direct labour organisations. Why should anyone continue to go through the agony and anguish of maintaining a posture in the building industry if it means that in the future there will be a growing threat from direct labour?
  The other side of the coin is the use that it is now widely believed the administrative machinery is making of the 714 certificate. One can argue a narrow administrative point for the introduction of 714 certificates, but many people outside believe that the certificates are being used not to improve the efficiency or administration of the industry but to squeeze out a number of small businesses involved. The important thing is not what Ministers say or believe but what those people engaged in the industrial activity affected by 714 certificates believe—and they believe, widely and sincerely, that they are being discriminated against.
  In the circumstances it is not surprising, as the Municipal Review has made clear, that we now have a higher proportion of unemployment in the construction industry even than in the high watermark of unemployment under the Labour Government in 1931. More than 220,000 people in the construction industry are unemployed. The previous record was 154,500, about 18 per cent., when unemployment reached the ultimate record in 1931.
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  The next area where the Government have specifically, for doctrinal reasons, been prepared to introduce discriminatory concepts in housing is in the withdrawal of tax reliefs. I have heard and can understand the words of the argument that one should not allow mortgage interest deductions on high levels of mortgage The theory, I suppose, is that that would mean that there would be more money to go round and that there would be a more egalitarian use of resources. In practice, however, what happens is that a significant number of people who would like to trade up from their existing level of house to a higher level are prevented by the tax system from doing so, which means that the level of demand for low-priced houses is kept higher than it otherwise would be. The effect is to keep the level at the lower end of the market higher than it would be otherwise, and the people who suffer are not only, to to some extent, those at the top end of the market but, even more dramatically, those at the lower end who cannot get houses from people who would like to sell them but cannot do so because of Government policy.
  What is the Government's position on this matter? Labour Party policy is to remove interest relief on mortgages over £25,000. Anyone trying to plot the future clearly understands what the Labour Party would like to do. There is an electoral difficulty because, with the best will in the world and the most optimistic of scenarios, we shall be fighting a General Election in months rather than years. Therefore, the fear is that the issue will be fudged in the election but that after the election, if the Labour Party won, there would be a toughening of the mortgage interest relief provisions. That would be another disincentive to the expansion of the market.
  The other matter which was once regarded as the jewel in the crown was the whole paraphernalia of promises which surrounded the Community Land Act and the development land tax. I shall deal with that matter later.
  Against that background, it is not surprising that the latest figures for starts are as depressing as they are. According to the 2nd June Press release from the Department of the Environment, public sector starts are down 39 per cent. on a year ago and private sector starts are

  905
  down 25 per cent. on a year ago. I accept that there has been a tiny flicker of improvement in the private sector in the last month, but the improvement is a percentage increase on such a low base as to mean that we are dealing with very small figures indeed. Overall, the level of decline in starts means that we face a very grim year for new housing in total. The local government figures particularly show dramatic reductions. We have now come virtually full circle from the heady days when the Under-Secretary of State for the Environment was first getting the Chancellor of the Exchequer into trouble.
  It was impossible for the Government to sustain the momentum which they had put behind local government housing. It is now recognised everywhere, except in the published words of the Government, that local authority house building is the least effective form of provision of new houses. Every new council house built commits the community to a subsidy of more than £1,000 in the first year. The NEDC report on housing makes the point that it will be into the next century before we see the profit on the council houses being built now.
  I understand—I hope that the Secretary of State will take the opportunity to confirm this—that the good news is that after three years of trials and tribulations the housing review is at last on us and that next week, despite all the delays, we shall be allowed to see the conclusions which the Government have reached. After three years of intensive wrangling and bickering, the conclusions had better be impressive.
  Mr. Frank Allaun: Does the Conservative Party, if it should become the Government, intend to cut down the production of council houses on which most working people do and must depend? [HON. MEMBERS: "Nonsense."] Let the Shadow Minister answer. Secondly, does the Conservative Party, if it became the Government, intend to cut down the subsidy on council houses, which would inevitably increase rents for millions of people? May we have a straight answer?
  Mr. Heseltine: The White Paper Cmnd. 6393 commits the Government to increase to 50 per cent. rents as a proportion of total housing revenue by the
  906
  end of this decade—in three years. By making that important judgment the Government are moving in the right direction, and as a bipartisan approach—[Interruption.] I am simply quoting the Government's White Paper and the Chief Secretary's own statements on these matters. I believe that, broadly, that is the direction in which the Government will be forced, and I should support them in the policy outlined in Cmnd. 6393 in general terms, without naming specific figures, because I believe that they were right. Therefore, we can achieve a bipartisan approach to the question of council rents.
  The hon. Member's second question was whether the Conservative Party would reduce public authority starts. The problem is that public authority starts are falling so fast that we cannot tell what their level will be at the next General Election. It is therefore impossible for us to answer the question. If the hon. Member will tell me how far they will have dropped by the time of the next General Election, it will be possible for me to make a judgment.
  We believe that there is a strong argument for reallocating housing resources because we think that there are ways in which we can achieve a better deal for the community. I shall explain later where we think the money should be spent.
  On the question of subsidisation of the council tenant and the owner-occupier, it is incontrovertible that the social benefits per pound spent in subsidies argue strongly in favour of encouraging the private ownership of homes. According to the latest information, the average owner-occupier gets a benefit of about £118 a year. The average council tenant gets a subsidy, including rebates, of well over double that sum—about £273 a year. The average amount of mortgage relief for someone taking out a mortgage today is £300, whereas the average amount of subsidy from which a new council house tenant benefits in the first year is over £1,000. Therefore, it is dramatically more expensive to sustain the public provision of housing than is private provision.
  Mr. Bruce Douglas-Mann: Does the hon. Gentleman agree that, on average, owner-occupied

  907
  houses are sold every seven years and that consequently the subsidy starts again at a very much higher level, and that a subsidy is received in respect of an owner-occupied house which is 100 years old, whereas the subsidy on a council house ceases within 10, 15 or 20 years, depending on the rate of inflation?
  Mr. Heseltine: It is the people with whom we are concerned. The object is to encourage people to own their houses. After helping the majority of people to own their houses, we are still subsidising them by only £118 a year.
  The average mortgage lasts for seven years. It is desirable for people to move up the scale and to acquire more expensive houses as their earnings increase, because it encourages people to save and to move and it enables houses at the lower end of the scale to be released for young couples buying houses for the first time. Therefore, in every way it is a desirable social objective to encourage people to move up the social structure, and I would not wish to do other than to put that firmly at the forefront of the policy.
  Therefore, to use resources economically in continuing a massive council house building programme means making the judgment to achieve less in terms of new housing than would be possible if one chose an alternative method of using the money. That is why we argue persistently that there is a need for a new emphasis; and, although there must be a continuation of local authority provision, particularly for the elderly and in stress cases, the emphasis should be put more on modernisation and renovation for the provision of incentive for direct owner-occupation.
  It is a sad reflection that in its October 1974 election manifesto the Labour Party should have given the impression that there were easy alternatives available. The party claimed that
  "Local councils' lending will be expanded so that they can play a major part in helping house purchasers".
  Nothing could have been put before the electorate in starker terms or in more dramatic language. The Labour Party spoke of young people wanting to buy their own homes. After all, that is a party which is obsessed with election manifestos, with people hawking their
  908
  consciences around and saying that this or that is writ large and that the party has promised to do it. It is frequently said that the party must not deviate by one fraction of a millimetre from the ark of the covenant or the tablets of stone.
  When the Labour Party said that it would expand local authority lending, potential young purchasers were entitled to believe that the words meant what they said. Yet the £734 million available from this source of revenue hi 1974–75 is now down to £116 million. That is the scale of the reduction in the provision of local authority mortgages from a Labour Government who had promised young couples that this sort of provision would be increased.
  The Government have been forced to introduce tough controls of local authority building programmes, and all over the country a large majority of local authorities, Labour and Conservative, are being forced by the constraints of the Government to reduce the levels of local authority building. [Interruption.] The Secretary of State is tut-tutting and accusing me, therefore, of giving a slightly false impression.
  I shall read a letter written to my right hon. Friend the Member for Knutsford (Mr. Davies) from the borough of Trafford, in Greater Manchester. It was discussing the problems faced in that area, where properties had been bought which it had been intended to modernise. This is what the chief executive officer of the borough said:
  "It was intended that the property would be converted during the current year but the Department of the Environment have so cut back the Council's allocation under Section 105 of the Housing Act 1974 for the improvement and conversion of Council dwellings that it will no longer be possible to continue with the conversion of this property this year. In fact the allocation is so low that it is unlikely that the Council will be able to continue with all schemes commenced in 1976–77 let alone commence any new schemes…. In the circumstances, the only thing the Council can do with the above property is to keep it as secure as possible from vandals in the hope that the DOE will allow an increase in the 'Section 105' allocation or give an allocation in 1978–79 sufficient to enable conversion work to proceed during that year."
  If the Secretary of State is suggesting that there is no constraint on local authorities, that is out of accord with the evidence flowing in to hon. Members on both sides of the House. I say to the

  909
  Secretary of State and to the House that I would not underestimate the difficulties of stimulating the private sector in the economic climate that the Government have to a great extent created, but I believe that the private sector now offers the only alternative for stimulating housing supply in the foreseeable future.
  With the constraints on public expenditure which the country now faces, the alternative must be to look to the private sector. But there are other arguments. The fact is that private ownership is what the community at large, to an overwhelming degree, sees as a prime political objective. Ownership is what the people want, whether they be in rented private accommodation or in local authority rented accommodation.
  Given that the public sector has not the resources to increase its commitment to housing, and given that there is, therefore, no method by which the Government can prime the housing pump on a large scale, how are people to be persuaded to part voluntarily with a higher proportion of their savings, which they are now using for a range of other things, and to put this into better housing? The only way in which to do that in a nil-growth or low-growth economy is by giving an infusion to their commitment, and that can be done only by making possible an increase in ownership.
  The policies which seem to me to be needed are those which place special reliance on the incentives to the private housing provision sector. Without listing them in order of priority, there are sx suggestions that I put to the Secretary of State, not altogether with total optimism.
  I believe that the whole charade of the Community Land Act must now be scrapped. In reality, if one can say so in the privacy of these four walls, the Secretary of State knows that the Community Land Act is a major Socialist disaster. The Secretary of State knows as well as I do that his GNLA 12—for the benefit of any hon. Members who have not kept abreast with the latest terminology, these are General Notes to Local Authorities—has destroyed the Community Land Act.
  The whole concept was to have fastrolling programmes building up in the future so that local communities could know that there was an ongoing pro-
  910
  gramme constantly onstream, regardless of intervention one way or another. But all that has gone, because local authorities, under the Secretary of State's circular, now have to get approval from the Secretary of State. To get this approval, they have to show that any land they acquire under the Community Land Act is not only to be sold off within two years but also sold at a price which reflects the cost price. There is, therefore, no opportunity for the local community to stockpile, to have a rolling programme or to have any massive future plan. It has been made perfectly clear that with these great constraints, local authorities no longer have the ability to finance such a programme, even if they wish to do so.
  In support of my general contention, I refer the House to a statement from the Association of Metropolitan Authorities, reported in Building Design of 17th June. The House will know that this is a Labour-controlled local government organisation. The chairman of the AMA, Jack Smart, is reported as saying that controls are
  "causing frustration, disillusionment and, worst of all, loss of opportunities."
  Various examples of the problems are given. The chairman points out that
  "the restrictions have resulted in a catalogue of potential developments lost, delayed or diverted to privately owned land."
  That organisation represents 77 authorities. As I have already indicated, it is a Labour-controlled local authority association talking about a Labour Government.
  The concept of the Community Land Act, therefore, is as dead as the dodo in regard to its positive commitments. But that is not the end of it, because it hangs like a spectre and is always being referred to. Long speeches are made by local Labour members saying that the time has come to resurrect it or that more money can be obtained for the purpose. It is, in fact, an illusion that will not come about. Given that the Community Land Act process of compulsion cannot come about, because of the financial constraints, what, then, is the only alternative? The only alternative is the private sector.
  The first issue is the provision of land. Here we run straight into the barrier of the development land tax. Given that one is dependent upon private owners of land

  911
  to bring forward land voluntarily for development, what conceivable incentive is there for doing so if they know that they will have to pay about 66⅔ per cent. or 80 per cent. tax, and by the end of the decade perhaps 100 per cent., because that is the levy imposed by a Labour Government? There is no way in which land will be made available when we have tax rates of that order. The fact that we have that barrier is a direct consequence of the intervention of a Labour Government. We say clearly that the Community Land Act and the development land tax are barriers to wider ownership of homes.
  Mr. Frank Allaun: I am listening carefully to the hon. Gentleman, and I should like to put to him a question about his party's policy. Do his words mean that the Conservative Party, if in power, would remove the development land tax, when previously the Conservative Party has taken the view that it would maintain that tax? Since vast fortunes can be made overnight once planning permission is given to build on potato fields, does it also mean that the Conservative Party will allow such resources to be taken away from the community?
  Mr. Heseltine: No, that is not the policy of the Conservative Party, as the hon. Gentleman knows. We are saying that a balance has to be struck. There has to be a form of capital taxation, as we have made clear. There is no issue of principle between the hon. Member for Salford, East (Mr. Allaun) and the Opposition. The difference lies in our practical approach to the supply of land. If one is totally dependent on the voluntary provision of land, one must pitch tax rates at a level at which supply of land will flow forward. That is our position, as we have made abundantly clear.
  Mr. Douglas-Mann: Is the hon. Gentleman suggesting that the present reduction in private house-building is caused by a shortage of land, or by a shortage of investment, or a lack of willingness to invest? I do not think the hon. Gentleman is seriously suggesting that there is now a shortage of land, but I should like him to clarify that point.
  Mr. Heseltine: Undoubtedly the view of the experts is that the shortage of land is a growing feature as money from the
  912
  banks dries up. A large amount of land was available to house builders in the early 1970s and previously. Those builders are beginning to work through that land, and the evidence is that as time passes the supply of land will become more and more a relevant factor. There is a growing anxiety in the industry, and if the industry is to revive we must cope with this problem.
  Mr. Michael Latham: Is my hon. Friend aware that a survey conducted by the House-Builders Federation dated 19th May illustrated that 85 per cent. of house builders considered that the lack of building land was likely to restrain their output to some extent?
  Mr. Heseltine: That is the kind of comment that is made to me by constituents. I am grateful to my hon. Friend for reminding me of that survey.
  A further step which the Government should now take is to give specific incentives to first-time buyers in the form of help with their deposits. The Government should use some of the funds available and should divert them to that desirable social end.
  Furthermore, the Government should commit themselves wholeheartedly to the sale of council houses and flats. The Greater London Council is to be congratulated on its total commitment to this principle in the recent election campaigns. There has been a considerable response. I understand that 800 people have asked to be put on the list of those wishing to buy council houses. Such people should be positively encouraged with every incentive, and the GLC obviously is taking that line.
  I should like to mention one area of confusion, which I hope the Secretary of State will clarify. There is a dual situation whereby, with the right hon. Gentleman's permission, a 30 per cent. discount can be granted off market value—and without such permission there is a 20 per cent. discount. It would help the situation if the right hon. Gentleman would announce that he will make a general disclaimer in regard to requests for approval. He should announce that it will be in the gift of local authorities to move to a 30 per cent. disclaimer without further permission being required. This is a significant way to

  913
  encourage sales. I believe that the facility of council house sales to tenants is the single most dramatic method by which to extend home ownership in the short term.
  Such a policy would also have the effect on the part of those who become home owners to commit an increasing proportion of their income to improving and repairing those homes since they will have a direct personal involvement in them. It also means that local authorities and communities make a profit. [HON. MEMBERS: "Oh."] I know that it does not come easy to Labour Members to hear such things, but the figures of loss advanced by Mr. Bernard Kilroy have been said by Mr. Peter Sparling, the Chairman of the Leeds City Council Housing Committee, to be fallacious. The reason that Mr. Bernard Kilroy is wrong is that his assessments of the relative rates of increase in terms of rent and repairs are not based on actual historical calculations.
  If Labour Members are saying that a profit will be earned more quickly if the council house is let to tenants, they are suggesting that the rents will go up faster than will the repair and management costs. One has only to look at the record of the Labour Party and at what has happened since they have been in power. A high rent policy is implicit in Mr. Kilroy's assumptions. The Labour Party will not be able to resist intervention in rate and rent policies. Therefore, Mr. Kilroy's suggestions do not stand examination.
  Mr. Douglas-Mann: I am sorry to intervene yet again, but the hon. Gentleman referred to Mr. Kilroy's assumptions. Mr. Kilroy in his calculations worked out an assumption of about 10 per cent. annual increase in rents. If one examines the figures over a number of years in Leeds, one sees increases of 15 per cent., 12 per cent., 6 per cent., and 13 per cent. This can be seen from Table 6. That shows an increase substantially in excess of the assumptions made by Mr. Kilroy. Therefore, the hon. Gentleman's figures are totally misleading, because Leeds bases its figures on projections of figures which have not been realised. It is Mr. Kilroy's figures that are realistic.
  Mr. Heseltine: The figures put out by Mr. Kilroy do not accord with the figures put out by Mr. Peter Sparling, Chairman of the Leeds City Council Housing Committee. This is not a subject for discussion across the Floor of the House. The fact is that for there to be a profit on a council house letting—which cannot take place in the first year because we understand that the subsidies are over £1,000—there has to be a relative change in the balance between rents and repairs. Rents must rise faster than repairs. As the repair bills have been rising at a rate of 15 per cent to 20 per cent. in the current year, rents will have to increase in order to improve the position of the State investment. It is an unlikely situation to put by way of hypothesis.
  The next area which the Secretary of State should take as a target relates to the sale of new town assets. In case the Labour Party says that it is not prepared to consider a half-way house, I wish to say how pleased I was to see the Housing Corporation Press Release of 15th June because it showed that the City of London raised £35 million to make good the cuts in public expenditure imposed by this Government on housing associations.
  I was delighted to hear that news. I have always believed that the savings of the British people, managed by the City of London, should be made available for housing. That is precisely what has happened. I remember in the last housing debate asking the Secretary of State for the Environment to encourage these moves, and I believe that the right hon. Gentleman has committed himself in principle. I hope that we shall hear no more from Labour Members against the concept of encouraging private sector investment in this way.
  Why not go further, and encourage as many of the new towns as wish to do so to sell their freehold assets and thus raise substantial sums of money for a variety of purposes that it would be profitable to discuss? An obvious but important point contained in the Housing Corporation Press release is that it says that devices can be reached whereby a flow of private funds to the development and housing funds can be produced. I hope that the Secretary of State will deal with that in his housing review. The right hon. Gentleman should bring a more

  915
  dynamic approach to the planning procedures which, in terms of time taken, are making substantial contributions to the cost of new housing.
  I should like the Secretary of State also to consider the statistics in the Housing and Construction Statistics, volume 20, for the fourth quarter of 1976. These show that it now takes between 19 and 26 months to complete a new house or flat in this country. That seems to be an inordinate period of time, and the Secretary of State should look into the matter. It means that resources are being committed over a long time and, because of the time taken, the cost of building new homes is rising dramatically.
  I now wish to turn to the renting side of the problem. There are some 5 million tenants in local authority housing and that means that there must be a great deal of political concern. As has been established in earlier interventions, the Government are committed to increasing the proportion of rent to 50 per cent. of the housing cost by the end of the decade. We all want to know the Government's latest view on the matter. I believe that the Government will want to await publication of the housing review which is due next Tuesday. In these circumstances we shall look carefully to see whether the Government have, for electoral reasons, abandoned the pledge spelled out in Command Paper 6393. Certainly this or any Government will be forced by the circumstances of financial restraint to move in that direction and it would be intolerable to do that unless there were a number of other incentives surrounding that movement. There would have to be a determined attempt to sell—and I mean really sell—council houses to council tenants.
  We should also expect to see increased publicity for rent rebate schemes that were introduced under the last Tory Administration, because it is a sadness to many hon. Members to find while doing their constituency casework that many people do not know their entitlements in this matter.
  There would also have to be a move forward with the concept of a tenants' charter. There are a whole range of areas in which bureaucracy denies to tenants a proper rôle in the management of their estates. The management side
  916
  of the tenants' charter is probably the most important, because it should be possible to devolve a degree of responsibility and thus eliminate a certain amount of bureaucratic influence if tenants played a greater rôle. The Secretary of State should also encourage the experiments that are now being conducted by the GLC, where "homesteading" is becoming a new word in the domestic housing vocabulary. It is an admirable concept of self-help that should certainly be encouraged across the country.
  I now wish to talk about private rented accommodation in which 2 million or 3 million people—often of the lowest income groups in society—find their homes. Everybody understands that this is the area in which the most acute problems are to be found. We have a number of suggestions that could be of help.
  Whether one likes it or not, there are many empty properties, and while the present paraphernalia of the law remains as it is those houses will remain empty. The objective of those politicians who have a detached view of the matter must be to find solutions to the grave problems that must be overcome and to help that large number of people who do not live in the sort of housing for which we all wish. [Interruption.] The problem of the hon. Member for Salford, East is that he has a parrot cry for every sensible debate on any subject. One has only to mention a major national crisis affecting the lower end of the housing market and the hon. Member for Salford, East produces his parrot cry. We do not advocate conditions that would permit such a fringe of abuse as causes concern and does harm to an otherwise perfectly reasonable industry. We should not tolerate the reintroduction of the techniques that allowed such people as Rachman to earn such discredit.
  This is a problem that concerns people on both sides and I should like to look now at what we can do to deal with it. The concept of a shorthold should be tried. We shall try it when we are in Government and I hope that the party opposite will not immediately indulge in yah-boo techniques of party politics to try to discredit the scheme before it has had a chance to work. We shall certainly introduce it, because it would be better for people to be allowed to enter into

  917
  fixed period leases on the clear understanding that at the end of the time fixed there would be no further commitment to letting. It would be a clear understanding between landlord and tenant. We should want to see duties imposed as much upon on the landlord as on the tenant but it should be a contract freely entered into by both sides. It should be given a chance to work.
  The Secretary of State should also consider an extension of the Bromley scheme, whereby private institutions could be encouraged to build, for example, on local authority land—where the local authority produced the land—for open market rent. There should be a contract that all parties concerned should accept. It would not prejudice the political freedom of local authorities. The private provider of capital would, in fact, be using the savings of the life insurance companies and pension funds and should be allowed to charge an open market rent for the properties. If local or national Government intervened to prevent that open market rent there should be a right of compensation for those people who had invested. Nothing could be fairer than that. It means that there would be an opportunity to encourage home building together with an assurance that if the experiment did not work those savings that had been invested would not be put at risk.
  The concept of the North Wiltshire scheme offers a real opportunity of partnership between the public and private sector and the Secretary of State should encourage it.
  I also wish to put a personal point of view. We all understand that there is a real difficulty with private rented accommodation. There are good and bad landlords and good and bad tenants. With 2 million people involved there will always be that mixture of human beings. The question is how we shall deal with the situation. We should move to the sort of experiments that I have put forward and to which my party has been committed for some time. Other similar experiments have been put forward. I believe that we should set up a Select Committee of the House to monitor what is happening on the ground, to judge the facts and to help up to make future judgments. We cannot lightly allow 2
  918
  million to 3 million houses to continue declining as they are now doing because we cannot solve the differences between two political parties in trying to judge the issue.
  The severity of the national economic crisis that now besets the country has been gravely worsened by the Government, and not only in national economic terms, because the Government have introduced specific measures that have harmed the house building and home owning industries. The Government's total reliance on the public sector has proved to be illusory, and they are doctrinally unsuited to changing direction and to putting their faith in the direction that we advocate—that is, home ownership and encouragement of the private market. That is the only option left and the sooner that we move in that direction the better.
  5.19 p.m.
  The Secretary of State for the Environment (Mr. Peter Shore): The last Supply Day debate on housing was just two months ago, on 21st April. I am therefore puzzled that the Opposition wish to return to this subject so soon. Before I heard the speech of the Opposition spokesman, the right hon. Member for Henley (Mr. Heseltine), I had, perhaps optimistically, assumed that he was returning to the subject in order to withdraw some of the more extravagant claims that he made on the last occasion about the total collapse of our housing policy, and that he wanted to take the opportunity of expressing some little satisfaction about the improvements in the housing prospect that are now opening up.
  However, having listened to the hon. Gentleman's speech, I find that he has not brought anything before us on this occasion that he has not said before. I do not altogether complain of that because we must go over much of the same ground. The hon. Member for Henley went over rather familiar ground and made one or two points on which I shall comment shortly, but the most conspicuous point in his speech, bearing in mind that our last debate on housing was only two months ago, was the absence of any mention of the great improvement in housing prospects as a result of the further and most welcome reduction in the

  919
  mortgage interest rate from 1st July. This is the one major improvement since our last debate on housing and the hon. Gentleman said not a word about it. That gives some indication of his approach to housing.
  Mr. Heseltine: Let me say how pleased I am that, after three years, the Government have got back to where they were when they took office.
  Mr. Shore: It was rather grudging and a little late, but we got it in the end, and I thank the hon. Gentleman.
  May I ask the hon. Gentleman that, when he is making strictures about the Community Land Act, he should think much harder about his future policy on land. It must be welcomed on both sides of the House that there has been a reduction and stabilisation in the price of land for housing in the past three years. When the Conservatives came to power in 1970, the price of a typical housing plot was about £908. By following reckless financial policies and through a lack of land control policies, that Government ensured that, by the second half of 1973, the cost of a typical plot of land had risen to £2,741—an increase of 200 per cent. in three years. By the end of last year, the average price had fallen to £1,879—a reduction of about a third in three years. Before closing his mind to the prospects and possibilities that have opened up most beneficially as a result of the Community Land Act, the hon. Gentleman should reflect in detail on what went wrong last time and see that it does not happen again.
  The hon. Gentleman's remarks about the building industry were either sheer humbug or were based on misconceptions. No one could seriously argue that the imposition of a capital transfer tax and the possibility of a modest increase in direct labour organisation powers could have had a serious effect on the building industry. The reduction in overall demand has had an effect and there was a strange anomaly in the hon. Gentleman's speech. Whatever his enthusiasm for owner-occupation, the past three years, in which, as he properly recognised, there have been major economic problems, have seen a substantial increase in the level of public sector building. Without that, demand in the building industry would have been
  920
  noticeably lower and, with that lower demand, there would have been unemployment even higher than the unacceptable levels of today.
  I wish to turn to some of the changes and some of the future possibilities in housing. The biggest single change since we last discussed the subject has been the fall in the mortgage interest rate. The reduction on 1st July will follow the 1 per cent. reduction on 1st May, and this reflects general decline in interest rates that has occurred since the December measures. This, in turn, is directly assisting private builders.
  Looking back over the past three years, one of our most important successes has been our relative stabilisation of the flow of mortgage funds—in marked contrast to the chaos of feast and famine that we had under the last Conservative Government.
  Mr. Nick Budgen: Is the right hon. Gentleman serious in saying that he has stabilised the money going into the building societies? They are wholly independent organisations.
  Mr. Shore: I am not saying that we have a command relationship with the building societies, but during the difficulties of 1974—a period of total collapse in the private house building programme—when there was no mortgage money available, we offered £500 million to get things going again and entered into talks and an agreement on a continuing basis with the building societies to encourage them to build up reserves against inflows and outflows of money so that the situation that occurred in 1973 would not recur.
  In the past year, during which there have been great upheavals in the money markets and a substantial outflow of funds, the stabilisation arrangements have turned out to be pretty satisfactory. Indeed, they have enabled the building socities to lend at a rate of £500 million a month in the second half of 1976—a period of great difficulty—compared with an average of £520 million a month in the first half of the year. That was quite remarkable when one considers that the inflow of funds dropped appallingly in the second half of the year.
  Despite the fact that the societies have reduced their share rate to savers, there is a good flow of new receipts and they were

  921
  able to offer loans of £666 million in May compared with £509 million in March.
  The average annual rate of starts in the private sector is, because of the measures that we have taken, holding fairly steady. It was 150,000 in 1975 and 155,000 in 1976. The builders' own forecast for this year is 145,000. There is growing confidence about the prospects for this year and even more about the prospects for next year. Certainly we are a long way from the collapse that hon. Members opposite were ghoulishly predicting in our November debate.
  Turning to the prospects for building in the public rented sector, we made provision at the end of last year for 150,000 starts this year. Since then, we have been able substantially to restore the £57 million cut in the Housing Corporation's programme which I was pleased to hear the hon. Member for Henley welcome. The Corporation has been able to borrow £35 million from the financial institutions, and I hope that a further £15 million can be arranged later this year.
  However, I am the first to admit that progress in public sector new housing so far this year has been disappointing and a little puzzling. It would appear that the moratorium we had to impose for a month last summer and the working out of an agreed programme for the stress and non-stress areas may have checked some of the momentum of local authority programmes. The wet spring may have played some part too. However, it is the local authorities and not the Department of the Environment that are responsible for erecting houses. As both I and my right hon. Friend the Minister for Housing and Construction mentioned in the last housing debate, we are becoming increasingly concerned that some Conservative district councils may be unnecessarily cutting back their programmes to figures well below those we had agreed for their areas.
  Mr. Heseltine: Does the right hon. Gentleman agree that it is scandalous that, having imposed the most stringent public expenditure cuts we have seen, he now tries to pretend that it is Conservative authorities that bear responsibility for cutbacks? He will find when the figures appear that the cutbacks are spread between Conservative and Labour coun-
  922
  cils, unless he has deliberately distorted the flow of funds to ensure otherwise.
  Mr. Shore: The hon. Gentleman is wrong about these cuts being the most stringent ever. We had to reduce planned new starts from 170,000, as being roughly, the figure at which they were running, to 150,000. I thought that the best way of handling that reduction was to cut back on the non-stress areas and to allow the stress areas, the areas of obvious housing shortage, especially rented housing, not to cut back their programmes. I deliberately arranged matters so that they would not have to cut their programmes. Having come to an agreement with those areas, we now find that a number of them are beginning to cut back upon the programmes that we had allotted and agreed with them.
  It is no good the hon. Gentleman blinking this off. It is an important matter. I believe that we have to maintain a programme of the size that I have indicated. Leicester and Nottingham were two cases mentioned on the previous occasion. We have now the example of the GLC, which has announced that it is about to cut its programme by nearly a half by stopping all new building contracts in outer London, and outside London, too.
  Mr. Heseltine: The Secretary of State is clearly aware that the GLC was elected to reduce that form of total commitment. Secondly, it was elected to concentrate resources on the inner city problem. That is the policy to which he has been paying lip service. Now that the GLC is doing it, he criticises it.
  Mr. Shore: I shall return to the inner city problem, have no fear about that. I assure the House that we are determined to do all that we can to maintain the momentum of the housebuilding programme. I have already asked for reports from my Department's regional offices on the take-up of housebuilding allocations. I am ready to reallocate to willing authorities allocations not taken up elsewhere. We have already done this in the East Midlands region. Secondly, I have considered carefully reports about difficulties that some authorities have had in meeting the cost yardstick. I am pleased to tell the House that later this week I shall be announcing an increase in the yardstick, which will take especial

  923
  account of the difficulties that have been experienced in the Northern, North-West and Yorkshire and Humberside Regions.
  Mr. Frank Allaun: Clearly I cannot support the Opposition in their criticism. They were foremost in demanding public expenditure cuts. Nevertheless, does my right hon. Friend agree that there have been serious cuts in the past year in council house building, improvements, mortgages and acquisition? Are there not grounds for restoring those cuts and going further than he has just announced?
  Does my right hon. Friend agree that the Government have benefited in three ways? First, there has been the reduction in interest rates that has benefited the Treasury by millions. Secondly, there are a quarter of a million building workers who could be taken off the dole if this programme were embarked upon. Thirdly, there is the £2½ billion miscalculation that the Treasury made in estimating the public spending deficit. I put it to my right hon. Friend that he now has an opportunity to restore the serious cuts that were made last year.
  Mr. Shore: I have indicated that I am anxious to sustain the housebuilding and expenditure programmes at the levels that have already been indicated. If I have to reallocate resources between authorities to achieve that, that is the first thing that I shall do. Secondly, my hon. Friend makes the point that as and when the economic situation eases, resources should be made available for increasing housing expenditure. That is something that I cannot anticipate, but I assure my hon. Friend that if resources become available the Department of the Environment, which I hope has some voice in these matters, will be doing its best to get a proper share.
  I turn to a matter that is strictly relevant to what my hon. Friend has said—namely, the progress made in improving existing houses. As the House knows, we were able to increase the allocation under this programme by about £30 million only two months ago. It was that £30 million that was made available through the change in the financial situation that occurred along the lines that my hon. Friend indicated.
  Mr. Arthur Jones: Is the right hon. Gentleman saying that capital resources for housing are now available
  924
  to the extent that he is prepared to allocate resources regardless of housing need to be established by the local authority?
  Mr. Shore: I should not like to say that that is so regardless of housing need. On the contrary, I believe that there are considerable needs. I am saying that if authorities that have recently agreed to have substantial programmes do not take them up, I am prepared to reallocate—this is because we have made provision for such expenditure—to other authorities that have equal needs and are prepared to make greater progress in tackling them.
  Opposition hon. Members have been making play of comparing improvement figures before the 1974 Act with those that came afterwards. They know that there were bound to be changes following the 1974 Act. That is because so much of the activity between 1969 and 1974 was the result of time-limited schemes. They were specifically designed as a fillip.
  Opposition Members must also accept that the 1974 Act tightened conditions and followed closely the White Paper that they produced in June 1973. That White Paper was a notable exercise in self-criticism of the indulgence of the earlier scheme for housing improvement grants.
  I have said on many occasions that the separate compartments for new building, rehabilitation and improvement in the public sector have not been satisfactory and may have led to distortions in local authority programmes. I have followed through that concern this year by permitting a much greater degree of virement, or switching, between budgets, than was allowed in the past.
  I am pleased to tell the House that for 1978–79 we intend to put both new housebuilding and public sector improvement into one block allocation to give authorities greater freedom over how they meet their priorities in this important sector. A circular has already been discussed in detail with the local authority associations and it will be published at the end of the month.
  Mr. Hugh Rossi: I am grateful to the right hon. Gentleman for the important advance that he has made. On the assumption that local authorities take up the invitation that he has given them in this new way of allocating money

  925
  and concentrating on improvement rather than new building, is he likely to go back on such authorities later and chide them for doing just that, because new house building figures in their areas have not been as attractive as they would have been if they had not availed themselves of the opportunity that is being given to them?
  Mr. Shore: We shall have dialogue with the authorities concerned. We shall have considerable time for that dialogue. We are talking about 1978–79 and we have the greater part of a year to engage local authorities on the balance of their programmes. In our discussions we shall try to work out with them some generally agreed assessment of need and how it can best be met. Having made that general assessment, I shall not be chiding them. As the hon. Gentleman realises, I shall be giving them considerable freedom of movement within the blocks that we establish.
  There is one last matter that I wish to draw to the attention of the House in making an up-to-date review of what has happened since our last housing debate. I wish to comment upon the first results that have come from the 1976 housing conditions survey. I hope that we shall have a full report before very long.
  The first results indicate a welcome reduction in both the number of houses which are unfit and those which lack the basic amenities. In England and Wales there are now estimated to be about 900,000 unfit houses compared with 1¼ million five years ago. That is moderate progress. A further 1 million houses which are fit lack one or more of the basic amenities. In 1971 the comparable figure was 1·8 million. Therefore, we have reduced from 1·8 million to 1 million in five years.
  Mr. Wyn Roberts: Can the right hon. Gentleman give the separate figure for unfit houses in Wales according to the 1976 survey?
  Mr. Shore: I am sure that I could, but I shall leave it to my hon. Friend the Under-Secretary of State for Wales to mention that later.
  Mr. Stephen Ross: Does the right hon. Gentleman intend to
  926
  deal with improvement grants and the increase in rateable value limits?
  Mr. Shore: I do not intend to pursue that matter further now. The House will understand my reticence on some matters. I am about to turn to a subject which has been in the wings of our discussion for a considerable time.
  As the House knows, we have undertaken a major review of housing. This started as a review of housing finance and was extended to cover housing policy more generally. The issues covered have been complex, and it has taken longer than we expected. I make no apologies for the fact that I felt it more important to try to get the review right than to get the document out in a hurry. No initiatives have been held up pending the review. Where I thought that progress could be made in advance of publication, I have made separate announcements—for example, in respect of the new housing investment programmes of local authorities. But I am now pleased to tell the House that the review will definitely be published next week. I hesitate about the particular day next week on which we shall release it. [HON. MEMBERS: "Friday night."] I assure hon. Members that that will not be so. The House would not expect me to reveal its contents now, but I wish to refer to the general approach in the report.
  As I have steeped myself more and more in the arguments of the review, the more I have found myself convinced that there was more to be learned from the common sense, actual experience and preferences of our people than from the theoreticians and ideologists of housing policy. In particular, I have been influenced by three main considerations.
  First, in the past 25 years we have progressively achieved an immense improvement in our housing situation This improvement is evidenced not only in the much higher quality of our housing stock but in its quantity. Although we still have a major problem to overcome, the housing situation is not worse, as many people are eager to suggest, but clearly and measurably better.
  Governments of both parties have, in the last 25 years, built 7 million new houses and improved another 4·5 million. It is true that the average family in Britain is today better housed than it has ever

  927
  been and is better housed than the average family in many, if not most, countries in Western Europe.
  The second consideration is that there is and will continue to be a substantial need to provide houses for rent, most of which can be provided only by local authorities and housing associations. Equally, there is a growing and natural demand for owner-occupation, which we fully support. Already 53 per cent. of households are owner-occupied. It is our task to help to meet both of these requirements.
  Thirdly, there is a growing desire, wherever the choice is possible, to improve existing areas and homes rather than to engage in massive clearance programmes with all that they involve in terms of community disruption and dispersal.
  Our housing policy is already firmly set along these lines and, provided that we can sustain our efforts, we can expect increasing success in the years ahead. While, therefore, we should seek to improve existing arrangements in every possible way—there are many suggestions as to how this can be achieved—it would be a great folly to embark upon a root and branch upheaval of policy to meet theoretical or ideological goals.
  Mr. Frank Hooley: I have a great deal of sympathy with what my right hon. Friend has just said. But is not a new critical factor in the next 10 years the demographic factor of the sharp decline in the birth rate and, as we all know, the increasing numbers of elderly, retired people who may need special provision?
  Mr. Shore: Those are exactly the kinds of consideration which should be in the forefront of the Government's mind and, indeed, in the minds of the authorities which provide housing.
  The House will recognise from what I have said that I am strongly opposed to the doctrines and dogmas of many housing economists. Their basic viewpoint is that the great evil of Britain's post-war housing is the support given to the finance of housing through both subsidies to council tenants and tax relief to owner-occupiers. Their belief is that financial support in both sectors leads to waste and the misallocation of housing resources.
  928
  Therefore, they urge that rents should be increased and that mortgage tax relief should be reduced. I suspect that some of them are basically more upset about council subsidies than owner-occupiers' tax reliefs. Nevertheless, they believe that it is politically practical to punish the tenants only if at the same time they are ready to harm the owner-occupier.
  My view is that they are entirely wrong to treat housing as though it was just another commercial service. They fail to recognise the social significance of housing both to the community and to the individual. Further, they fail to recognise the real connection between the price of housing and its supply. If we were to abandon general support for both tenants and owner-occupiers, I have no doubt that the progress that we have made and can continue to make in dealing with housing need would suffer an immense setback.
  Certainly some changes are required in housing finance, but, on the basic doctrine of withdrawing support from both main sectors, I am totally unconvinced and shall not countenance any major change.
  Mr. Douglas-Mann: I do not think that my right hon. Friend would suggest that I was more enthusiastic about increasing council rents than reducing mortgage tax relief. Does he agree that one effect of our system over recent years has been towards investment in both housing and industry? Has he had regard to the fact that over the last 16 years, while house prices have increased by five times, the Financial Times Ordinary Share Price Index has increased by only 11 per cent.? Does he therefore agree that this factor has caused investment to be channelled into an area which, desirable though it may be, has affected the viability of our economy because we are distorting the investment pattern in that way?
  Mr. Shore: No, I do not agree at all. I know the argument and I have seen what has been said about it. I consider it to be a totally unproven assertion that, by providing reasonable housing through the medium of owner-occupation or, indeed, through local authority provision, we have somehow starved our industry of the resources necessary for it to perform more satisfactorily. I believe that to be an illusion.

  929
  Certainly, as I said, some changes are required in housing finance, but, on the basic doctrine of withdrawing support from both main sectors, I am totally unconvinced and shall not countenance any major change. From this, the House will recognise that I am equally opposed to the dogmatic approach of the Conservative Party. Its great and continuing errors are, first, to suppose that it is only the need for owner-occupation that needs to be met and, secondly, its continuing belief that the shortage of rented accommodation can somehow be dealt with by allowing market forces to dictate the price.
  This was the error that the Conservatives committed in their 1957 Rent Act and it was the same basic error that they committed again in the Housing Finance Act 1972. There is, of course, a clear inconsistency in their approach to the two sectors. For while they hanker after market pricing as a solution to the problems of the rented sector, they are prepared to intervene in the owner-occupied sector with all kinds of additional subsidies.
  Mr. Heseltine: Can the Secretary of State explain why we introduced rent rebates in both the public and the private sectors?
  Mr. Shore: Easily. The rent rebate system is one of economic assistance which bases support on income. I am talking about the systems of general support which have the effect of making housing in both the private and public sectors cheaper and more obtainable than they would be otherwise. That is the point.
  Mr. Heseltine: Surely the Secretary of State will agree that what one is doing is making housing, either rented or for sale, available to a larger number of people. For purchase, one subsidises the price and for rent one subsidies the rent. We did both.
  Mr. Shore: The result of the hon. Member's policy was to bring up the level of council house rents to the level in the private sector. The alleged fair rent approach and the compulsory means test system was introduced to assist those tenants outside the particular income parameters. I understand that.
  Mr. Rossi: The Secretary of State has just criticised the Housing Finance Act 1972. Does he agree that when he abolished some provisions and allowed local authorities to charge at their dis-? cretion, they went back to the levels suggested to them by the panels?
  Mr. Shore: I would not necessarily accept that without checking.
  Let me examine some aspects of the Conservative approach in more detail. It is a fundamentally lopsided approach. We have all read "The Right Approach", which contained many allusions to the need to increase rents in the public sector. There were also such allusions in the speeches by the hon. Members for Henley and for Hornsey (Mr. Rossi) in our last debate. But the House and the country still wait to hear firm details from the Opposition about their precise intentions.
  I want to put only two questions to them. Do they intend to return to the formula of the 1972 Housing Finance Act and try to establish so-called fair rents in the public sector? We have not had an answer to that. If not, do they intend to fix rents by reference to total expenditure on housing revenue accounts? This seems to be what the hon. Member for Hornsey was suggesting when he spoke last time and referred to the leaked EDC report.
  Mr. Heseltine: Before the Opposition can answer that the Government must say how far down the road they have gone towards implementing their own policy as outlined in the public expenditure White Paper.
  Mr. Shore: A year ago when the hon. Member's predecessor sat on the Front Bench he told me to be bold and admit that in the coming year the general guidance and instruction of the Government to local housing authorities was that rents should go up by £1 a week. That was the assumption made from certain documents. I said that it was too early to judge these things. I was not disposed to accept such a conclusion. As the House knows, the increase for the year 1977–78 is not £1, as his predecessor predicted. A recommendation for an increase of 60p. was made. We judged that that was right under the circumstances, including the finance of housing

  931
  and the general counter-inflation policy. I do not intend to say more about that at this stage, although I shall say more in about a week's time.
  Mr. Peter Hordern: Does the Secretary of State accept that in the public expenditure White Paper last year, the Government accepted a target of 50 per cent. on the cost of outgoings by 1978? Do the Government expect to achieve that which was described last November as a modest target?
  Mr. Shore: I do not accept that that was a target; it was an indication. The crucial factor is what will happen to the level of interest rates and what will happen in the general context with the counter-inflation policy, the cost of living and so on. The hon. Member will have to accept that the situation is not as definite and formal as he chooses to judge it.
  I now turn to another matter which has been raised in the House—the Conservative approach to new building in the public sector. I am very anxious to see authorities embarking—as so many have done—upon programmes of renewal as an alternative to wholesale demolition. Such an approach cannot be a complete alternative to new house building because some of the existing stock has to come down and the continuing upward trend in household formation. I do not know what the Opposition's approach is to new public sector house building. On the last occasion I challenged the hon. Member for Henley to say whether he intended to wind up new house building by local authorities on any substantial scale. There was no answer. My right hon. Friend the Minister for Housing and Construction has not received an answer to that question, either.
  Although we do not have a clear policy from the Opposition we have the evidence from their colleagues at County Hall. There, the Tory leadership appears to be embarking upon policies which would represent a severe weakening of the GLC's rôle as a strategic housing authority for London. Its decision to stop all new building in London and outside London is very dangerous.
  We all wish to see the inner areas of London and other cities rejuvenated—none more than I. Of course I am glad to
  932
  see what I believe would have happened in any event—a proper emphasis on London. I have repeatedly acknowledged that there are some parts of inner London that are sufficiently overcrowded that their housing problems can be solved only if houses are made available outside the inner areas. This was the view taken by the consultants who studied an area of Lambeth in great depth over a period of three years. Incidentally, the consultants were appointed by the right hon. Member for Worcester (Mr. Walker) when he was Secretary of State for the Environment.
  The consultants stated:
  "We therefore propose a set of policies for 'balanced dispersal' out of Inner London. The objective is to help more low-income families who want to move out to do so. Since they cannot afford to buy, they need rented public housing. As most potential migrants do not want to move far, the bulk of this housing should, as far as possible, be in Outer London or in areas immediately beyond."
  I fear that the policies emerging from County Hall will continue what the consultants called "the housing trap". Many people living in Lambeth and other inner city areas are anxious to move out to better conditions in outer London but, if they cannot afford owner-occupation, it is difficult for them to do so.
  This is the last of perhaps a series of debates before the publication of the Green Paper. In our future debates, we shall all be helped by the wealth of material and analysis that the Green Paper and its supporting material contain. We shall be all the better for it. It is not that I believe that we shall not have great controversies in housing policy between the two sides of the House, but that we shall all do far better if we conduct that debate on the basis of far more information, and objective information, than has perhaps been available to us in the past.
  Housing is a serious matter. More than perhaps any other aspect of social policy, it involves the welfare of the people of this country. I hope that that will be a consideration very much in our minds and that it will help to guide our future discussions.
  6.1 p.m.
  Mr. Wyn Roberts: I shall leave the bulk of the Secretary of State's remarks to the tender mercies of my hon.

  933
  Friend the Member for Hornsey (Mr. Rossi). The right hon. Gentleman's speech seemed to have a detached, academic air, hardly reflecting the feelings expressed about housing in most of our surgeries. I think all hon. Members will agree that about 60 per cent. of the cases we handle relate to housing.
  The House will not be surprised if I confine myself to the housing situation in Wales, which is very grave and shows every sign of deteriorating still further. If our people are to be adequately housed, vigorous and sustained action will be required. I emphasise, as did my hon. Friend the Member for Henley (Mr. Heseltine), the word "sustained". It is difficult for us to estimate the number waiting for council houses, but I know that none of the 36 authorities in Wales has fewer than 1,000 applicants on its waiting list and that many have twice and three times that number.
  Length of waiting lists is not a perfect guide, but it is the best indication pending a proper survey by the Government and local authorities, which is long overdue. On a conservative estimate, therefore, there are about 50,000 to 60,000 people in Wales waiting for houses.
  Our housing stock in Wales is older than that of the rest of Great Britain. Nearly 25 per cent. of it was built before 1891, compared with 18 per cent. in Britain as a whole. Similarly, 20 per cent. was built between 1891 and 1918, as compared with 15 per cent. in Britain as a whole.
  The age of the housing stock is reflected in the lack of amenity. There is a higher proportion of houses in Wales without fixed bath or shower, indoor toilet or hot water than in England or Scotland. The social survey report on the handicapped and impaired in Great Britain showed far higher percentages in Wales without access to amenities. For example, 35 per cent. were without exclusive use of hot water, fixed bath and toilet, compared with 26 per cent. in Great Britain as a whole.
  All this clearly implies that the rate of new building should have been higher in Wales, but it has been consistently lower than in the rest of the country, with the solitary exception of building in 1975, which was an exceptional year, due to
  934
  exceptional reasons. Also, the Welsh share of United Kingdow housing expenditure should be increasing, but it is decreasing alarmingly, as my hon. Friend the Member for Pembroke (Mr. Edwards) pointed out in the Welsh Grand Committee on 10th March last year. The Secretary of State for Wales seems to have lost out badly somewhere and will eventually have to answer to the electorate.
  New housing is desirable but it is expensive and we in Wales question whether the Government are absolutely right in present circumstances to give it as high a priority as they seem to do. It is certainly questionable whether they should be giving the present high priority to the acquisition of land by the Land Authority for Wales, to be used at some future time. Many argue that a higher priority should be given to rehabilitation, simply because Wales has so many older properties. About one Welsh home in six was declared unfit by the survey published in 1973. I hope that the results of the 1976 survey will show an improvement. If so, as the Secretary of State has led us to expect, that will help to show that the last Conservative Government were right to concentrate on improvement grants.
  I have recently been impressed by the report on housing and land use in Cardiff entitled "Lost Property", produced by the Friends of the Earth, and by the report on homelessness in South Wales entitled "Insult to Injury", produced by Shelter and kindred organisations. I need hardly say that I do not agree with all the conclusions in those documents, but valuable work has been done.
  As my hon. Friend the Member for Henley has said, many empty houses could be restored. Many more have been converted to offices but are not used as such at present and there is a great deal of vacant land in our towns and cities, much of it belonging to the authorities, which could be used to help to provide accommodation. We have in Wales more than 1,000 people in temporary accommodation. The figure has been growing throughout this decade.
  I believe that it will grow still more if and when the Housing (Homeless Persons) Bill becomes law, because there is a great deal of hidden homelessness in the waiting lists. Many of us on this side are worried because that Bill lays

  935
  extra duties on the housing authorities without giving them additional resources. Representatives of the authorities I meet and of the authorities which have written to us have all expressed grave anxiety.
  That Bill also threatens to create two tiers of council tenants, one more privileged than the other. If we are not careful, there is a strong possibility that these homeless families will become institutionalised in communal establishments financed by local housing authorities. That is surely not the kind of development that we wish to see, yet it appears to be inevitable unless we make more effective use of our resources.
  All kinds of drastic legislative solutions are being offered. The National Empty Homes Campaign has been urging that houses should be requisitioned along the lines of the Bill that was introduced by the hon. Member for Salford, East (Mr. Allaun). I regret that he is not in the Chamber now, although he was present earlier. The campaign has recommended also that more money should be provided for municipalisation. Curiously, it has set its heart against reform of the Rent Acts to make it worth while for property owners to let their accommodation to those who are prepared to pay an economic rent for it. Such reform would be cheaper for the Government, more immediately effective in alleviating the pressures on local authorities, and more beneficial in that authorities could then concentrate more on needier families with low incomes. These are the people who appear to me to be going to lose out.
  In housing, as elsewhere, we find that this Government's Socialist policies are failing. There is not enough money to maintain the council houses that we have or to build enough to meet the demand. I admit that the demand is incredible. In the 20 years to 1971 the population of Wales increased by just over 5 per cent. The number of households increased by 20 per cent. and the number of new houses increased by no less than 35 per cent., but housing waiting lists remain as long as ever.
  I agree with my hon. Friend the Member for Henley that it looks as if the Government must turn for salvation in this area of policy, as in many others, to the private sector. Only by freeing the private sector to provide housing for rent, as well
  936
  as for purchase, on economic terms can the Government possibly provide enough accommodation to enable local authorities to care for those in genuine need who do not have adequate resources to provide for themselves. More Socialism in housing is not the answer. We cannot afford it, and neither can the Government. Neither will it work satisfactorily in practice.
  There is no advantage in more Socialism to the people of Wales who have clearly expressed their preference for owner-occupation. We have 58 per cent. of homes owner-occupied compared with England's 53 per cent.
  The provision of adequate housing is basically a practical problem. In Wales we need improvement grants on a generous scale if we are to maintain and improve our ageing housing stock. Also, we need a crash building programme that will last until the problem is solved. Maybe we shall have to depart from the Parker Morris standards, or perhaps build cheaper homes of the prefabricated variety or its modern equivalent.
  The alternative is very unpleasant to say the least. The resentment of those on the waiting lists will grow, and so will the tension in homes that were intended for one family but are actually occupied by two. Such tension often leads to mothers ending up in mental hospitals and menfolk taking to violence. This is not an exaggeration, as those of us who hold surgeries know only too well. These are the harsh facts facing us in Wales. Something must be done, and done quickly. The home is rightly regarded as a basic right, but the way things are going it is being denied increasingly to an increasing number of people in Wales.
  6.15 p.m.
  Mr. Bruce Douglas-Mann: I agree with a great deal of what the hon. Member for Conway (Mr. Roberts) said about stress in Wales. This exists in a large number of parts of the country—perhaps nearly all. It is not confined to the inner cities.
  I listened with great disappointment to the speeches from both Front Benches. I listened with greater disappointment to the speech of the Secretary of State than to that of the hon. Member for Henley (Mr. Heseltine), because I expect more

  937
  from my right hon. Friend. If the outcome of the housing finance review is to be as my right hon. Friend foreshadowed it this afternoon, we shall be left with what the late Anthony Crosland once called "the dog's breakfast of housing finance". The stress will be with us for many years to come, and we shall not succeed in solving our problems, because we shall have failed to tackle the problem of housing finance.
  My right hon. Friend has taken a number of points against the Opposition this afternoon, and of course I accept that undoubtedly the position would have been a great deal worse had the Conservatives been in power. However, the actual achievements of this Labour Government in housing have been very disappointing.
  If we project the 1977 figures for the first four months of this year, we find that we shall have about 120,000 starts in the public sector and about 124,000 in the private sector, making a total of about 244,000. In 1968 we had 394,000 starts. Not for a very long time have we had as low a combined total as we are likely to achieve in the current financial year. There are all sorts of reasons for this, but the fundamental reason is finance and the fact that 60 per cent. of the population is getting ill-directed subsidies. Because of this, we cannot afford to provide houses for those who really need them.
  The figures for need provide scope for a great deal of argument. We all know that within our own areas there is a very acute need for substantial new building and house improvement. My own assessment is that the country needs about 5 million additional houses in the next 10 years. This means that we shall need to build 500,000 houses a year to get a reasonable standard of housing provision within that period. If we do not build at that rate, we shall perpetuate the hardship of which we are all aware.
  We are not likely to achieve that figure with the present system of distribution of housing finance. In 1968, when we achieved nearly 400,000 houses a year, the pattern of distribution of housing finance was that we spent—at 1975 constant prices—£477 million on rent subsidies and £411 million on mortgage
  938
  relief. At the same time we spent £2,473 million on bricks and mortar. Therefore, we were spending nearly three times as much on bricks and mortar as we were on subsidies.
  By 1976 the situation had changed completely. We spent £1,083 million on subsidising rents, £1,020 million on mortgage relief and £2,043 million on bricks and mortar. We were spending more on subsidies and mortgage relief than on building houses, whereas in 1968 we spent nearly three times as much on building as on subsidies and mortgage relief. This subsidy is so badly distributedߞ—
  Mr. Ronald Atkins: Will my hon. Friend tell us to what extent this is dependent on differing interest charges?
  Mr. Douglas-Mann: My hon. Friend is quite right to point out that the high level of interest rates involves a high rate of subsidy on local authority rents and in subsidising mortgages. Nevertheless, whatever the level of interest, the change of interest rates is only one cause of the maldistribution of these figures. As long as we continue to pay to someone with a large income, a large mortgage and a high marginal tax rate the tax relief for his mortgage, and hold down to totally uneconomic levels the rents of some local authority houses, we make the cost of building new houses so great that we cannot do the job.
  If my right hon. Friend believes that he will do the job with the present system, I do not share his confidence. I do not believe that he will be able to manage the job with the present system. Unless he takes the opportunity provided by the housing finance review to review the whole system fundamentally, we shall continue with this decline in meeting the housing need which we are seeing in the present year.
  I do not like to say such a thing about my Government, but if we do not take the opportunity provided by the housing finance review to make these changes we shall not be solving the problems of the homeless or of those who are in need, such as the families who come to my surgery saying "We are now expecting our second baby. We are still sharing the sitting room in my parents' house." A lady who came to me last week in

  939
  Merton has been on the council waiting list for 20 years. She now feels that she should have priority because she has great difficulty in getting up the stairs to her first-floor flat. People such as these should be given priority in the allocation of public money for housing.
  The fact that these matters have not been adequately dealt with arises because 60 per cent. of us—most Members of the House, most of the population—are receiving from public funds assistance which many do not need. One of the effects of this system has been to distort the pattern of house prices and to make the solution of our housing difficulties so much more difficult.
  Since 1960 house prices have increased by five and a half times. The retail price index has increased by three times. The Financial Times industrial ordinary share index increased from 319 in 1960 to 368 in 1976 to about 450 today. That is an increase of about 50 per cent., whereas all the other indices have increased by 300 per cent. or 500 per cent.
  The hon. Member for Henley mentioned the effect of the withdrawal of tax relief for interest on mortgages over £25,000. He was correct in saying that there was a falling off in demand for houses in excess of £25,000. Those houses are being sold, but at a generally lower price level than prevailed previously. At present, with the existing mortgage structure, there is a fairly steady market up to £25,000. Above £25,000, the value for money is very much better. For £30,000, in many areas, it is possible to purchase a mansion. As it is not possible to get tax relief on the mortgage in excess of £25,000, the rate at which house prices increase above £25,000, depending on the standard of amenity, is much lower than it is below £25,000.
  Of course, changes must be gradual. I do not know whether any evidence to the contrary effect has been submitted to the housing finance review. There may have been some from a few extremists, but I do not think that anybody is seriously suggesting that there should be a sudden withdrawal of mortgage tax relief or a sudden dramatic increase in the level of council rent. What is proposed is that we acknowledge that, by subsidising all mortgages irrespective of the length of time someone has had
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  a house, irrespective of the rate of tax to which the mortgagor is subject, irrespective of the value of money or of the amount of mortgage up to £25,000, we are subsidising an increase in house prices artificialy and stimulating demand beyond the level to which it would have risen without the subsidy. The evidence is there in the figures for house prices and in the pattern of investment over the past few years.
  During the course of the past 15 years, the average proportion of personal wealth held in dwellings has doubled whereas holdings in company securities, on which we depend for a flourishing and healthy economy, has halved. At the same time, there has been a steadily increasing absorption of the annual flow of funds from financial institutions going in loans for house purchase, which have increased from 25 per cent. of loans in 1963 to 36 per cent. in 1973.
  We are channelling far too much of our investment not into house construction or building but into house purchase. Only one out of every five house transactions is for a new house. We are subsidising the price of old houses so that everybody who owns a house, everybody who has got on to the escalator, is going steadily up and up. It is lovely for those of us who are on the escalator—we have our houses. Our houses are becoming more valuable each year that we live in them.
  What we are really doing is benefiting our heirs. It will not help us. Each of us must go on having a house for the rest of his life. Sooner or later we shall die and then our children will inherit a capital sum the building up of which has been subsidised at public expense and which will have put the cost of housing out of the range of the minority.
  Thirty per cent. of occupiers are council tenants, 53 per cent. are owner-occupiers. We are still leaving out of account the minority—the 17 per cent.—who are not assisted in any way. We are ensuring that they never will be effectively assisted in this way, because we are channelling so much public money to the assistance of those who do not really need it that it becomes uneconomic to deal with the problem of those who really need assistance.
  I come now to more controversial ground for my hon. Friends. I accept

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  that, taking the country as a whole, local authority tenants are to a considerable extent paying too small a proportion of their income in rent. We are all, in general, paying too small a proportion of our income for the provision of housing. This is one of the few points on which I agreed with the hon. Member for Henley.
  The proportion of income has been declining in recent years. In 1973, local authority rents in the South-East represented 97 per cent. of average manual earnings. They are now down to 7·9 per cent. The figure for the country as a whole was 8·4 per cent. It is now down to 7 per cent. Although that pattern may be desirable from the standpoint of achieving an incomes policy, from the point of view of a housing policy it will in the long term make it much more difficult to solve the problems.
  Taking the simplest example, a family has no incentive to move from accommodation which is too large for them—accommodation which is nice but which is more needed by a young family than by a family whose children have grown up and left home. There should be an economic incentive to encourage a couple whose children have left home to move from their house with garden into a tower-block flat. Unfortunately, there are not enough houses with gardens to go round. Unless an economic incentive is provided, the only way to get people to move when they no longer need that type of accommodation is by compulsion. We all reject compulsion.
  A system of economic incentives—a system of rent allowances making it possible for families to afford a house with garden when their children are young and with an incentive to move to a flat when their children leave home—would provide a much greater degree of housing satisfaction for local authority tenants than the present system.
  Mr. Ronald Atkins: I am grateful to my hon. Friend for giving way to me a second time. I agree with him that there is a need for rented accommodation to which people who are occupying accommodation too big for them can move.
  I do not follow my hon. Friend's point about the diminishing proportion
  942
  of family income being spent on housing. He will acknowledge that this will vary greatly from family to family. Usually, the lower the income the greater the amount spent on housing. Is not the general figure an improvement that he would expect to see with a developing society? It could equally be argued that the proportion of family income spent on food is diminishing.
  Mr. Douglas-Mann: I agree that it is diminishing. It is desirable that the amount spent on necessities should diminish in a society which is getting wealthier. But we have not got much wealthier as a society since 1973. The proportion which we are spending is not sufficient. I do not know that there is any specific, desirable figure to say "That is the appropriate proportion to be spent on housing", but it is self-evident that we are not spending enough, though there is room for argument as to whether what is spent should come from public funds, from the rates or from increased rents, or mortgages.
  But, while we believe in providing such a high proportion of the cost of every new house from public funds or rates, we shall not get the provision of enough houses to meet the needs of those who are in acute need. We are, in fact, subsidising those who have housing, whether from a local authority or on mortgage, and we are failing to do the job of meeting the needs of those who really need housing.
  Of course, I accept that the changes which I believe are desirable must be gradual. Certainly, that is so as regards the mortgagor. Somebody who has undertaken the commitment of an existing mortgage should not have the tax relief taken away. What we should be doing is approaching it first of all on the basis of new mortgages. The initial relief should probably be the same, certainly for a first-time buyer—we should continue to assist people to buy their houses in the first place—but once someone has got over the initial burden of first-time purchase his housing costs as a proportion of his income gradually diminish as, and the extent to which he should continue to receive help from public funds should likewise diminish. This would enable us, if we were reducing the level of tax relief now given indiscriminately to everybody, to give greater help to the first-time buyer.

  943
  It would also enable us to give greater help to the person who at the present time is receiving no assistance at all, the elderly owner-occupier without a mortgage who, according to the Family Expenditure Survey figures, has in general a lower income than those who have mortgages and who badly needs assistance for repairs to maintain his property. We could give greater assistance to such people and to first-time buyers, and by some increase in local authority rents we could ensure that we were meeting the problems of a greater number of people. But it seems that these are not to be the solutions which my right hon. Friend will be proffering when the housing finance review comes out next week.
  I fear that, in consequence, we shall not be getting an adequate solution and we shall not be tackling the problem as we should. However, although I criticise my right hon. Friend, after listening to the panaceas offered by the Opposition I can only thank God that it is my right hon. Friend who is in office and not the hon. Member for Henley and his hon. Friends. But there was one thing that I was glad to hear from the hon. Member for Henley. Although he spoke about the revival of the private sector and about various things which could be done to encourage the private landlord to come back into this field, I was very glad that he did not suggest that his party would withdraw security of tenure from furnished tenants. I hope that this will be made even clearer by Opposition spokesmen. The hon. Member for Hornsey (Mr. Rossi) made it clear in a television broadcast in which we both took part. I hope that it will be put beyond doubt that, whatever changes are made, the Opposition will not be taking that particular step.
  The strategy of dealing with the private sector depends on landlords coming to accept that unless a property is capable of being sold—if it is capable of being sold, they will sell it—it can only be used for letting within the private sector. That is why I disagree with the arguments of the hon. Member for Kensington (Sir B. Rhys Williams) about shorthold, to which the hon. Member for Henley referred. As soon as there is one loophole—it does not matter what it is—as soon as there are opportunities for letting
  944
  free of the Rent Act, any landlord who is proposing to let at all will go for the market where he can let free from control.
  But the confusion of the Opposition is that they seem to believe that in the absence of the Rent Act there would be a return to private investment in property for private renting. That cannot be the case, as is clear if we do the sums. Let us take a house which could be sold, say, for £10,000. The landlord invests that money, and it will bring him in £1,200 per annum gross. The cost to the purchaser of that house would be £10,000 which on mortgage at 11½ per cent. would be £1,150 a year, less tax relief of £380, which means that the actual cost to the purchaser of what would provide theland with £1,200 per annum is £770 a year—that is, about £15 a week. If, on the other hand, a tenant is paying about £15 a week to the landlord, the landlord receives £770 a year. After certain expenses of management, he will be left with £735 per annum, against the £1,200 that he could have by selling.
  Quite apart from the Rent Act, and quite apart from any other factor, the economics—as a consequence of the tax relief on mortgages, and I am not arguing against tax relief—are that it is always more profitable to sell if somebody owns property which is capable of being either let or sold. He will gain more return by selling than by letting.
  Mr. Heseltine: The hon. Gentleman will be aware of the very substantial funds flowing into investment in commercial lettings at well below the rates of interest to which he refers, even at high rates of interest on today's market price, simply because the institutions look to the inflation-proofing of their investments. If one could introduce into the residential market the sort of returns that one has in the commercial market, the figures would look dramatically different from the ones that the hon Gentleman is quoting.
  Mr. Douglas-Mann: I accept what the hon. Gentleman says about commercial lettings, but in the commercial field there is not the differential of 35 per cent. tax relief on the cost. Consequently, no matter what

  945
  is done in the field of the Rent Acts, it will be preferable from the standpoint of the owner of property to sell it rather than to let it, irrespective of rent controls. I do not think that any changes that the hon. Member might introduce if he were in control could possibly change that pattern.
  Mr. Heseltine: I think that we are not quite at one here. The fact is that the 35 per cent. differential to which the hon. Member refers exists today. Commercial investment by the institutions in commercal properties is taking place at very different rates of interest, through the normal open market, because, with rent reviews in seven years, they see an inflation-proofing of their investment.
  Mr. Douglas-Mann: I accept that if the landlord retains the property, instead of having £1,200 a year coming in, it will provide increased rents for the future. But because of the tax differential a tenant cannot compete with a purchaser in the residential field. This does not apply in any other field—neither does the opportunity for the purchaser to borrow at 11½ per cent. If the commercial tenant wishes to borrow to purchase, he will have to borrow at 17 per cent. or 18 per cent. In general, any person renting commercial property who wishes to borrow money to purchase the freehold will have to borrow at a very much higher rate of interest than is available from a building society.
  Mr. Heseltine: The commercial investor to whom I am referring does not have to borrow. I am speaking of the institutions, which have a massive inflow of funds to invest. There is no question of paying a high rate of interest. They have the money. They have to invest it. At the moment, they invest it in commercial property at lower rates of interest than the prevailing market rate. They will not do that in the residential market because there is no long-term inflation-proofing because of the Rent Act.
  Mr. Douglas-Mann: Yes, I think that we have been talking at cross-purposes. The financial institution investing in commercial property for letting receives the rent from the tenant of that property. The tenant does not really face a choice of buying, because if he were to buy he would have to borrow in the market at a
  946
  higher rate of interest than would the house purchaser buying residential property. The tenant of commercial property, if he wished to buy as an alternative, would have to borrow at a far higher rate of interest, and, as both rent and interest would be tax-deductible, there would be no tax differential there. But there is a tax differential in the case of residential property as between sale and letting.
  I hope that the hon. Gentleman will take this point into account since it is of fundamental importance. Irrespective of the changes which might be made in the Rent Act, he will not find the private investor coming back into this housing sector. There is not an analogy with commercial property because of the two factors which I have mentioned—the lower rate of interest at which the house purchaser can borrow and the tax relief which is available against mortgage interest but not against rent. In commercial property, tax relief is available also against rent.
  The hon. Gentleman's other panacea was the sale of council houses, and here I come back to the article in Roof to which I referred in an intervention, the article by Mr. Bernard Kilroy. It was a well-argued article, soundly based upon the facts. [Interruption.] The hon. Gentleman can intervene later if he wishes to contradict me. Mr. Kilroy based his article on an analysis of figures in Leeds, and he contended that the effect of council house sales, although it gave a nice bargain to anyone who bought a public asset at 30 per cent. discount—that is all very fine for the happy individual who gets it—involves a loss to the local authority in a relatively short time, and it entails a substantial and increasing burden to the Exchequer because every time a house is sold on a mortgage and is then resold the tax relief on the mortgage interest runs again at a higher figure.
  Mr. Kilroy's calculations were based on an assumed rent increase of only 10 per cent. If his assumed rent increases had been higher, the loss would have been even greater. In fact, the rent increases in Leeds during the periods prior to the effecting of the sales had ranged as follows: 18 per cent., 14 per cent., 11 per cent. and 14 per cent. However, as I say, Mr. Kilroy worked on the assumption

  947
  of 10 per cent., which should have shown a much lower loss to Leeds.
  However, according to Mr. Kilroy's calculations on the basis of 10 per cent., rent increases, the loss to Leeds City Council was £1,785 on a post-war house and £7,905 on a modern house. Those were the losses to the local authority, and in addition we have the loss to the Exchequer.
  The Opposition should realise that if they come to power and make the sale of council houses a matter of policy, they will find a backlash from the council estates and from the ratepayers. The rest of council house tenants will have to pay higher rents, the ratepayers will have to pay higher rates and the taxpayer will have to pay more taxes in order to provide a bonanza for those who buy council houses, who will be the better-off council tenants buying the nicer houses, leaving to the council only the poorest in the poorer houses. That is what will result from Tory philosophy if it is put into effect, and plainly that policy would be even more disastrous.
  However, I conclude by saying to my right hon. Friend that I am extremely disappointed that it seems from what he said that the opportunities presented by the housing finance review are not to be taken and we shall continue to subsidise those who have houses at the expense of those who need them.
  6.43 p.m.
  Mr. Stephen Rass: I followed the speech of the hon. Member for Mitcham and Morden (Mr. Douglas-Mann) with great interest because he faced up to a number of rather unpalatable facts which hon. Members who have so far spoken have not recognised. I, too, am concerned about whether the housing finance review Green Paper which is to come out next week will go to the root of our problems.
  I must take up with the hon. Gentleman the question of institutional finance. I ask him to look at what is happening today concerning agricultural land. I am certain that many institutions are investing money in land for which they will receive a very low return after paying £1,000 an acre or more. They may not receive more than 1 or 2 per cent. I have discovered over recent years that certain fashions come and go among the institutions.
  948
  Suddenly, the Prudential or the Pearl decides that it will go into agricultural land and everyone else follows suit. Then it is discovered that this is not producing a very good return and farmers cannot pay rents to cover money invested at the current rates. We saw this in 1974, when there were many sad circumstances, with people like Mr. Lyon coming down to Hampshire and paying £1,500 or £2,000 an acre for farmland. A year or so after, the whole thing went bust and many suffered.
  However, the institutions have this money and they want to put it somewhere. They could put it into housing development, though not at present rates of interest. If we could bring the rate down to about 6 per cent., it could be shown that there was a return. I recall that my first mortgage was taken out at a rate of 3¾ per cent. Now, although we are talking about mortgage interest rates having come down, the rate is still over 10 per cent., which is a usury rate even today. Any rate over 7 per cent. is far too high.
  I refer next to the figures that the hon. Member for Mitcham and Morden gave about the proportion of average income spent on rent. I think that he said that it was roughly 7 per cent. That is a very low figure in comparison with what is spent in other countries of the Western world, where it is far more like 20 per cent. I believe that it is 25 per cent. in New York. I understand that that is the figure insisted on for local authority housing in that city. Therefore, if we compare ourselves with what is paid for housing in the rest of the Western world we must conclude that our is still a very low figure. This is a matter on which we must educate the public and not dodge it all the time. People will have to recognise that they must contribute more and they will have to get their priorities right.
  Young people are already having to do that. This is one of our great problems. When my children, or, I am sure, the children of other hon. Members, try to go off on their own and find accommodation, they have to pay anything from £20 to £30 a week, often for only a shared home. Yet apparently that is acceptable, although it represents a very high proportion of their income. As they get on in life and earn more and manage to buy or rent a home, the proportion they spend

  949
  on housing goes down. In my view, this is the wrong way round.
  Already some building societies are discriminating against those who have higher mortgages. I gather that one building society—I have not checked whether it is mine, but I suspect that it is—has not reduced the rate for mortgages of over £11,000 but has reduced the rate for those with smaller mortgages. There is, therefore, some discrimination going on in the upper range of mortgages.
  I listened with some sympathy to what the Secretary of State had to say because, in company with many others, I am deluged with the voluminous outpourings of many housing experts and, like the right hon. Gentleman, I am sure, when I read one argument going in one direction and another argument going in another, all from recognised experts, I should like to know who is right. I can only hope that the facts that come out in the housing finance review will help us there.
  The right hon. Gentleman was right to point out that we are not so badly housed in this country as is often suggested. In company with other hon. Members I visited Japan in April, and I found that the Japanese think that we are extremely well-housed. They have a great problem coming upon them. They have not yet dealt with their land speculation problems, and farmers there, whose holdings usually run to only an acre or two, are having a field day. In Tokyo, people are having to pay £32,000 for 100 square metres of land and a one-room apartment costs anything up to £18,000, even with shared facilities. Admittedly, wages are higher in Japan—perhaps one and a half times or twice ours—but these are still large sums for people who want to buy. Municipal building is now essential for those who are retiring at age 55 or 60 because, when giving up their company house, and although in receipt of a lump sum payment, they do not have sufficient to buy a home for their old age. The Japanese, therefore, are watching with considerable interest what we are doing.
  The point that the Secretary of State has ignored is that although we apparently have more habitable rooms per head of population than any other country in Europe we have the highest number of homeless families. Therefore, something must be badly wrong.
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  The hon. Member for Conway (Mr. Roberts) mentioned my Housing (Homeless Persons) Bill. He is a member of the Committee considering that Bill. It is an open secret that I believe that the Bill would have had a much easier passage if I had been able to incorporate provisions whereby more property would be brought on to the market. In my view the repeal of certain aspects of the Rent Act would help deal with homelessness. That is the conclusion to which one must come if we have so many habitable rooms and yet increasing numbers of homeless families.
  I found little with which to disagree in the speech of the hon. Member for Henley (Mr. Heseltine), which contained nothing particularly new. However, when the hon. Gentleman talks about scrapping the Community Land Act I repeat what I have always said, that there is a great need for legislation to enable local authorities to play a rôle in land assembly. I wish to draw the hon. Gentleman's attention to the comments of the Royal Institute of Chartered Surveyers in a report on the question of inner cities. In paragraph 27, dealing with land assembly and renewal, it said:
  "Local authorities should be encouraged to use the appropriate legislation"—
  —it might well be said that there is other legislation that could be used, and I would accept that, but the Community Land Act has been used and could be used in the future—
  "to assemble vacant land and to acquire obsolescent areas, where this is necessary to bring about renewal, and the current restrictions should be eased in those areas of stress where action is most urgent. Whilst profitability should be sought whenever possible, many of the areas concerned will produce little or no financial gain at least in the early years. A share in the ultimate profit from the development of such areas may best be obtained by authorities retaining a share of equity, or by one of the many variants of town centre partnerships."
  It is worth noting that the chartered surveyors, the main operators in this field, see a rôle for the Community Land Act in land assembly.
  I ask the hon. Gentleman to take care over the development land tax. I do not think that the Government have got it so far wrong. Any indication that the rates of DLT would be lowered by very much

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  would be a movement in the wrong direction. Perhaps the rates could go down a little to encourage sales, but if the Conservatives do away with the Community Land Act they must have some weapon to try to get land on to the market. When we sat through the debates on the Community Land Act we were told that it was to bring about positive planning.
  Lord Barber, when Chancellor of the Exchequer, got near to the answer when he talked about introducing a land hoarding tax, and he was mistaken not to bring it in. A form of land value taxation should be imposed by local authorities when planning permission is given and when it is obvious that the development should go ahead. It would then be possible to cut out the middle person, whom most builders and developers very much dislike. The tax could be on a sliding scale, and in that way we could make sure that the land was developed. The Opposition should give attention to this matter.
  Mr. Rossi: Does not the hon. Gentleman agree that there are thousands of acres of unused land in the hands of public authorities? If we are talking of bringing that land into use, perhaps we should divert our attention to shaking it out of public authorities.
  Mr. Ross: I agree. We have had many debates on housing and the construction industry in which we have agreed that that is one of the matters to which local authorities should now be devoting their attention. They should have joint partnership schemes with local developers. The more we can do to encourage such schemes, the better.
  We have gone through the whole question of what is the right policy on the sale of council houses, and I do not want to go through it again. However, I must warn that we could have a surplus of owner-occupation if we are not careful. In our deliberations on the Housing (Homeless Persons) Bill, we have learned that the number of repossessions for failure to keep up mortgage payments have continued to increase. With the rate of interest at 10½ per cent., owner-occupiers still have large sums of money to find.
  I can remember the housing slump in 1951, when, particularly in my con-
  952
  stituency, and particularly for guest houses, many house-owners found that their mortgage was more than the property was worth. It took me nine months to sell the property that I had then, and I had to take a substantial loss, which took a long time to get over. Therefore, owner-occupation is not a panacea. People may again find themselves faced with difficulty in selling property. Nothing is worse than for a person to be unable to rent when he moves to a new district and to be committed to buying a property while owning another that he cannot sell. That can lead to desperation. I am happy to see local authorities selling houses where the essential conditions are met, and at a discount, but the matter should be left, if possible, to local authorities to decide.
  I wish to deal shortly with some matters that I believe would help in the present situation, though I think that it is unlikely that I shall succeed in persuading the Government to examine them. First, I should like them to go for short, fixed-term leasing. I see nothing wrong in my agreeing to lease from someone who may wish to go abroad for a time or who, perhaps, has two houses and wishes temporarily to let one. Why should I not agree with him the rent and the term of years of the lease, perhaps with three years as the maximum? We could then go to a person who is recognised in housing matters—perhaps a rent officer—who could explain to me what I was letting myself in for as the tenant and that at the end of the agreed period I should have to leave. If such an agreement is registered with the rent officer or someone else, it should be clearly seen to be a short fixed-term lease. I see no reason why that should not be permitted.
  Secondly, I should like to see long-term leases entered into in both public and private sectors. I am not trying to move away from security of tenure, which I wish to maintain, except for the short-term lease. I should like local authorities to lease council houses to their tenants at fixed rents for fixed terms of 10 years or more, with the tenants taking over considerable responsibilities for maintenance. I see no reason why we should not have such provisions, similar to those in the Landlord and Tenant Act 1954 applying to business tenancies. The land-

  953
  lord could repossess only for redevelopment or to let to a member of his own family, or for his own occupation. If a new lease could not be agreed, a court could fix the terms and the rent.
  Thirdly, I am sorry to disagree with the hon. Member for Mitcham and Morden, but I should amend the Rent Act 1974 to release furnished accommodation outside London and other particular stress areas that the Secretary of State may from time to time wish to include in its provisions. I have never thought that there were grounds for bringing furnished accommodation in the provinces within the Act. It was a great mistake. I accept that there was good reason in London, but why not allow people freely to let furnished accommodation in the provinces? High rents were not being charged, and such letting was helping to meet housing problems and was helping the social services, amongst others. I also ask the Secretary of State urgently to raise the existing rateable value limits for improvement grants.
  Mr. Rossi: Is the hon. Gentleman aware that during the passage of the Rent Act 1974 the Conservatives sought to make an amendment whereby the Secretary of State would have had the power to exclude from the operation of the Act areas depending upon supply and demand? Unfortunately, the Liberal Member on that Committee would not support us, and therefore the amendment was lost and we could not do the things that the hon. Gentleman is now advocating.
  Mr. Ross: I realise that the hon. Gentleman wished to get that on the record. He has mentioned it to me many times and I have told him that I did not agree with the action of my colleague on that particular occasion.
  The Minister for Housing and Construction (Mr. Reginald Freeson): Before the advent of the present Labour Government I saw the previous Minister responsible for housing, when there was no Rent Act on the statute book, to propose such limited action in designated stress areas. The proposal was rejected by Ministers then in the Department of the Environment.
  Mr. Ross: That comes back to the point made by the hon. Member for Henley in talking about a Select Committee for housing. The right hon. Gentleman has now reinforced the case. I am sure that if we could establish such a Select Committee we could get a lot of agreement across the Floor of the House on subjects such as furnished accommodation in the provinces.
  I welcome the forthcoming circular on the better use of vacant and under-occupied housing. If we are prepared to give greater freedom to the private owner or landlord to let, we can be tough with him if he does not take full advantage of the opportunities available to him. I could not go along with compulsory requisition or double rating unless landlords first had the opportunity to use their property to the best advantage. If we gave them that opportunity and they did not take advantage of it, we would then be entitled to hit them hard.
  I would like to see far more activity by local authorities in the provision of housing advice and of accommodation agencies where appropriate. I believe that they could do a great deal in that direction. Some authorities already set a good example, but many do not follow.
  In the longer term we must try to bring back institutional finance into private housing, without disturbing security of tenure. To do so will mean allowing rents to rise to sensible levels so as to ensure a reasonable return on finance invested. That problem must be faced, and the sooner the better. It is time that we got our priorities right and moved forward to ways in which we restrict subsidies to those who really need help and not simply apply them to bricks and mortar.
  7.02 p.m.
  The Under Secretary of State for Wales (Mr. Alec Jones): I intervene briefly because the subject of the debate is housing in Wales as well as in England, and I believe that some of the information I have to give may help other hon. Members who may wish to contribute later.
  Many hon. Members on previous occasions have complained to us about the inadequacy of the provision for housing in Wales in the public expenditure White Paper. I must confess that I have

  955
  not always been happy with it myself. What worries me more at this time is that the returns now received indicate that in 1976–77 authorities were unable to spend the provision which was made for them. The exact amount is not yet known, but all the evidence shows that it will be very substantial in relation to the total provision.
  That is paradoxical at this time, because there is no doubt that we have a housing need in Wales. Even the local authorities themselves are constantly stressing that fact. Yet they did not spend their allocations for last year. When, in the middle of last year, I was able to offer additional allocations for improvements and acquisitions—and we all know the importance of improvements in Welsh housing—11 authorities declined the offer and 14 authorities similarly declined the offer of an additional allocation for lending for house purchase.
  The total capital investment in local authority housing programmes in 1976–77 was over £113 million. For 1977–78, because of the general economic constraints, we were able to allocate only £96·7 million, representing a further decline in the capital investment capability of our local authorities. Naturally, I was disappointed at the reduction, especially as I am still sure that Welsh authorities have the ability to expand their programmes from the levels to which circumstances have depressed them.
  In the circumstances, I am pleased to be able to announce that an extra £11½2 million is now available for allocation for housing in Wales in 1977–78. This has been made possible partly because a fall in interest rates has permitted reduced provision to be made for housing subsidies in 1977–78, partly because slum clearance and other small items of housing expenditure are to be brought within local authorities' block allocations for 1977–78, and partly because certain contingency reserves are now to be released.
  Of the total, my right hon. and learned Friend the Secretary of State for Wales proposes to allocate £3·9 million to local authority lending for house purchase—an area in which I have received particularly strong representations—while £2·7 million will be for slum clearance. The remaining £4·6 million will be applied to new building, improvement and rehabili-
  956
  tation schemes, acquisitions and other housing investment. Local authorities will be informed of their individual allocations this week.
  Mr. Nicholas Edwards: The hon. Gentleman has told us about local authorities not taking up their allocations, and he has made the point before at Question Time. Presumably he has made inquiries. Can he tell us the reasons given by the majority of local authorities for this situation and give an indication whether there is any particular geographical distribution of the authorities, or of other factors which might be common to them?
  Mr. Jones: I am coming to that point and to what we are proposing to do about it. The situation in which we found ourselves at the end of 1976–77, with this considerable underspend, clearly needs investigating before we can talk with a degree of certainty about the adequacy or otherwise of provision for future years. We have had preliminary reports from local authorities, all involving a variety of different reasons. Some of the reasons given by authority contradict those given by authority. That is not making my task any easier.
  Because we are trying to get down to the root causes of the underspend in order to prevent it from occurring again, and to ensure that if there is an underspend of money allocated to local authority A we can transfer it to other authorities with perhaps even greater need, my right hon. and learned Friend has invited the Council for the Principality to join with the Welsh Office in a working party to investigate and report on the reasons why the housing provision for Wales in 1976–77 was underspent and to make recommendations for future arrangements to ensure the most effective use of the available provisions.
  Some local authorities have indicated that the extremely wet weather of last autumn was a factor, but I would have thought that if it was a factor it would have affected all local authorities since the rain fell fairly generously on sinners and innocents alike. One cannot say that it applied to North, East, South or West Wales or to the valleys as opposed to the towns. The underspend seems to have been fairly general in almost all the local authorities. It is because of that factor

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  and the need to get down to the underlying roots of the problem that we have set up the working group. We want it to report as early as possible with a view to realiocations being made if that proves necessary or desirable at the end of the day.
  Mr. Wyn Roberts: The hon. Gentleman will recall that the Secretary of State announced on 10th March last year in the Welsh Grand Committee that an extra £20 million to £30 million would be available for housing in Wales. Could it be that one of the reasons why the money was not all taken up was that the right hon. and learned Gentleman was rather late in announcing its availability?
  Mr. Jones: I cannot accept or believe that as a possible explanation, since the announcement was made before the beginning of the financial year and before the time at which local authorities have on many occasions been given their allocations for the following year. We are trying to find the causes of the under-spend.
  Mr. D. E. Thomas: In drawing up with the Council for the Principality the terms of reference for the working party, will the hon. Gentleman consider the effect of his Department's stop-go policies on the take-up by local authorities of available funds—for example, on mortgage lending, where the moratorium which he placed had an effect on take-up later when suddenly, under the carpet, he found an extra £2 million to allocate for mortgage lending?
  Mr. Jones: I do not exclude the examination of anything. If local authorities feel that there is something which the Welsh Office has done but should not have done, I shall seek to correct the situation.
  The terms of reference of the working party are to examine and report on the reasons why the housing provision for Wales in 1976–77 was underspent, and to make recommendations for further arrangements to ensure the most effective use of the available provisions. I intend that the working party shall, if possible, tell us the reasons for the underspend and how we can prevent it in future and ensure that all the money allocated for housing is used to meet the need.
  Mr. Heseltine: Can the hon. Gentleman say whether the under-spend is taking place in Labour-controlled authorities and non-Labour-controlled authorities?
  Mr. Jones: The evidence is that the underspend is like the rain: it is falling all over the Principality. I am sure that that pleases the hon. Gentleman.
  Mr. Heseltine: That shows what absolute nonsense was the Secretary of State's statement that the cut-back was in Conservative authorities in England.
  Mr. Jones: All I am defending and all I am answering for is the situation in Wales. The hon. Gentleman cannot draw the conclusion that what automatically applies in Wales applies in England. I should not have supported some of the behaviour of the newly-appointed authorities in London had in occurred in the Principality.
  The hon. Member for Conway (Mr. Roberts) asked particularly about the housing condition survey.
  Mr. Leo Abse: Will my hon. Friend note that, whatever blemishes there may be on local authorities throughout Wales for not spending available money, they do not apply to the Cwmbran New Town Development Corporation? All the money available is being spent. I trust, therefore, that very shortly we shall hear about the designated area so that the corporation may continue with its work. No working committee needs to be set up for the Cwmbran New Town Development Corporation.
  Mr. Jones: I do not quite know how that comes into this discussion, but, as I know that my hon. Friend is pressed on matters concerning Cwmbran, may I say that we are actively discussing the report of the inspector and expect to make an announcement in the immediate future. My hon. Friend knows that it is now being worked on. Perhaps I had better skip over the question of blemishes on local authorities before I criticise some bodies about which I do not know much, namely, the English local authorities.
  The housing condition survey commenced in 1976 and it is now virtually complete. Some last-minute analyses have to be carried out. We propose to

  959
  publish the details as soon as possible. However, may I give the hon. Member for Conway the general picture—and genuinely I have no further information to give him. The number of unfit houses in Wales in 1973 was 147,000. The survey seems to indicate that the number is down to 100,000. I am sure that everyone is grateful for that.
  It may be of advantage to hon. Members to know that 15 per cent, of the new block allocation intended for new house building could be used for improvement works, but if local authorities wish to spend more they can make representations to the Welsh Office. Ten local authorities have requested permission to spend more than 15 per cent, on improvement. Eight of the requests have been granted, and two are still under consideration. We are therefore trying to devise a housing policy in accordance with the needs of Wales as expressed to us by the local authorities in Wales.
  The hon. Member said that new housing was desirable. I was pleased that the sinner had repented on the road to Damascus, or wherever he has been in the last few years, because he said that the rate of house building should have been higher. I remind him that in the last year during which his Government had responsibility in Wales 3,247 houses were completed in the public sector. If we had continued with that rate of house building in the public sector, 12,000 families in Wales now living in new houses would, but for our action, have remained on the waiting list.
  7.16 p.m.
  Mr. Nick Budgen: I suppose that throughout our recent history one of the great appeals of the Labour Party as been that it is thought to be more concerned than any other party about high unemployment. Therefore, the Labour Party must be appalled at the fact that nearly 250,000 housing industry workers are now unemployed.
  It must be the Government's overriding objective, in relation to housing and construction generally, to reduce that level of unemployment without reflation. I underline the words "without reflation". For the Labour Party, above all else, should realise that those people represent the weakest sec-
  960
  tions of the community. It is as a bricklayer's mate, plumber's mate, or general labourer on a housing site that a man with no skills customarily gets a job; or when a man comes out of prison it is often to a building site that he goes; or when a man comes from, say, Jamaica to join his family in Wolverhampton he may well find that he is, at least temporarily, employed on a building site. Therefore, it is those sections of the community, to whom the Labour Party customarily has directed its compassion, who most of all are being disadvantaged by the situation in the housing industry.
  The housing industry has always been a cyclical industry. It has always been subject to political changes which are reflected in the social composition of the majorities in the House and in the way in which the economy works. Since 1971 the housing industry has been hit harder than any other. I shall not name, as I have often done in the House, the Acts which have had a disadvantageous effect on the housing industry.
  The consequence of these frequent changes of policy is that the entrepreneur who builds houses, particularly spec houses, to survive knows that the only capacity in which he dare employ a man is as a labour only sub-contractor. Directly to employ sombody is to run the risk that when the cycle turns against him he may, unhappily, have to lay off the man and, under current legislation, pay a great deal of compensation, apart from running the risk of involving himself in labour troubles because the work force must contract.
  Therefore, the only way in which the necessary flexibility may be retained in this inevitably cyclical industry is to employ labour only sub-contractors. That is the way in which the weakest people traditionally have found work. They are being driven in great hordes by the 714 certificate procedure to be dependent not, as they would wish, on their own endeavour but on the taxpayer. The practical compassion of the Labour Party in attempting to reduce unemployment without reflation should be directed towards finding some honourable way by which the 714 certificate procedure may be forgotten.
  I do not want the certificates to be abolished. I am, I hope, enough of a practical politician to realise that the 714

  961
  certificates are vital to the present alliance between the Labour Party and the Trades Union Congress. Let us call them 214 certificates, but let us have no conditions attached. Perhaps in a roundabout way we can thereby abolish them.
  I join my hon. Friend the Member for Henley (Mr. Heseltine) in supporting the Government's proclaimed policy of higher rents in the council sector. It is a most courageous reversal of the Labour Party's previous policy, and we on the Conservative Benches much applaud it. But it is also consistent with what I believe ought to be the Government's central objective of reducing unemployment, because one of the causes of unemployment in this country is the immobility of labour.
  If we charge council tenants something slowly approachng a more economic rent—subject to generous rent rebates—we shall encourage some people to buy their council houses. As my hon. Friend said——
  Mr. D. E. Thomas: The major problem with rent rebates is the low take-up. The official figures indicate a take-up of 70 per cent. Other surveys in specific areas indicate a take-up as low as 30 per cent. If we rely on a high rent input, we have to improve the take-up position of rent rebates.
  Mr. Budgen: It is not for the Government to improve the take-up position. Application for a rent rebate is a voluntary matter for the tenant. I agree that it is right that the information should be made available and, indeed, that a proper advertising scheme should be undertaken by the Government of the day, but the crucial decision has to be taken by the tenant. He is the person who decides whether to apply. I agree, however, with the hon. Member for Merioneth (Mr. Thomas) that it is important that all the proper administrative steps should be taken by whatever Government introduce any form of movement towards economic rents in the council sector.
  The consequence of such a move will be to encourage the better-off tenants sometimes to buy their own council houses, but sometimes also to buy new homes. Here I reintroduce the terrible indictment of the Government that a quarter of a million construction workers are unemployed. Some of them might
  962
  now have been employed in building homes for the richer people who leave the council sector. But it will also mean that houses will become vacant for those who are in real need. It will mean that houses will be vacant for those whose jobs take them around the country. The man who has to go to Dundee temporarily to work on an oil rig will find that there is a vacant council house for him to occupy.
  Mr. Ronald Atkins: How will the selling of council houses, as the hon. Member is recommending, help the supply of rented accommodation?
  Mr. Budgen: It depends on how many people buy the council houses. What I am saying is that, if rents are increased, some people will wish to buy their own council house. Others will wish to move and buy in the private sector. When people move and buy in the private sector, a vast number of council houses, I contend, will be released. I contend that those released houses could then be used in part by peripatetic workers and in part also by those in real need.
  The increase in council rents, which I applaud as a change in Government policy, will also have a useful effect in further reducing the public sector borrowing requirement, which is the single most important factor in deciding interest rates. As the Secretary of State was indicating in the earlier part of the debate, interest rates have a crucial effect upon mortgage rates. A reduction in public expenditure might also lead to a reduction in taxation, which again would lead to an increase in demand for houses by private purchasers.
  The Secretary of State proclaimed the fact that mortgage interest rates had come down from their all-time high of last winter, but he did not sketch in the general economic climate within which these slightly reduced interest rates obtain. Since last autumn the Government have pursued a policy of very tight money. The money supply, with the sole exception of the month of April this year, has increased at a very slow rate. The Government are also to be congratulated in having cut public expenditure very hard in the last six months. These two factors have allowed interest rates to fall back. But other parts of the Government's general economic strategy are

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  wholly unfriendly to the provision of housing.
  The Government's first priority is to give every advantage to exporting, particularly to the exporting of industrial goods. And so it is that the Government, through their agent the Bank of England, are intervening in the foreign exchange markets to hold down the value of the sterling exchange rate. The strategy, of course, is well known. It is so that, as North Sea oil comes in in great quantities this year and next year, and as we move towards its high point in 1981, the balance of payments will be seen to be in massive surplus. We remember the old days when a deficit on the balance of payments was a symptom of inflation. Next the Government will say "We have masked the symptom; we must have cured the disease." There will then be an excuse for a massive reflation, which the Government hope will help them to bribe the electorate at the next General Election.
  The housing industry is paying a price for this, because what is good for exporters is bad for importers—and the housing industry is a massive importer, in particular of wood. Wood is being held at a figure which is far more expensive than it ought to be. Food also is being held at a more expensive figure, for this reason and for others, than it ought to be, as a consequence of the Government making sterling cheaper than it ought to be.
  The Secretary of State said nothing about wage control. Many of the people who would wish either to buy a house or to buy a better house—thereby trading up and thus releasing another house—cannot do so because of wage control. Wage control has been particularly slanted against those who traditionally move up the private housing ladder.
  While the Secretary of State is right to point to the important effect that reduced mortgage interest rates have upon the housing market, he does not fairly point to those other ways in which the Government are rigging the economy for political reasons and adversely affecting the housing market, particularly the private housing market. The fact is that the basic problem in private housing today is that the builder cannot build homes at a price that the purchaser can afford to pay.
  7.29 p.m.
  Mr. John Ovenden: It is not my intention to follow the points made by the hon. Member for Wolver-hampton, South-West (Mr. Budgen), but I think that his remark concerning the sale of council houses, and encouraging people to leave the public housing sector, revealed the sort of confusion that has remained on the Conservative Benches on this issue. I fail entirely to see how offering people council houses at 20 per cent, or 30 per cent, discount, as his hon. Friend the Member for Henley (Mr. Heseltine) advocates, can possibly free houses in the public sector. I shall be returning later to the subject of the sale of council houses, and perhaps we can try to throw some light on it at that stage.
  The speech of the hon. Member for Wolverhampton, South-West was somewhat more imaginative than that of the hon. Member for Henley, who trotted out another dose of Tory housing doctrine. He went back on the usual treadmill and tried to drive another wedge between the council tenant and the home-owner by seeking to simplify the argument between the public and private sectors.
  No Labour Member wishes to discourage anybody from purchasing his own home. Indeed, many Labour Members have pushed for policies to encourage people to buy their own homes. It is naïve of Conservatives to try to protend that we can solve our housing problem solely through the private sector. I recommend those hon. Gentlemen to read the evidence produced by Shelter, which shows that there is an acute shortage of rented housing not in the stress areas but throughout the country. Evidence has been produced to show that those who are in most serious housing difficulties can be helped only in the public sector. The cut-backs of which the Conservative Government were guilty in their last period of office—and they have committed themselves to similar cuts in their next period of office—were a disaster, because they hit the people who suffer most.
  Labour Governments have recognised that both sectors of the housing market have a rôle to play. Our record in either sector bears comparison with the record of the Conservative Government. There has certainly been equality of

  965
  treatment between the two sectors under recent Conservative Governments, namely, equality in sharing out disaster. The record of the Tories between 1970 and 1974 is a bad one whether one takes the public or the private sector. In the public sector, in the period 1970–73 there was a decline in the number of starts from 153,000 to 112,000—a complete collapse. In the private sector in the heyday of Toryism in 1973, the Conservatives managed to build or make starts on 215,000 houses. What a great pity they could not sell them. The young owner-occupier was hit hard at that time by Tory policies. He was virtually priced out of the market by the then Government, who in a period of two years allowed house prices to double and let mortgage rates shoot up. It is little use building houses at that level if people cannot afford to buy them. The Labour Government had to step in to buy up those houses and to take them into the public sector. That was the record of disaster of the last Tory Government.
  I do not want to dwell too long on that sorry story, but that is the record. We have not heard one word from Conservatives in this debate that implies any change of direction in the policies pursued in 1970–74. If they are ever -re-elected and seek to adopt similar policies, we shall witness the same disasters again.
  We heard little new from the hon. Member for Henley, apart from some talk about reform of the Rent Acts and a few make-weight suggestions, including the abandonment of the Community Land Act. However, when challenged the hon. Gentleman backtracked and said that there would still be a development land tax in some form or other. Therefore, that tax will still exist, although the Tories intend to remove the powers held by local authorities under the Community Land Act. I fail to see how that idea will build one new house or will make any contribution to a solution of housing problems.
  The other Tory ploy involves the sale of council houses. That, too, makes no contribution to solving our housing problem, and it will certainly not help those who are in the most desperate housing need. Indeed, it will make their plight worse than ever.
  966
  The hon. Member for Henley committed himself to the fact that the next Conservative Government will reduce the level of public sector house building. I am glad that the hon. Gentleman was so forthcoming. In an earlier housing debate in this Chamber he was not so forthcoming. He was very much more shy and reticent. I am glad that he has now come clean and said that the Tory Party wants to reduce that figure. Perhaps before the debate concludes he will give the House an idea of the figure that the Tories have in mind. Does he envisage a figure of 100,000 or one as low as 50,000? Perhaps he does not wish to be precise, but he should give us a general outlines of Tory policy in that regard.
  I believe that public sector house building has declined much too greatly already. Since the middle of last year, we have witnessed a serious decline in public sector starts. I was pleased to see a small recent upsurge in the figure, which is a chink of light, and is welcome, but I am not as optimistic as are my Front Bench colleagues about general prospects. In the last housing debate, the Secretary of State for the Environment spoke optimistically of 150,000 starts in the public sector. I find it difficult to go along with that figure when we see that in the first four months of this year the total starts were only 37,500. That gives no cause for optimism about a figure of 150,000 public sector starts for the year as a whole.
  The present situation is that the starts in those first four months have been about 60 per cent, below last year's figure. A reduction has been imposed at the behest of the Treasury. It can be fairly claimed that there was a decline in housing starts in progress in the public sector before those Treasury controls were imposed, and indeed that those controls have had the effect of overkill. We have succeeded in forcing public sector housing down to a dangerous level. We must bring about a reversal of that policy.
  I see no economic justification for cutbacks in the public housing sector. No sensible economic argument can be advanced for a cut-back in an area in which there is capacity not only in terms of requirements but also manpower. We have all heard the appalling news that 250,000 construction workers are now out of work. It makes no economic sense

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  that so much unused labour should be available in housing terms.
  I hope that we shall soon see evidence from the Government that restraints will be eased and that local authorities will be encouraged to play their part. The Secretary of State should take action in areas where local authorities are not fulfilling their proper rôle in carrying out house building programmes. My right hon. Friend has said that he will do what he can to redistribute their share of the public housing sector market to other authorities who want to build. I hope that that was not just an empty gesture and that he intends to take action. I know that there are many local authorities who would like the opportunities to take up that uncommitted part of the building programme which other authorities have turned down.
  I believe that the policy of selling council houses is short-sighted, populist and highly irresponsible. It may provide good Conservative electioneering slogans at local and general elections, but as a policy it makes no sense at all in economic or financial terms. It damages the housing prospects of those in most desperate need. It is ludicrous to try to pretend that one can reduce the level of local authority housing stock without affecting people's chances on housing waiting lists. Most people know that local authority housing usually becomes available as a result of voids produced by people moving of dying. Those houses are then vacated and occupied by another family.
  I am afraid that the sale of local authority houses will reduce the total stock available. It will certainly reduce the number of voids that are available and will reduce the chances of people being housed. It is hypocritical of hon. Members to claim that they wish to help people towards home ownership and that this will not damage the interests of every-body else. They are severely damaging to the interests to those in housing.
  We used to be told by Tory spokesmen—although we have not yet heard it today—that the idea of selling council houses was to make available finance for new houses, and that we would not have had the use of those houses that were sold anyway, because they were already occupied. However, the Tory Party has abandoned that idea. We have not heard
  968
  it today and it does not fit in with the general policy of reducing council house building anyway, so no doubt, that idea has now been thrown out of the window.
  The housing stock has now been reduced and undermined by a cheap popular gesture to buy a few votes. The policy is based on a simplistic and fallacious economic argument. Its financial implications are obvious. In the first few years the local authority makes a gain and receives a slightly higher return in terms of repayments than it would have received as a result of rent income. Neither does the authority have to spend money on rent repairs, so it is slightly better off. However, it does not take long before the scales are tipped and the local authority becomes worse off, because it has lost its rent income, which was virtually inflation-proof, and receives only the same monthly amount.
  The studies that have been carried out by Shelter and published in Roof have made clear that that is what has happened in Leeds. I have also come across evidence about a small local authority which was Tory-controlled between 1972 and 1974. It sold 451 houses. In 1974–75 the net effect on its housing revenue account was just under £17,000 surplus. In 1975–76 the surplus was only about £26,000, because more houses had been sold. However, as early as 1976–77 the surplus had turned into a deficit of almost £14,000, because of the lost additional rent income that would have accrued to the local authority from rent increases.
  It is clear that every authority that has indulged in council house selling has discovered that there is a great financial loss to be made and we must consider upon whom that loss falls. Is it the taxpayer or the ratepayer? In most cases the answer is neither. The loss falls on the remaining tenants, who are generally unable to afford to buy their own houses. It falls on the poorest tenants and they tend to take the burden of increased rents as a result of the privileges that have been made available to wealthier tenants, who have been able to buy their own houses at 20 to 30 per cent, less than the market price.
  This is a socially undesirable policy, because it redistributes income from the poorest to the wealthiest tenants—from those who cannot afford to buy to those

  969
  who can and also because of the pattern of sales that take place when local authorities embark on this procedure.
  In every area in which sales have taken place it is the more attractive houses that have been sold—the newest, post-war houses on the smartest estates. Pre-war houses, those on rundown estates and high-rise flats have not been sold. As a result, local authorities have been left with a disproportionate share of older, more run-down houses, and flats in high-rise blocks, making it impossible to transfer tenants with children into better accommodation. It is such people who pay the price—those living in substandard accommodation or high-rise blocks who do not have the opportunity to move into decent housing conditions because the Tory Party has made some cheap publicity and gained political advantage out of giving away a publicly-owned asset.
  One of the other arguments that we have heard today centres around the Rent Act and its workings. We have heard yet again the solution that is always trotted out by Tories for solving the problems in the private rented sector by reducing tenants' rights. We have been told again and again that the only way in which the private sector can work is by removing tenants' rights. There is no evidence—and I have never seen any produced—that there is any connection between the decline of the private rented sector and the housing legislation that has been passed over the years. The decline in the private rented sector has gone on virtually unabated since the war irrespective of whether there has been a free for all—as in the Rachmann period—or the controls of the 1974 Rent Act. The hon. Member for Blaby (Mr. Lawson) can shake his head, but if there is any evidence I hope that we shall hear it from him. The only evidence that I have heard put forward is that the London Evening News or Evening Standard contain fewer advertisements for flats to rent than there were before the 1974 Act. Of course there are fewer advertisements, because tenants cannot be thrown out, but that does not mean that there is less property available. We are talking here about the global stock of housing, and that has not been affected.
  970
  We have heard a lot about easing the Rent Act so that there can be freely-negotiated agreements between landlords and tenants. I have always thought that one can have such an agreement only if each side has more or less the same bargaining position. I do not believe that a young couple with a desperate housing need is in the same bargaining position as a landlord who can let his property to anyone he likes. That is not putting people on an equal footing, because they are not free to negotiate on those terms.
  It is often maintained that a healthy private rented sector cannot coexist with rent control and security of tenure. If that is true, there is no place in a civilised and humane society for a private rented sector, because we cannot run the housing system on the basis of pushing people for every penny that they have without any protection from high rents or eviction from their homes at the behest of the landlord. I do not see any future in that. If that is the only way in which the private rented sector can operate, the sooner that we admit to ourselves that it does not have a rôle to play in providing decent housing for our people and, instead, concentrate on making proper provision in the public sector through co-operatives and home ownership—the better it will be. We are deluding ourselves if we believe that that sort of alternative is acceptable to our people as a decent housing policy.
  Mr. Deputy Speaker (Sir Myer Galpern): Order. We ought to begin the winding-up speeches at 9.20 p.m. and there are still several hon. Members who have been sitting patiently throughout the debate and who are anxious to take part. I therefore appeal for brevity in order to enable the Chair to accommodate all the hon. Members who wish to speak in the debate.
  7.48 p.m.
  Mr. Michael Latham: I shall refer presently to the points that have been made by the hon. Member for Gravesend (Mr. Ovenden). However, I first wish to declare my interest as a paid director of a housing company and as an unpaid director of Shelter.
  I listened to the Secretary of State's speech with a growing sense of gloom.

  971
  It strongly reminded me of what one of the worst of our Poet Laureates said of a dying monarch—I believe it was Edward VII:
  "Across the electric wires the electric message came:
  'He is no better, he is much the same'".
  It is obvious that the three-year housing policy review will produce little change. Once more we shall continue with the policies of controls, subsidies and distortions which have led to the spending of literally tens of thousands of millions of pounds of public money since Addison first introduced direct subsidies for council housing in 1919. There is now a higher level of public sector provision and a lower level of owner-occupation in this country than exists in many Eastern European countries, let alone the market economies of the West. The Secretary of State should look at the record of West Germany since the war where private enterprise has built 500,000 houses a year and hardly any homes are owned by the public sector.
  Of course the truth of the matter is that the powers of Housing Ministers are very limited. First thoughts are sometimes best, and I thought it would be salutary for myself to check something that I said in my maiden speech on 12th March 1974 about the fact that
  "When mortgage finance is readily available, housing booms; when it is short, builders cut back on output to avoid having unsold houses on their hands. It is a fact of life. I have yet to be persuaded that any Government can do very much about it.—[Official Report, 12th March 1974; Vol. 870, c. 168.]
  That remains true today and that is why, when the construction industry representatives meet the Secretary of State or the Prime Minister, as they did last Thursday, they come away disappointed.
  There is one area in which Ministers can act—namely, land. The Secretary of State told my hon. Friend the Minister for Henley (Mr. Heseltine) to go away and think out Conservative land policy. He quoted some highly tendentious figures about building plot prices and refused to give way when I sought to test his arguments. Of course, plot prices rose under the Conservative Government—but so did the number of plots coming on to the market. It was three or four times as high as the present figure.
  972
  No one really knows what the price of land is now because relatively little is available and even less is being bought. I said in our debate on 21st April that most of the building land on the market with consent was being offered by other builders trying to offload their stocks, or by Receivers. White land—the reserve stock for building in the 1980s—is virtually unobtainable as vendors sit tight, frightened off by the threat of the development land tax and its complexities or by a local authority intervening with a suspension notice under the Community Land Act.
  When I want to know what is happening in the land market, I prefer to listen to the builders than to the hon. Member for Mitcham and Morden (Mr. Douglas-Mann), who in an intervention during the speech of my hon. Friend the Member for Henley tried to suggest that there was no real problem. The House-builders Federation said recently:
  "The second most serious constraint on the future supply of housing suggested by housebuilders is the lack of building land at viable prices, with 85 per cent. of the respondents considering this likely to restrict output to at least some extent, and over 60 per cent. suggesting that it could operate as a major impediment. These shortages of land at viable prices have been experienced by builders throughout the country".
  Of course the chickens are coming home to roost over the Community Land Act, which is providing the utter failure that everyone said it would be, except the present Minister of Agriculture, Fisheries and Food, who thought that it was the "total solution" to the land problem—as if bureaucratic control and State intervention with very limited resources could ever be an effective substance for market forces.
  The Minister for Housing and Construction said in reply to the hon. Member for Brigg and Scunthorpe (Mr. Ellis) on 12th May that the land scheme had made a good start. Indeed, it was apparently so good that his Department got its sums wrong. He said that 1,571 acres of land had been acquired, which was
  "about one-third more than the acreage figure incorporated in Cmnd. 6393."—[Official Report. 12th May 1977; Vol. 931, c. 579.]
  I was never much good at maths, but the table on page 75 of Cmnd. 6393—the 1976 expenditure White Paper—shows a prediction of 1,500 acres to be acquired

  973
  in 1976–77. How 1,571 acres represents "about one-third more" than 1,500 is not immediately clear, but perhaps all will be explained in due course. In any case, it is one thing for local authorities to buy land. I bet that there were plenty of builders and landowners who were happy to unload some of their abortive white land stocks last year, or even some land with consent that was no longer viable because the market had changed.
  But what happens then? After all, under the "total solution" local authorities were expected not to keep the land but to resell it to other builders to get on with building. Indeed, land acquired for council house building and land for resale are in different tables of the 1977 public expenditure White Paper. Who is going to buy it? Who has bought it? And at what price?
  After all, the reply of the Minister of Housing and Construction made deafeningly little reference to the total change in circumstances produced in GNLA/12, the departmental letter of last December which rewrote the land scheme by requiring all sales to recoup expenditure within two years in the case of housing. I said in our debate in April:
  "Therefore, the Community Land Act is of no use for acquiring land for housing in practice, except for green field sites. There is no hope of any sites in inner city areas fulfilling the criteria."—[Official Report, 21st April 1977; Vol. 930, c. 469.]
  The Association of Municipal Authorities has now said the same.
  An article in Estates Times refers to the AMA telling the Secretary of State that the Act is causing
  "frustration, disillusionment, and worst of all lost opportunities ".
  The article goes on:
  "The AMA says it is impossible to guarantee a fast disposal of land under current circumstances. Local authorities, they say, must be in a position to offer the widest possible range of opportunities to would be developers."
  So what is happening? They are all queueing for the let-out paragraph 14 of the circular dealing with
  "schemes which do not satisfy the criteria but which, nevertheless, have powerful planning and social arguments in favour of early local authority intervention".
  974
  We know two things about the let-out, both gleaned from parliamentary answers. First, no specific figure has been allocated for it this year, as the Under-Secretary of State for the Environment told me on 15th February, and, secondly, that early action on this matter is unlikely. I asked the Secretary of State for the Environment
  "what loan sanctions have so far been: (a) sought by and (b) granted to local authorities for acquisitions under the Community Land Act 1975 of a planning or social nature, as outlined in paragraph 14 of GNLA/12".
  The Under-Secretary replied:
  "Loan sanction applications in the financial year 1976–77 were concentrated mainly in the first quarter. First proposals to be considered in the light of GNLA/12 are currently being received. It will be some time before the possibility of a breakdown on the lines requested can usefully be considered."—[Official Report, 15th June 1977; Vol. 933, c. 175.]
  So the AMA will be disappointed. Why? It is because the Government have never decided what they want the Act to do. If it was to allow local authorities to make a quick buck, it could not work because the market will not stand it at present and such an approach directly conflicts with inner city policy and good planning, let alone the loss of good agricultural land. If it is to be a tool of inner city policy, it could achieve something in partnership with private enterprise, but for the fact that the resources are simply not there and that much of the land is owned by local authorities already, as is admitted in the White Paper on policy for the inner cities.
  Land is at the heart of housing policy. This House has never got it right since the war. We have certainly not got it right now, and everyone knows it. The next Government, with which I am sure that my hon. Friend the Member for Henley will be strongly associated, will have to try yet again to equate the law on land with practical reality.
  7.58 p.m.
  Mr. Ronald Atkins: In listening to the hon. Member for Melton (Mr. Latham), I understood why my right hon. Friend the Secretary of State denounced so forcibly the economists and Opposition Members who wish to regard housing as a commercial commodity. It may seem surprising that I should be so pleased that this came from a Labour Secretary of State, but many

  975
  of us were rather worried by reports that his Department was being influenced by such arguments. It is because houses were regarded as commercial commodities until after Addison started giving assistance that we have a housing problem today.
  In the great amount of house building of the eighteenth and nineteenth centuries housing responded to market forces, and that was why it was so inadequate. Even the strongest laissez-faire economist of the time agreed that the effects on health, especially through infectious diseases, were such that housing could not be regarded as a commercial commodity.
  Mr. Michael Latham: Is the hon. Gentleman aware that in his book on housing conditions in 1850 Engels wrote that we already had sufficient housing stock in this country given proper usage?
  Mr. Atkins: How wrong he was. Everyone realises that now. If the hon. Gentleman quotes books like that, I can understand why he holds such views. They are nineteenth century attitudes. Even in Addison's time, as the hon. Gentleman says, the major parties realised that decent housing could not be provided if the provision of housing were left to market forces. That is why every Government after the First World War and for some time after the Second World War—I hope that this has not changed—decided to help housing, Labour Governments doing so more generously in the inter-war period than Conservative Governments. Nevertheless, that was an attitude adopted by both parties in Parliament and at local authority level.
  It is sad to find economists and others who want to change that philosophy. The point made by my right hon. Friend is of major importance. If he means it, it is the finest thing in his speech. Some of us were afraid that we might go back on that attitude. I hope that that philosophy will appear next week in the Government's White Paper. It will be sad if that attitude changes, because we must bear in mind that the housing problem is still serious. I know that housing provision is better, but good housing is still beyond the means of many families. It is true that incomes have increased, but so also have housing costs and the price of houses.
  976
  It is unfortunate that the cost of a house depends so much on interest charges. The cost depends much more on such charges than on timber and land. The cost of a house is primarily the result of high interest charges. We have seen great increases from the halcyon days of the first Labour Government after the war when interest charges were roughly 2½ per cent. When the Conseravtives took over in the 1950s, they forcibly increased interest charges and made housing more expensive.
  Mrs. Elaine Kellett-Bowman: I suppose that Labour increased them accidentally.
  Mr. Atkins: Events that have taken place since have increased interest charges—for example, the economic weakness of the country.
  Mrs. Kellett-Bowman: And Labour.
  Mr. Atkins: The cost and the bulk of the problem should not be borne by the council tenant. It is a national problem that requires a national solution. That is one of the reasons for my hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann) referring to the rapid increase of house prices since 1968. My hon. Friend compared mortgage charges with charges for items such as bricks and mortar, the former having increased much more quickly in price than the latter.
  Another obvious reason is that supply is not meeting demand. It is clear to anyone who has an active constituency interest that housing problems are the most important issues that a Member of Parliament has to deal with on Saturday mornings. At least half the constituents who come to see me have a housing problem.
  Housing problems lie behind so many of the other problems in families and in society. There is a need for many more houses to be built, especially for lent. The need is as great as ever. I share the disappointment of my hon. Friends that the number now being built is not sufficient. We should like the Government to do everything possible to increase the number being built.
  We believe the Treasury expenditure cuts have done much to prevent as from realising our original hopes. I am hoping that the trend will be changed as soon as

  977
  possible. I agree with my right hon. Friend that a great deal of improvement must be made to existing stock. Much more will have to be done in many terraced streets in towns where houses are allowed to remain empty and deteriorate, lowering the whole tone of the street and consequently causing further houses to become and remain empty.
  Grants alone are not sufficient. When I have investigated the reason for many terraced houses in the town remaining empty—there are at least one or two in every terraced block in Preston—I find that the house belong not to the corporation but to individuals, very often elderly persons who cannot afford the necessary capital improvements. Often those people cannot sell their house because no mortgages are available. That is what I should like to see the Government make available immediately. Very often terraced houses cost £6,000 or £7,000 or even less. They are good houses, and if they were improved and lived in the tone of the whole district would be improved and people would be encouraged to stay in the streets.
  Another factor may have been the Rent Act, but it is more frequently the case that the owner is unable to maintain the house. The Government should require local authorities, with Government financial assistance, to take over and rehouse the many people who are on the local authority waiting lists.
  The improvement of older council housing should proceed, but we should not always ride roughshod over the wishes of the tenants. I have seen so much modernisation in Preston, often with disastrous results. For example, some of the older council dwellings have had central heating installed. Very often tenants have said that they do not want it. They want the improvements but not central heating. It seems that they must have it whether they want it or not. The results have been bad in many cases.
  It frequently happens that the air circulation is all wrong. Fungus develops for the first time on the kitchen and bathroom walls, as well as on other walls, expensive to heat their houses with central Tenants who are already finding it too heating are told to open the windows to improve the circulation so that the fungus will disappear. Naturally they become
  978
  incensed that that should be necessary. Eventually in some houses the tenant gives up the central heating and brings in an oil stove because he or she cannot afford to use the central heating system which has been installed at great cost. There are grounds for greater consultation of tenants. There is a need for a tenants' charter. There should be consultation before modernisation takes place.
  I urge the Government to increase housing provision rather than to reduce it. Housing is surely the most fundamental part of the social services. All other social services would be less expensive if we had a good basis of housing. As a teacher, I found in nine cases out of ten that if I had a child who could not be properly educated he came from a bad home. Illness, which is an expense on the National Health Service, is frequently caused by bad housing. Delinquency, family problems, the break-up of families, conflict between parents and the consequent effects on the children are frequently the result of bad housing.
  I have always regarded housing as the major priority. A strong house building programme, moreover, is the best way to lead the United Kingdom out of the industrial stagnation that we now face, as it was in the 1930s. Economists and economic historians have frequently stated that Britain emerged from the depression of 1931–33 largely because of the increase in house building. As hon. Members have said, with a quarter of a million construction workers unemployed and by using materials that are largely British, with the single exception of timber, an increase in house building would not be inflationary. It would enable us to conquer unemployment and at the same time to provide work without inflation. On both those grounds, I urge the Government to increase their expenditure on housing.
  8.10 p.m.
  Mr. R. A. McCrindle: I do not for a moment underestimate the need to continue to provide houses for rent, whether through council provision, housing associations or, indeed, private landlords, but I hope that the House will forgive me if in this short contribution I concentrate my remarks wholly on the subject of owner-occupation. I do so because the

  979
  development of owner-occupation since the end of the war has been little short of a social revolution.
  The Secretary of State confirmed that 53 per cent. of houses in this country are now in owner-occupation. It is evident that many more people wish to own their own homes. I believe that housing policy should be substantially—obviously not wholly—aimed in that direction. Therefore, I was pleased to hear the Secretary of State seemingly confirm that the provision for tax relief on mortgage interest is unlikely to be changed. I hope that is so, because it has been a major contribution towards the development of owner-occupation since the end of the war.
  The question may be asked: if 53 per cent. already own their own homes, why should greater assistance be given to those who do not yet own their own homes? The answer is to be found in the fact that to encourage people into owner-occupation is substantially more economical than to continue to prop up council tenants by subsidies. That point was fairly dealt with by my hon. Friend the Member for Henley (Mr. Heseltine) in opening the debate.
  Owner-occupation is very much desired by those who have the slightest chance of being able to afford to buy houses, but I do not overlook the fact that there will always be a number of people who will not be able to afford to buy houses. Those who pretend that we can ever reach 100 per cent. owner-occupation are, frankly, chasing a will-o'-the-wisp. However, we can substantially increase owner-occupation beyond 53 per cent.
  I want to concentrate my remarks on helping the first-time buyer with both interest rates and the deposit. I shall take further the points made by my hon. Friend the Member for Henley, and I hope to be a little more specific in the process.
  The best help that any Government can give to a prospective owner-occupier with regard to interest rates is a stable economy, but beyond that there is the argument that building societies could perhaps more quickly respond to changing interest rates. Building societies have rightly been criticised in the past for the cumbersome process that they employ, which seems to allow a long time to elapse
  980
  before a fall in interest rates is reflected by a fall in building society lending rates. The impression given—no doubt unfairly—is that interest rates are nearly all ups and not many downs.
  The Secretary of State reminded us that in the last two or three months there have been two decreases in interest rates. I hope that that will give us the opportunity to move towards greater stability in lending rates. Recently, I caused something of a stir by suggesting that instead of reducing the lending rate by the full amount possible we should reduce it by slightly less, in return for an undertaking that it would not again be increased unless and until the minimum lending rate had gone up by a full 2 per cent. or 3 per cent. The Minister for Housing and Construction did not respond as warmly as I had hoped, and the building societies did not respond at all, but I shall continue to press the matter, because I believe that stability in interest rates is one of the best ways in which to encourage young first-time buyers.
  I want to concentrate on three schemes to assist young people who want to buy homes but who have difficulty in raising deposits, and to urge the Minister, when he replies, to comment on the practicality of any one of them.
  The first is that, up to a certain limit of income and house price, for every £2 saved through a building society a grant of £1 should be made by a Government Department. I believe that if young people are prepared to extert themselves to the point of raising two-thirds of the required deposit it is a good investment for the country to assist them with the remaining third.
  Secondly, I draw attention to the prospect of what is called share purchase. Such a scheme would allow a buyer to acquire less than 100 per cent. of the house at the outset, the financial institutions taking the balance and selling progressively, if that is a fair way to describe it, to the buyer, the interest rate on the difference being met in the early stages by the Exchequer.
  The third, infinitely simpler scheme, would involve the Government undertaking a maximum mortgage interest rate by the simple device of altering the rate of tax paid by the building society so as to

  981
  achieve a continuing stable rate of lending.
  I believe that all, any one, or even a combination of two of these schemes might be justified. The whole idea of owner-occupation is still immensely attractive to many people who find house purchase beyond their reach. Owner-occupation gives a family independence and—this point is frequently stressed by the Opposition—buttresses individual freedom.
  It is important to encourage owner-occupation. My observation of those who have been successful in buying their own homes shows them to be happier as owners than their contemporaries appear to be as tenants.
  Owner-occupation is an excellent bargain for the taxpayer, because the average subsidy on a council house—certainly in the first year—is substantially greater than the average tax relief given to a mortgagee—equally in the first year.
  Financial realism indicates that the Government should be thinking hard how they are to implement the undertaking that they gave to first-time buyers in their two election manifestos in 1974. I was disappointed to hear the Secretary of State gloss over any attempt to predict the date on which the Government would start to implement that important aspect of their housing policy, I repeat, with regard to first-time buyers. This is an enormously important area. I believe that there is a feeling of betrayal among many young people who had hoped that by this time they would be on the path towards owner-occupation but who find that they are not.
  I wish to be fair. I concede that there have been and, indeed, still are economic difficulties in introducing such a policy, but the House will be disappointed if, when the Minister replies, he does not indicate his current policy for the encouragement of owner-occupation, particularly among first-time house buyers. I hope that he will state whether he agrees with any of the three schemes that I have mentioned, or, if not, what encouragement he intends to give to the many people who are waiting for encouragement.
  8.19 p.m.
  Mr. Frank Hooley: I entirely agree with my hon. Friend the
  982
  Member for Preston, North (Mr. Atkins) that housing should have the highest social priority. Good housing underpins health and education; bad housing undermines both. I have never had any doubt in my mind that if forced to choose between social priorities I should put housing at the top of the list.
  I also agree with my hon. Friend that the cases that come to me as a Member of Parliament are more often concerned with housing, despite the real achievements that have been made over the past 10 years, than any other single problem.
  The hon. Member for Henley (Mr. Heseltine) put forward some interesting arguments. He was cagey about council house rents. He did not commit his party to do anything radical about them. He launched a slightly veiled attack on the Community Land Act and the Development Land Act. But even he was not prepared to praise the disastrous free-for-all of 1972–73, when we had initially a free market in land.
  Another part of the hon. Member's policy was to sell off public assets. He wanted to sell off council houses and the assets of new towns—these great social assets that have been built up by successive Governments, at the expense of the public, over 20 or 30 years. The hon. Member also wanted a free market for rents in the private sector. If that is the Conservative Party's policy, I hope that the day comes when the electorate firmly rejects it.
  The Secretary of State dropped a heavy hint that the forthcoming Green Paper or White Paper on housing finance will be fairly conservative in its presentation of the problem and in its solutions. I agree with him that it is fundamental to housing policy to have public support in both the private sector and the public sector. It is a social need of overriding and overwhelming importance. It is essential that the Government should be committed to provide public finance to meet that need.
  Neverthless, there are one or two points that need to be explored. We should not take for granted that the existing system is all that there is. The basic problem is to bring down high interest rates. They are the curse of housing in both sectors. We must get away from the lunatic rates

  983
  that have prevailed over the past few years.
  Why is it impossible to devise a two-tier interest rate system so that housing can benefit from a lower rate? We already have a two-tier system for export credit to benefit the economy of this country. Why cannot we devise a two-tier system for housing? Within such a system there could be variable interest rates to help first-time buyers. Surely it is not necessary to pay the same level of interest over the entire 20 or 25 years of a mortgage. Surely it is not beyond the wit of building societies, with the help of Government, to devise a system that would enable young people in the 22–30 years of age bracket, when they have children and the wife's earning capacity is limited, to enjoy a lower mortgage rate than at a later stage when they are in a better position to pay.
  One of the problems that have not been much discussed in the debate is that of repair and maintenance. No one has devoted much time to the question of more sensibly maintaining our present housing stock. It is a problem that needs to be examined further. In the private sector there is a potential army of labour. About 3 million owner-occupiers are capable and willing to do a lot of work on their own properties, to keep them in good order and repair. They reduce the market labour charge in terms of maintaining and decorating that property.
  Within the public sector, we should examine whether there is any possibility of providing an incentive for people to carry out certain repair, maintenance and decoration work on their properties. Most tenants make a great effort to keep their homes in good order, both decoratively and in terms of repair. I wonder whether, in view of the immense cost of repair and maintainance and the problems of labour recruitment—although that does not apply at present—tenants should be given financial or other help if they are prepared and able to carry out certain tasks on their own properties. We should examine that possibility.
  I see no reason why local authorities should not be encouraged to build houses for sale if there is a reasonable balance in their area between demand for houses for sale and demand for houses for rent. A modest experiment carried out in Sheffield has been amazingly successful. The
  984
  houses that the local authority built for sales were snapped up immediately by people on the housing waiting list who were glad of the opportunity to buy those homes. That experiment needs further examination.
  Obviously, the speculative builder is more vulnerable to fluctuations in the economy than are public corporations, such as local authorities. If local authorities were given wider powers to build for sale it could influence house prices and the availability of housing stock for owner-occupation.
  Demographic factors have not been mentioned much in the debate, nor has the startling reduction in the birth rate and the steady rise in the number of retired people that has been experienced over a long period. The birth rate is the more difficult problem, because it has fluctuated sharply and unexpectedly in recent years. It is bound to have an impact on the demand and type of housing required. It deserves fairly close study, so that we may work out future policy on the type of housing required and on housing finance.
  In future, elderly people may wish to switch from owner-occupation to renting accommodation. At the moment, this is not easy to do. It is another problem to which more thought should be given.
  The control of land is fundamental to the problems of the inner cities. I hope that the Community Land Act can be used where necessary to acquire and control land that will be needed if we are to have a sensible development of derelict areas. I hope that we shall not become obsessed with the idea that we had in the past, that inner city development must involve high-rise flats. Appalling damage has been done by high-rise developments in places such as Birmingham. There is no reason why we should not get away from this obsession for high-rise flats, which has occurred over the past two decades. When we set about rejuvenating inner city areas there is no reason why we should not use low-rise development.
  Mr. Arthur Jones: I am interested in the inner city problem. About 75 per cent. of the land in the inner cities is owned either by local authorities or by public institutions. The hon. Member is saying that the Community Land Act

  985
  should be used to make further acquisitions.
  Mr. Freeson: That is cock-eyed.
  Mr. Arthur Jones: It is not cock-eyed. I have gone into this question thoroughly. I am sure that the figure is correct. I know that the Minister's sources are more elaborate than mine. But should not local authorities, which, after all, own vast areas of land in some of the cities, consider disposing of it to private developers?
  Mr. Hooley: I am afraid that I cannot argue with the hon. Gentleman on the figures, because I do not know them. Perhaps the Minister will be able to clarify that point. All that I am saying is that the Community Land Act could be a key factor in collecting key portions, if not whole areas, of land where inner city redevelopment is necessary. Certainly the powers under the Act could be of great importance in rejuvenating the inner cities.
  I am a little hesitant about the new apparent policy of discouraging the expansion of new towns, at least on the scale originally envisaged. There are still areas, such as the South-East, South Lancashire and West Midlands, which are grotesquely overcrowded, even today. I should not like the idea to get abroad that the new towns do not have a great future rôle. They have played a great rôle in the past and they still have an important service to perform.
  I can understand why people feel that it is an insult to them that, in a time of great housing need, houses should stand empty for months and even years. All sorts of complicated legal problems are involved, which the Government are trying to sort out by legislation, but I wonder why it is not possible to grant a local authority the power to make an "administration order". Then, when a property has stood empty for more than six or nine months, say, the local authority should be able to take it over and let it to an approved tenant or family in need of housing but without expropriating it or taking over the owner-Ship. It would administer the property, charge whatever rent was necessary, and pay an appropriate rent to the person with legal title. That would at least
  986
  ensure that such properties did not stand empty ad infinitum.
  Our basic need is to build and improve more homes. It is fantastic that with 250,000 building workers unemployed we should be cutting back on house building and house improvement. The need is still for more and better houses and for greater improvement of our housing stock.
  Several Hon. Members rose——
  Mr. Deputy Speaker: I think that I should make a further appeal for brevity. If hon. Members will restrict the length of their speeches to about eight minutes every hon. Member who wishes to speak can be accommodated.
  8.32 p.m.
  Sir Brandon Rhys Williams: I shall try to do as you request, Mr. Deputy Speaker.
  It is useful for us to ask ourselves two questions in this debate: are we making the best use of the housing subsidies, and are we making the best use of our stock of housing? On the latter question, I do not want to emphasise again the fact that there is a large amount of altogether empty property, because that is a problem which has often been brought out, but we must also admit that much council property is under-occupied.
  Although there is no security of tenure for council tenants, it is clear, as we all know from our surgeries, that in council housing and housing association property people do not like being shunted about by officials and that there is a good deal of resistance when people are moved into other properties, even when discretion exists and a reasonable choice is available. They feel that they are second-rate citizens when they are directed into new accommodation, even when they are obviously not making full use of their existing property.
  I should therefore like to find ways of encouraging people to plan their own moves by offering them better opportunities to become freeholders, whether in former public sector properties, in private rented accommodation, in new housing or, particularly, in newly-converted property. That last category is an aspect of the housing market which lately has unfortunately been neglected.

  987
  In the private sector we must use the vacant spaces better. I have given this subject a good deal of attention and have tried to make specific recommendations. We have to provide for mobility by an increase in the total supply of suitable accommodation. We have a surplus of houses and an even greater surplus of lettable or potentially saleable rooms. Many houses were designed for the larger families of the old days and have been converted in an inadequate or unsuitable way.
  The hon. Member for Sheffield, Heeley (Mr. Hooley) drew attention to the dramatic fall in the birth rate. This has not come into our thinking sufficiently but the effect of it will be seen quite soon in housing.
  We need to review the operation of the systems of improvement grants, because it is possible that the same amount of money could achieve more. If there is any candidate for an increase in expenditure in the housing area, it is improvement grants. The money saved in some directions could be applied more fruitfully for everyone's benefit if we reviewed the way in which the grants operate. The Government touched on this in the consultative document on the review of the Rent Acts.
  We need a change in direction on housing subsidies and a change in the law on letting owner-occupied accommodation for a short term. My hon. Friend the Member for Henley (Mr. Heseltine) said a few words about the shorthold letting concept. I would like to say more than I have done in the past because obviously I have not succeeded in convincing the Minister. I want to approach this subject in a non-partisan and rational way.
  We need some facts on the type of property offered for reletting under the Rent Acts once it becomes vacant. The Department has evidence of the large volume of property which landlords are offering for reletting and thinks that the introduction of shorthold would reduce the supply. I do not agree, because I think that the sort of property offered for reletting at present is either the worst of all and should be taken off the market before it is offered again or, on the other hand, may be the very best, in the stratospheric reaches of rents, and that is not
  988
  what we want to be legislating for just now.
  It is wrong to impede parties from coming to a mutually beneficial agreement simply because of the ideology of security of tenure. There are categories of people and types of premises where short leases under a reasonable legal formula are wanted and open-ended tenancies are inappropriate. For these people the insecurity of renting in the owner-occupied sector is unsatisfactory. Very many people in Kensington—and I am sure it is the same elsewhere—have to resort to taking rooms in the owner-occupied sector because such tenancies are all that are on offer. While that type of accommodation is not ideal for them—they want more security—they do not necessarily desire the total security of a freehold or a controlled tenancy.
  An example of this is a young married couple who have not planned the eventual size of their family, where they want to live or the eventual jobs they may have. They are not yet in the market for a freehold, yet they have no claim for priority in the public sector. We need to cater for them. One could point to other areas where shorthold would be appropriate.
  It is a pity that the Minister has consistently blocked the Bill that I have introduced and prevented it from getting to Committee stage. I believe that one could find a number of different practical aspects which might not make a big impact on the housing scene in themselves but which would make a start. The Department agrees that some kind of shorthold would be convenient for flats over shops. This is not a large area but it could make a useful contribution if there were suitable legislation for it. Shorthold would also be appropriate where the owner-occupier only has a life interest in the property and is under pressure not to let because of legal entanglements which might delay or prevent the eventual sale of the house when the owner of the life interest has died.
  There are also very many cases that I can think of where the tenant actually only wants limited security, longer than when renting under owner-occupation, but not permanent. Instances include people who may be in London undertaking professional studies for a year or two or perhaps longer but who have no intention of

  989
  staying permanently in London, business visitors with short appointments, and people awaiting retirement.
  This is another of the points raised by the hon. Member for Heeley. People who have brought up their families and whose youngest children have married do not necessarily want to go on living in the same house. Perhaps they have a need to realise their asset and put it into something which will produce income rather than simply to have empty accommodation which they feel obliged to offer to their in-laws or their children. After the marriage of the children, it should be possible for people to dispose of their house and to move into decent property where they have a reasonable degree of security and can invest their money, instead of having it standing idle in a house which is far too large.
  In Kensington we also have a special housing problem. As Sir Malby Crofton had a very effective letter in The Times about this on 16th June, I want to follow it with a few words tonight. Other inner London constituencies suffer the same problem but not, I think, so badly as Kensington. We have a large presence of people whose general level of earnings tends to be much higher than their British equivalent. They tend to have the benefit of much lower tax rates. Lately they have been able to exploit an exchange advantage that makes central London property seem quite cheap to them. Many of them have Government or business backing and do not mind what they pay.
  Therefore the character of inner London is rapidly changing because a large number of the better properties—and not only the very best properties, but average properties too—are going out of the control of Londoners and being taken over increasingly by people who have no continuing interest in the life of the capital. I agree with Sir Malby Crofton that this needs special attention. His letter has attracted a good deal of attention and I hope that hon. Members will also give serious thought to this problem.
  I should be trespassing upon your good will, Mr. Deputy Speaker, if I ventured on to the subject of housing subsidies. I would like, however, to close by drawing attention to what I said when
  990
  the House gave me leave to introduce a Bill to reform the national insurance system. We really have to look at the way in which our housing subsidies are distributed and, I believe, to introduce a housing allowance, like a tax credit, which is related to the actual rent paid and which is also related to family size and need.
  We have the embryo of this in the housing allowances brought in by the Housing Finance Act, but all too few people in fact claim their allowances and I believe that the Government ought urgently to be studying the situation which will inevitably arise as the operation of the fair rents system pushes rents up. Otherwise we shall force thousands, if not hundreds of thousands of tenants on to supplementary benefit.
  I do not think that the housing situation must be one of total gloom, but it is a subject on which the public will not forgive lightly a party which systematically rejects all new ideas.
  8.44 p.m.
  Mr. D. E. Thomas: This debate is taking place amid the continuing grip of the reduction in public expenditure on housing, although naturally we heard very little about that from the Secretary of State in opening.
  If my calculations are correct, the cumulative reduction in housing expenditure through both the public expenditure White Papers and the subsequent announcements of rounds of cuts in July and December 1976 amounts to a total loss for the housing programme between 1975 and 1979 of £1,250 million. No doubt, the real loss under the Government's cash limits policy will be even greater than this. It is in that context that we had the announcement earlier in the debate by the Under-Secretary of State for Wales that £11·2 million of the cuts in the Welsh Office housing programme had been restored. He can hardly expect me to shout with glee at that.
  Neither can I shout with any joy at seeing that provisional results of the house condition survey indicate that the level of unfit housing in Wales is now down to 100,000. If my quick calculation, comparing the hon. Gentleman's figures with those of the Secretary of State earlier,

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  is right, the number of unfit houses in Wales is still well above the average number of unfit houses throughout Great Britain.
  The Under-Secretary told us earlier that he is to have a working party between his Department and the Council for the Principality on the non-take-up of housing allocations. He should also look within that working party at the real housing need of the different districts in Wales to ascertain what their allocation ought to be in the context of a housing policy directed to tackling the basic problems of the older housing in Wales, the high proportion of unfit housing and the higher demand for owner-occupancy.
  Mr. Wyn Roberts: Does it not strike the hon. Gentleman as curious that the Government should know about this underspending only at this stage? Does he not think that they could have monitored the progress of spending in the course of the year and discovered it a little earlier?
  Mr. Thomas: I am grateful for that intervention. I certainly think that the price of a telephone call from the Welsh Office housing division to all the districts in Wales could have brought the information earlier, and there could have been far more effective monitoring of the position.
  Mr. Alec Jones: I assure the hon. Gentleman that the figures on which we based our calculation were the actual returns submitted to us by each local authority in Wales. We are now discovering that these returns were not correct. I do not think that it is fair to attribute the blame to the Welsh Office.
  Mr. Thomas: I think that it is a serious attack on the credibility of the treasurers and housing officers of our district councils in Wales to suggest that figures gathered by the Welsh Office are incorrect. I should be the first to deplore it if that were the case. On the other hand, I equally deplore a housing policy operated on a stop-go basis, as it has been over the past three years, so that housing officers and chief executives of districts who wish to plan on a five-year basis the kind of housing programme they want are unable to do so because one circular or one suggestion after another comes out.
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  I remember the visit paid to all districts in Wales by the Minister's predecessor at the Welsh Office, the hon. Member for Merthyr Tydfil (Mr. Rowlands), when he went on a tour telling district councils in Wales to rob the bank. Those were his very words, said in my presence.
  Mr. Alec Jones: "Bust the bank".
  Mr. Thomas: Yes, "Bust the bank". Yet subsequently, within nine months, we were having cash limits and expenditure cuts imposed. In that context no local authority can be expected to carry out an effective housing programme.
  I stress that as local authorities now look to their housing needs for the next three years they should be thinking of putting in to the Welsh Office not realistic bids related to what they submitted in the last two years but bids for what they really need to tackle their housing problems.
  I appeal to local authorities in Wales to undertake a programme not only of new house building for specialised needs but also of improvement. This will take them well beyond their 15 per cent. ceiling for Section 105 allocations which the Welsh Office has laid down. I was glad to hear that the Minister was being flexible on the 15 per cent. The truth is that the balance of a massive rehabilitation programme would take certain district councils well beyond their 15 per cent. The Welsh Office should look again at that ceiling, and, instead of imposing an initial ceiling and then becoming flexible in relation to various districts, it should consider giving more freedom to authorities to choose as between rehabilitation and new building. I say that because the balance of rehabilitation as compared with new building has an immediate impact on the total number of unfit houses.
  I stress that we are working within a context of massive reductions in public expenditure on housing, and in a context also where not sufficient attention is paid to the relationship between the various types of housing expenditure. This has been touched on already in the debate, and I shall not go on at length about it because we have been warned about shortage of time. However, I emphasise that we ought to look again at the relationship between spending through the mortgage interest tax relief and spending on subsidy to the council house tenant.

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  I was very disappointed to have advance warning from the Secretary of State that the housing finance review, or whatever the Green Paper coming out next week is to be called, will not result in a fundamental reassessment of the cost-effectivness of our subsidies. It must be said again that any studies of tax relief to owner-occupiers show that public money is being ploughed in which tends to find its way especially to the upper end of the market, while, on the other hand, there are inadequate total resources going to housing. We should look again at the ways in which our total deployment of housing resources can be improved. If that means taking away tax relief at the upper end of the market even further, it must be done in order that our housing resources may be redistributed effectively.
  In this debate, as in every housing debate, the Government have pretended that they give housing a high priority. That is totally at odds with their expenditure policies. I was glad to have from the Under-Secretary of State for Wales the small admission that he himself felt that the figures for housing in Wales given in the expenditure White Papers were inadequate. I was glad to have that admission, but the hon. Gentleman should admit also that his Government's expenditure policies mean that we shall never be able to tackle our housing crisis in Wales as we ought to tackle it.
  The three recent rounds of public expenditure cuts have hit housing more heavily than they have hit any other single social wage item. The housing programme is still being severely reduced at a time of unprecedented unemployment in the construction industry. The consequence is that we face a deepening housing crisis, especially in the older regions of England, such as the North-East, and in Wales, where we have a preponderance of housing built at the time of the Industrial Revolution and where, accordingly, a more urgent initiative from the Government is necessary to tackle the problems.
  Finally, I turn to the impact of housing cuts and the impact of the Government's housing policy on one area in Wales, namely, our capital city of Cardiff. I am becoming increasingly concerned about what is happening in Cardiff—both about
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  the attitude of the South Glamorgan County Council and the attitude of the Cardiff City Council. This year already homeless families have been thrown out on to the street, families have been split up and families have been thrown out of hotel and short-stay accommodation by the South Glamorgan social services department. Moreover, we have seen an unwillingness on the part of Cardiff City Council to accept the responsibility for homeless persons, and the Welsh Office has not felt able to intervene in the matter because it sees it as an internal dispute within Cardiff between the social services and housing.
  The root of the problem in Cardiff is not merely that we have extremely reactionary Conservative councillors running Cardiff. We have, in addition, the failure over the past 10 years to tackle the 3,000-strong waiting list in the city. Cardiff's council house building programme has plummeted down from 1,000 in 1970 to fewer than 500 houses in 1976–77. Demolition in Cardiff has been ahead of new building every year since 1973–74.
  I appeal to the Welsh Office to examine the situation in Cardiff as it reaches crisis point, particularly as regards homeless families. I also ask the Welsh Office to be prepared to intervene between the district council and the city council if there are any further evictions and if any more families are split up by the authorities in Cardiff later this year.
  8.55 p.m.
  Mr. Eric S. Heffer: I should like to raise one important aspect of housing that probably affects other cities as it affects mine. I refer to the uncertainty felt by people living in privately rented houses when those houses come up for possible slum clearance. All the time in my constituency an area or a number of streets is being designated as property which must be removed, and then a period of uncertainty begins. The local authority draws up plans, but then there may be a change in the authority's political complexion or in legislation or in the economic situation. The people concerned then do not know where they are.
  Because the plans are deferred, property is not properly looked after. The

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  repairs are not done. The people do not know whether to do their decorations. At the same time, the houses are deteriorating. I have people living in rows upon rows of such property. I am sick and tired of getting in touch over the years with Ministers and local councillors of all parties. The people in the houses are fed up with what is happening.
  It is very important that we should have a housing policy. We must have more housing, and much more money must be put info providing it. Once people are told that an area is a slum clearance area and that it will be cleared by such and such a date, they must know that it will be done then and that they will be rehoused.
  We have a genius for destroying communities in big cities. During the Jubilee celebrations there were many street parties in my constituency. People came out into the small streets and had a whale of a time. Most of them vote Labour, so it is not a question whether they are Labour or Conservative. The point is that the community spirit exists.
  When people's houses are designated for slum clearance, they ask "Is it possible for us to be rehoused in or near the same area together with our friends?" The authority replies "We shall do our best", but then the people are sent 10 miles away and are separated. They go into the outskirts, into areas some of which they do not know. Sometimes they are prisoners in high-rise blocks. We must be concerned about maintaining the communities.
  In my constituency there is a piece of land called the Walton Triangle, which was railway property. We have been on about its use for years. The Liberals, Labour and the Tories have been in office in Liverpool, all of them saying that they would build houses there, but the plan has been put back. Finally, it has been decided that houses will be built there, some for private renting, some for owner-occupation and some for council renting. That is fine. But, again, will the people in the locality, from the slum houses or old houses that are to be pulled down, have the opportunity that they want to move into the new property? I hope so. I am asking the local authority to give them the opportunity, but can it be guaranteed? I am afraid that perhaps it cannot.
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  We should aim at getting local authorities to ensure that people are moved as a community. When I was on the local authority and served on the housing committee I always wanted to see that when we got rid of one set of houses we built close by and moved the people affected into the new houses. Of course, it was necessary to move the people whose houses were the first to be demolished out of the area and then to move them back again, and one always lost a certain number. But it could be done, and it should be done. That is what we should aim at in any serious housing policy.
  I do not agree with those who argue that we should continue to build new towns on a vast scale. I think that such a policy would be quite wrong. In Liverpool, we have acre upon acre of land lying derelict, but new towns outside with no employment. Once we build a new town we have to put industry there, but in an area like Liverpool various industries are declining in the city centre. I do not think that that is a very bright situation. We have to bring people back into the city centres. I do not mean by that that we should destroy the new towns that are already in existence, but we should not develop any more, at least not on a vast scale. We must rebuild and repopulate our city centres and get new industries on a small basis into them for the people living there.
  My hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) made a very important point about owner-occupiers who want smaller accommodation once their families have grown up and gone. It is not always easy for them to buy a smaller property, and it would be of some assistance to enable them to go into council property and to help those younger people who find it difficult to raise a deposit to purchase the kind of good artisan dwellings thus vacated. It is important that this should be done.
  Above all, we must get the quarter of a million building workers back to work, both in building new homes and in rehabilitating old ones. It is a scandal that in my area for example, where there are thousands of people on the housing list, thousands of building operatives, many of them highly skilled craftsmen, are walking the streets seeking work. It is the economics of madness, and it is

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  about time that we changed policy and did something to get the building workers back to work to build the houses that are so desperately needed.
  9.3 p.m.
  Mrs. Elaine Kellett-Bowman: It is not often that I follow the hon. Member for Liverpool, Walton (Mr. Heffer) and agree with everything he has said. How right he was to say that large cities like Manchester, Liverpool and London have been far too good at destroying communities. How much better it would have been if they had sought to save these twilight areas rather than destroy them and build often soulless buildings at rents which people cannot afford, destroying their community spirit in the process.
  My local council has not had that bulldozer mentality. Until recently it has had a very good and well-balanced housing programme. It has built steadily to meet the demand, especially for old people's dwellings, which are so vital to us in the North-West with our ageing population. It has had a planned programme of improving older council houses, of which we have many. It has lent extensively to people to buy their own homes. It has encouraged home improvements, which are particularly vital in an area such as ours, which has very many pre-1914 houses. It has cooperated closely with housing associations, and also with private builders to ensure that land has always been available when required and that there should be continuity of building.
  On all these counts, I regret to say, the council's policy has been shot to pieces by the present Government's policy. Our council building programme was dealt a savage blow last July when the Government, as part of their economy measures, asked local authorities not to start building work on new schemes even if the contracts had been accepted. This was described by our deputy chief executive as
  "the most serious piece of control ever exercised over housing".
  But, despite severe Government restrictions and bias against us in the rate support grant to that sort of area, my local council has done all in its power to get on with the job of meeting the
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  housing needs of those on the list, especially the need for old people's dwellings. I have no doubt that it will continue to struggle against the odds, but, unfortunately, they seem to be getting longer every week.
  The council's efforts to help people to buy their own homes have been brought to nought by a reduction in the amount of money available for council mortgages from £600,000 in 1976–77 to a mere one-sixth of that amount for 1977–78—only £95,000. We learned of that slashing cut with absolute horror in March because it has set all our plans at naught. This is a disaster in an area such as ours because we have a very high proportion of pre-1914 housing on which building societies are very unwilling to lend. Moreover—and this compounds the problem—we have a large number of relatively low-wage earners who find it difficult to get building society mortgages. In the past three years, 550 such people have been helped. Goodness knows how many we shall be able to help in the next year. The houses that they buy are the very houses which need modernisation and improvement.
  We were told that in order to keep control on expenditure the Government had decided to include all mortgage loans in the general allocation for direct lending, lumping it all together with conversion, repairs and improvements—a total for our city of only £249,000 for all these categories of work.
  The council also worked closely with the housing associations to help to meet local housing need. I mention three bodies: the British Legion, the North British Housing Association and the Northern Counties Housing Association. To our utter dismay, when a site had been not only bought but landscaped and serviced by the housing associations for a very well-balanced housing development, the Government suddenly, last September, stopped the development stone dead and redirected the money to so-called stress areas. We fought the decision as hard as we could, but we got no change.
  The Minister has proudly announced today that part of the £57 million cut has been restored. I wrote to the Minister within five minutes of learning of part restoration of funds, only to be

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  told that the money was not for the likes of us but was for so-called stress areas. If he wants to know about housing stress, he needs only to come to one of my interviews any week and he will get firsthand examples of housing stress, not just housing statistics. Similarly, a housing association-planned development for 24 flats for single people was also abandoned because of Government restriction. This is a sector which gets scant attention—single women and single men who have little provision made for them. This development, too, was knocked on the head.
  Lastly, a joint council-private builder project to build 64 houses for sale has had to be scrapped because no money is available locally for house buying, and "house for sale" notices are springing up all over the place.
  It is small wonder that the employment situation in our intermediate area has been consistently worse than that of most full development areas and, indeed, of some special development areas. Until the Cabinet gives us a status on a par with that of our neighbours, we shall not be able to remedy the unemployment problem and get house buying going again.
  The irony of it is that well over half of our total unemployed are builders. There would be many more were it not for the fact that local builders, in an effort to keep their workers together for when an upturn eventually comes, are taking on jobs at cost price or at below cost, and, indeed, in some cases 10 per cent. below cost. How much better it would be if all our unemployed builders could be employed on building houses instead of eating their hearts out on the dole. In our part of the country, people are loth to be unemployed. They are desperately independent, and it goes very much against the grain to be out of work for any time.
  If the Government do not do something very soon to save our house building industry, particularly in the North-West, there will be no builders left when we once more take over and implement an active housing policy tailor-made to meet the needs of the people.
  9.9 p.m.
  Mr. W. R. Rees-Davies: propose to cover ground that has not
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  so far been covered, but before doing so I should like to comment not only on the able speech of my hon. Friend the Member for Henley (Mr. Heseltine) but on that of my hon. Friend the Member for Melton (Mr. Latham) and, strangely enough, the valuable contribution of the hon. Member for Liverpool, Walton (Mr. Heffer). It was like a breath of fresh air to hear the hon. Gentleman bringing forward the idea of keeping the community together, referring to examples in the recent Jubilee celebrations. It is a pleasure to pay the hon. Gentleman a tribute.
  My hon. Friend the Member for Henley and my hon. Friend the Member for Kensington (Sir B. Rhys Williams) put the shorthold argument. I support it entirely, for the reasons they have given, but it docs not go far enough. The Minister has absolute power to decontrol from the Rent Acts altogether by region. There are many parts of the country, mainly in the shires—parts of Kent, for example—where the Rent Acts are no longer required.
  The basic trouble is that since 1919 the Rent Acts have distorted the housing economy, and we must gradually rid ourselves of this distortion without creating hardships to those who have security of tenure at the present time. Hitherto we have not been able to set about this task, because of the danger of a Socialist Government. It has always been the hard rock philosophy of Socialism that in no circumstances must people be denied absolute rent control and absolute security of tenure. Those hon. Members who had to suffer a 24-hour sitting on the Rent Act in the Standing Committee had the opportunity of seing how very deeply Labour Members believe in that principle.
  Now we are to have a report on vacant and under-occupied housing. It will probably be valueless, because it fails to understand the principles of housing. The Government, because they do not understand the principles of housing, have by their actions led to the abuse of housing. We need to introduce a system of new shorthold tenures, both for new housing and for premises that have been converted. At the same time we must in large tracts of the country get rid of rent control and security of tenure.
  In order to achieve this without hardship we shall have to give in return what is, in effect, a shorthold for those who

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  have been in occupation for any length of time. If they have been in occupation for five, 10 or 15 years, or even longer, it will be necessary to give them a firm shorthold tenure, with the opportunity then to go on the housing list if they so wish, so that they will have the guarantee of security of tenure in council housing. This opportunity will probably be taken up in a certain number of cases. Where the person concerned may have been in a wholly inadequate position over many years it may be that a modicum of increase in rent and the opportunity for the tenant to carry out repairs will lead to agreement. But without ultimately unwinding security of tenure we cannot hope to have a real market operating.
  Nothing is being done by the Government to help the young people who come into our cities or to help the single person who has to try to find accommodation. These categories have not been mentioned in the debate so far. Hostels are desperately needed in London and in all the major cities. Nothing has been done to provide hostels to enable young people to live at cheap rents in a reasonable way. This sort of accommodation, again, does not require security of tenure; that is purposeless. The young people want to stay only from six to 12 months at most, because they are moving about from one job to another.
  I have raised these questions with the tourist bodies and with other bodies in London. There have been sympathetic soundings, but the Government have done nothing to assist in this direction. The Greater London Council is simply not interested, because the people involved are not the voters of the present time. I hope that the Government will consider the question of hostels and ensure that accommodation is provided in Liverpool, Birmingham, Manchester, Cardiff and London to enable young people to have somewhere reasonable to live.
  Single people do not want security of tenure; they want the proper rebuilding and proper development of large existing blocks of flats. There should be an opportunity for the old people who own these houses to move out into other accommodation and for the younger generation and the single person to move in. They are willing to pay a reasonable rent. They want nothing other than the opportunity
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  to enter into a contract from one to three years, with the guarantee that at the end of that period they will be moving on.
  I agree with the suggestion that we need a Select Committee of the House to deal with these matters. It is not until one has heard the whole of a debate that it is possible to see what has been left out, and that there are needs such as those I have mentioned.
  These things can be done, but let us on the Conservative side not be afraid that a Labour Government will come back and ditch the measures that have been carried into effect. These measures must be taken if we are to have a really effective housing policy, such as that to be found in Germany today.
  9.15 p.m.
  Mr. Arthur Latham: I wish to apologise to my right hon. Friend the Minister for Housing and Construction for the fact that although I wish to put two questions to him I shall not find it possible to be in the Chamber when he replies. This is somewhat ironic, because during the last housing debate, when I put a number of points to him, he was not able to reply to them because he was peppered with partisan points by the Opposition Front Bench and was never able to deal with those serious housing questions. I understand that he is still in process of replying to those queries that he was not able to deal with on the previous occasion.
  I wish to put these points to the Minister because I do not know what to say to private tenants in my constituency who look to a Labour Government for some protection in facing rent increases of £300 a year over a three-year period. I emphasise that I am referring to increases of that nature and not to total rent. I have given the Minister a number of examples in numerous letters to him, Furthermore, I have written on this subject to the Secretary of State for the Environment and to the Prime Minister. I have now returned to the sort of occasion on which I originally put these questions—namely, in a housing debate. The Government appear to regard rent increases in some parts of London as excessive but exceptional. Therefore, they are not prepared to use their power to fix either a percentage or a cash ceiling.

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  I repeat that I do not know what to say to tenants who face excessive rent increases and who feel that they can turn to nobody for protection. It will be no comfort to them to say, as has been outlined by the Opposition Front Bench, that if the Conservatives are returned to power they will operate a free market in the private sector. The fact that those tenants might suffer even more will give them no reassurance.
  What appears to have been ignored by the Department of the Environment was illustrated by what was said by the hon. Member for Kensington (Sir B. Rhys Williams), who spoke about the letter in The Times from Sir Malby Crofton and the pressure that was being applied. Pressure from those who can pay a good deal for their accommodation is not a new feature in Westminster, Kensington or Chelsea. Recent events may have added an additional dimension, but the effect of the kind of rent increases that I have constantly described to the Minister will change altogether the social character of these parts of central London. In future, it will no longer be possible for a family living on ordinary means to think in terms of making their home in those parts of London. It will be no use pointing to local authority property, because, as the Minister will know from his constituency in Brent, there is a tendency for local authorities, particularly Tory-controlled authorities such as Westminster, to look at the level of private rents and then to examine local authority rents and consider setting them at a new high level.
  When I hear my hon. Friend the Member for Salford, East (Mr. Allaun) and others talk of the rent levels obtaining in other parts of the country I emphasise to them that ordinary local authority tenants in my constituency are being asked to pay rents of £14 and £15 per week as the norm. If the Government want to see a reasonable mixture of population in central London, if they want ordinary working people, including higher-earning working people, to take the opportunity to make their homes in central London, they will have to take action soon to stop these excessive rent increases. These people will be driven out of the centre of the Metropolis. That is not good for London and it is not good for my constituents.
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  I have on numerous occasions sent to the Minister letters from my correspondents, and he has a file corresponding to mine. It is a large one, involving individual cases in my constituency. I have also sent evidence about neighbouring districts that are similarly affected. Action is necessary, and I again appeal to the Minister to offer a glimmer of hope to these people, who are entitled to look to the Government for protection.
  I wish to mention another related matter, concerning the National Empty Properties Campaign, which held an exhibition on the Interview Floor of the Palace of Westminster last week. The exhibition was attended by a number of hon. Members. An interesting development of the campaign is that although it started in Westminster—indeed, in Paddington—there is now a countrywide response to the campaign. At the exhibition last week there were representatives from not only London but Cardiff, Bristol, Nottingham, Sheffield and many other parts of the country. They made the point that this is not simply a London problem but a growing one in most urban centres.
  During the last housing debate the Government announced that there was to be a pilot survey of empty properties. My hon. Friend the Member for Salford, East has tried to introduce a requisitioning Bill. I was able to present it on his behalf on one occasion—albeit unsuccessfully.
  My hon. Friend and I, and other hon. Members, thought that here at last was some indication of Government action. We believed that the problem had been identified, that there would be a pilot survey, and that some useful action could be anticipated. I recently tabled a Question on this point and the reply indicated that the pilot survey would be made at some time in the future, perhaps in July or August. The survey will look at empty properties and return six months later to find out whether they are still empty and, if so, inquire why. I suggest that the approach shows an abysmal unawareness of the urgency of the problem and of the need for Government action. We are speaking about the homeless in London and elsewhere in the country who want a response from the Government that will be much more immediate than a long-term survey and

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  pilot inquiry and, presumably, another long pause before action is contemplated.
  I must remind the Government that during the last debate on housing one of the Opposition speakers suggested that a variety of actions might be taken to try to overcome the problem of empty properties. I readily responded to that, and suggested that it might be helpful if, instead of having a pilot survey, a report and a long pause, with heaven knows what action at the end of it, the Government now considered attempting to get through the House—and this might not be impossible—enabling legislation that would permit schemes to be promoted, particularly in stress areas where there is a high incidence of empty property. I offer Westminster and Paddington as ready examples. Such a scheme should be along the lines suggested by my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) this evening. He talked not about requisitioning—that raises hackles among hon. Members opposite; they go white at the thought—but about a scheme in which an administrative order could be made by a local authority. The property could be occupied and the rates calculated and paid.
  Little more than that was involved in the requisitioning Bill that we attempted to bring before the House. It is merely a system of trying to ensure that the many thousands of empty properties are put to a useful purpose, at least for a limited period. I urge the Government not to tinker further with pilot schemes but to come forward with positive proposals that will help to overcome the problem, at least in some parts of the country.
  Has the Department any figures to convince it of the scale of the problem or to confirm various claims that are being made? For example, it is said that there might be between 120,000 and 200,000 empty properties in the London area. If only half of these properties could be occupied it would be a substantial contribution towards dealing with the problem of homelessness. Similarly, if powers could be introduced countrywide it would save much misery and anguish among people who need homes and who see empty houses around them over which no action is being taken.
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  I still insist that the Rent Act 1974 has done little to contribute to the problem. This problem was here long before the Act. I believe that many landlords keep some properties empty as a hedge against inflation—as part of a deal in a multiple transaction that may take place. If the Government made a sympathetic response to the idea of a system of compulsory, albeit temporary, letting, it would be unnecessary to use that power. The mere fact that there was the possibility of such action would have a salutary effect on landlords who keep properties empty.
  I shall not be here for my right hon. Friend's reply, but I hope that he will answer the points that I have raised and that I shall be able to read them in Hansard. There is a need to do something about excessive rent increases in the private sector and a crying urgency to see that empty properties are occupied by homeless families.
  9.28 p.m.
  Mr. Hugh Rossi: In view of the lateness of the hour and the limited time left to me and the Minister to reply, I hope that the House will forgive me if I address my remarks mainly to the speech of the Secretary of State and do not refer to the many valuable points made by other hon. Members.
  The right hon. Gentleman started by commenting on the Community Land Act and claimed that it had had great success on the basis of its having stabilised land prices. The Secretary of State should not treat the House as if it were completely naive. He knows as well as we do that so little land is now changing hands that there can hardly be said to be a market at all. There are insufficient deals to establish a price.
  I am not saying this just for the sake of scoring party points. It is being said by non-political organisations which are desperately concerned with the development and provision of housing. The House-Builders Federation and the National Federation of Building Trades Employers are desperate about the effects that the Act is having and will have on the supply of land for housebuilding if it is allowed to remain on the statute book.
  The hon. Member for the Isle of Wight (Mr. Ross) said that there was some merit in the Act and wondered what we would

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  do if we repealed it—as we shall. He indicated that there was a need for local authorities to have some power to marshal land. I accept that local authorities should have that power and should be able to arrange for the development of the land in partnership with private developers.
  There is also a need for local authorities to have the power to deal with land in the interests of what is now called positive planning. That can be done readily by simple amendments to the existing town and country planning legislation—for example, by amending the powers of acquisition possessed by authorities. What is not necessary is all the bureaucratic nonsense contained in the Community Land Act—for example, disposal notification areas and the suspension of planning permission for a private developer while the local authority makes up its mind whether it chooses to carry out the development. When that situation is coupled with a rate of development land tax of between 66 per cent. and 80 per cent., what more could one envisage as creating a land shortage? If we wished deliberately to create a land shortage, we could not go about it any better than by introducing the measures that we have in the Act, which is a complete discouragement to anyone to bring forward land for development purposes.
  I have mentioned the house building industry and the Secretary of State has made reference to it. The right hon. Gentleman took an extremely complacent view. He tended to brush aside the difficulties that the industry faces. He said that the present taxation measures do not really impinge upon the industry. I wish that he had been there—and I do not recall whether the right hon. Gentleman was—when we debated the construction industry a few weeks ago. If he had been in the Chamber he would have realised that the industry was going through a worse period than in the 1930s. There are about a quarter of a million unemployed in the construction industry. The right hon. Gentleman surely cannot sit back and make the complacent and bland statements that he made this afternoon.
  I wonder whether the right hon. Gentleman read the Architects' Journal of 15th June 1977. It states that one in three
  1008
  architects will be unemployed within two years. It continues:
  "Architects are at the mouth of the pipeline which leads from the client to the worker on on the sites. … No one can calculate the figure accurately',
  but, given the work load of architects at the moment, there will be at least 400,000 unemployed in the construction industry next year unless the Government take action.
  Mr. Shore: I know that the hon. Gentleman wants to be fair. What I was saying in the context of the building industry was not to deny the great problems which it faces, which I fully understand, but to put to the hon. Gentleman the question of whether he agrees that the major problem facing the industry is a lack of demand, and whether in the light of that his party's policy of discouraging new local authority building would have the effect of damaging rather than helping the industry.
  Mr. Rossi: The Secretary of State cannot slide out of it in that way. He knows that it is patently not true. Demand is a factor, but what creates demand? Who is responsible for the economic climate today? What stimulates or does not stimulate demand? The responsibility lies with the Labour Cabinet for the state in which the nation now finds itself and for the state in which the construction industry finds itself.
  The Secretary of State took an equally sanguine view of housing starts and said that in the private sector these were holding steady. There has been a consistent and continual decline since last autumn. At this time last year housing starts were running at about 30,000 a month. Today there are 15,000 a month. That is not something that the right hon. Gentleman can brush aside. Orders, which are the starts of tomorrow, are 25 per cent. down on last year. An even more significant figure is the stock of bricks and cement, which is a sensitive indicator of the amount of activity that is taking place in the house building and construction industry. The brick stocks are mounting month by month and they are in their hundreds of millions. If the Government are not careful, they will soon be at 1,000 million. We shall have a brick mountain.
  Mr. Norman Tebbit: Give him a free vote on it and see which way he goes.
  Mr. Rossi: The Labour Government invented the brick mountain long before the European Community ever thought of any mountains. We have seen this situation before. It took place in 1964–65.
  I turn to the public sector. The right hon. Gentleman is always ready to put the blame on someone else for a disappointing performance. The scapegoats are the Conservative-controlled local authorities which have recently come into office and have inherited a reduction in the rate support grant and high interest rate charges. These problems have been created by the Government. The Undersecretary of State for Wales is a more truthful man than the Secretary of State, because he said that the difficulty was spread equally between Conservative-and Labour-controlled authorities.
  Of course, when it is not the local authorities it is the weather. That is the other alibi. The wet weather is now responsible for the lack of building. It is on those feeble excuses that the record of the Secretary of State and the Government will be judged.
  The right hon. Gentleman told the House that we must accept that there has been a reduction in applications for improvement grants, but he did not tell us that it was a reduction from 450,000 in 1973 to 150,000 in 1976—a fall in expenditure from £840 million to £470 million. The Secretary of State said that was the fault of the 1974 Act—which, incidentally, the Labour Government brought in. The Conservatives were party to that Act, I agree. But the Act gives the Minister power to adjust rateable values above which improvement grants cannot be claimed. It lies within his power to increase improvement grants. Despite urgings from both sides of the House for several years, he has done nothing to increase the level of improvement grants.
  The maximum eligible expense of £3,200 for each improvement is also totally out of date. The average cost of an improvement in London is £7,500, and it is £4,500 elsewhere. In view of the level of grant that is applicable today compared with the actual cost of improvement, few people are prepared to put in applications. What are the Government doing to encourage applications? If they encouraged applications, they would help
  1010
  the house building and construction industry and deal with the housing problem in a way that we would like to see.
  The Secretary of State said that, in terms of quality and quantity, Britain is now one of the best-housed countries in Europe. I accept that the problem is no longer the overall shortage of houses. We have about 20 million houses in this country as against 19 million households. Therefore, we have a crude surplus. The right hon. Gentleman said that we had built about 7½ million houses in the last 25 years. The problem is not the quantity, because we are in surplus, but, to an extent, the quality, because within the total of 20 million houses about 2 million are unfit or are lacking in basic amenities.
  We have consistently and persistently urged that there should be a redirection of resources in this area, but the Government have consistently failed to take action. Instead, we have seen this tremendous decline in the number of improvement grants and in the supply of money that has been made available for this purpose. That is understandable because the Government entered office on a policy of massive, indiscriminate expansion of local authority building. As a result, they neglected the existing housing stock.
  A change of heart has been announced today. I am glad to hear from the Secretary of State that he is now to give local authorities block grants within which they will be able to choose whether they use the money for new council house building or for the improvement of housing stock. Now that they have been given this discretion and flexibility, I hope that we do not hear again the argument against certain authorities that they are not building as many houses as they should, particularly if they are spending money in the way in which I think the House would like them to spend it—on improving the existing housing stock which is in surplus.
  We believe that local authorities should concentrate new building on the sectors of the community that are not able to help themselves—the elderly, the disabled and those in need.
  Mr. Heffer: Surely the hon. Member must agree that if a local authority is getting out of balance—for example, in

  1011
  certain areas where there is a need to build houses—and it is not building but is concentrating on improvements, we have a right to criticise it.
  Mr. Rossi: If that is what authorities are doing, I agree. However, the authorities that are usually criticised are those that tend to concentrate on improvement when they can do so. That has been the picture so far.
  It is often said that the housing figures of the Conservative Government were not as good as those of Labour. If one takes a combination of new houses built and improvements and compares the records of the two Governments, one finds that in 1973 the Conservative Government improved or built 747,000 compared with 493,000 built or improved by this Government. The Labour Government have shamefully neglected the need for improvement.
  I had intended to deal with other matters, particularly those mentioned by the Secretary of State and the financial review that he will be introducing next week. I wanted to deal with the challenge he made to us about the increase in council rents and the question of a contribution of 7 per cent. of average income towards council rents. I have not the time to go into detail.
  From the statements by the Secretary of State, it appears that he does not really want to do much at all either with council rents or with mortgage interest rates but that some minor adjustments must be made. One can only conclude that he does not want to offend the 30 per cent. of people who live in council houses by putting up their rents too much or the 53 per cent. of people who live in owner-occupied houses by tinkering around too much with mortgage relief. I can only take that as an indication of a General Election in the near future.
  9.44 p.m.
  The Minister for Housing and Construction (Mr. Reginald Freeson): I shall try to deal with as many as possible of the points that have been raised in the debate. Most of the general points that were raised by the hon. Member for Hornsey (Mr. Rossi) and other hon. Members were dealt with in the opening speeches. Following the publication of the Green Paper next week we shall begin
  1012
  a major debate and consultations on a whole range of matters which are the subject of today's debate.
  A great deal of play has been made of the improvement grant position. I accept that the situation has been accurately described. There has been a major reduction in the number of improvement grants, partly because of the general state of the economy and partly because of the state of the housing market, but also arising from the operation first of all of the 1974 Act and, more particularly, the ending of what was known to be the temporary Act passed by the previous Government. I have before me a summary of that Government's White Paper dealing with this issue particularly. I shall not go into all the details of it, but I shall quote some significant figures.
  The Act in question was described as a temporary Act, due to end in June 1974. The number of improvement grants, which had stood at 57,000 in the first quarter of 1974, dropped to 17,500 in the first quarter of 1975, after the ending of the temporary Act. That was the major single cause of the drop in improvement grants. There were two or three areas in which that special Act operated chiefly as a counter-unemployment measure, which had increased the percentage of improvement grants in large parts of the country; but it had also given rise to a whole range of abuses which the then Government themselves described in their own White Paper before they left office and which they made recommendations to deal with in a draft Bill published just before the 1974 election.
  Mr. Heseltine: Then why is it that, nearly two years later, the Minister has not introduced legislation to deal with the abuses and to replace the facilities so that the flow of improvement grants can go on?
  Mr. Freeson: The hon. Gentleman is wrong. We introduced the Housing Act 1974, which in this respect was based largely on the recommendations in the draft Bill which the previous Government had published. So we have introduced the very legislation which he suggests we should now introduce.
  Mr. Michael Morris Mr. Michael Morris (Northampton, South) rose——
  Mr. Freeson: No, I will not give way. I have very little time and the hon. Gentleman has not been in the Chamber very long. I want to deal with points put to me—[HON. MEMBERS: "Give way."] It would help the House if the Opposition stopped turning housing debates into barnstorming acts every time we had one.
  Mr. Michael Morris Mr. Michael Morris rose——
  Mr. Freeson: 1 will not give way. I wish to deal with as many of the individual points—[Interruption.] Does the hon. Member for Henley (Mr. Heseltine) want to intervene again?
  Mr. Humphrey Atkins: Get on with it.
  Mr. Freeson: The Opposition Chief Whip should hold his tongue.
  A number of points have been made about this Government's record in both the public and private sectors. Whatever the hon. Member for Hornsey may have said and no matter what is said by those who seek to interrupt me, when this Government came to office there was a total collapse of the house building programme in both sectors. We have since then increased building in the public sector from a little over 100,000 dwellings a year to between 150,000 and 170,000. In the private sector, of which the Conservative Party is so proud, they produced a situation in which a figure of 200,000-odd dwellings collapsed to just over 100,000 when they went out of office. There were 65,000 newly-built houses on the market which had been unsold for more than six months when we came to office.
  We have reversed that trend. There have been increases in the private and the public sectors of up to 40 and 50 per cent. taking one year with another. We are holding that course steady, no matter what Conservative Members may say.
  There were suggestions that the Community Land Act had something to do with holding back land from the housing market. There is no evidence for this from house builders; none of them has suggested it. Despite their feelings about the Act, they are not arguing that it is responsible for holding back land. In the first year of operation of the Act, more land was purchased by local authorities than was forecast. The forecast was for
  1014
  1,200 acres, but in the event over 1,500 acres were purchased, half of which was for housing purposes. In 1977–78 we shall see something of the same order of activity on expenditure of resources.
  Mr. Heseltine Mr. Heseltine rose——
  Mr. Freeson: No, I shall not give way. I offered to give way to the hon. Member a few minutes ago and he did not take the opportunity.
  The point has been made about the operation of the Rent Acts. I restate that there is no evidence at all to suggest that the Rent Acts have dried up the supply of private rented accommodation. What is more, I put the question once more to Opposition Members, in particular to the hon. Member for Hornsey: if they were so strongly against the Act—and for three years they have opposed it—why did they not vote against it in 1974 when they had the opportunity to do so? I invite the hon. Member for Hornsey to tell us the reason on some other occasion. He did not vote against the 1974 Rent Act but he has spent the last three years attacking it. Yet he has not told us why he has turned his back on the Rent Act when his own party supported it when they were in office and refused to vote against it when it was introduced. [Interruption.] I wish that the Opposition Chief Whip would maintain silence.
  Mr. Rossi Mr. Rossi rose——
  Mr. Freeson: No, I shall not give way. I have not much time.
  Mr. Rossi: On a point of order, Mr. Deputy Speaker. The Minister has asked me three times to answer a question, and when I try to do so he will not let me. Will you rule that he should allow me to answer his question?
  Mr. Deputy Speaker (Mr. Oscar Murton): That is entirely within the discretion of the Minister.
  Mr. Freeson: The hon. Member for Hornsey can answer the question on any other occasion that he wishes. I find the behaviour of hon. Members on the Opposition Benches very interesting. I voted against the televising of the House, but I think it would be interesting to see this kind of conduct on the screen. Hon. Members opposite must contain themselves. This jack-in-the-box behaviour serves no particular point.

  1015
  In the limited time that the Opposition interrupters and barnstormers have left me, I shall deal with the few points that were put to me by hon. Members who were in the House throughout the debate. The point was made by the hon. Member for Henley about a review of planning procedures. We have done that and we shall issue very shortly a revision of the General Development Order as a result of that review. I ask the House to await its publication. The hon. Member for Horasey was one who participated in the review——
  Mr. Rossi: That was not a review of the planning system.
  Mr. Freeson: I ask the hon. Member to await publication, and then he will know.
  The hon. Member asked us—others supported him—to undertake arrangements to encourage leasing of empty property by local authorities. We are already doing so. At least two dozen authorities are doing this. We are encouraging them. We will continue to do so.
  The hon. Gentleman asks us to support a policy of switching over to gradual renewal and rehabilitation and to stop the bulldozer. We are doing so. It is already policy.
  The hon. Gentleman asked us to undertake a review of the operation of the Rent Acts generally—not just the 1974 Act. We are reviewing the operation of the Rent Acts. Specifically in answer to the hon. Member for Isle of Wight (Mr. Ross), I have asked officials to consider any relevance that the Landlord and Tenant Act 1954 might have to that review. I await the advice of my officials on that matter.
  It has been suggested that there should be an increase in the activity of local authorities in rehabilitation outside improvement grants. Today we are providing about five times as much capital, in real terms, as was proposed by the Tory Government when they went out of office. In 1977 nearly £600 million is being spent by local authorities and housing associations, or provided for them, for the purposes of conversion, modernisation and rehabilitation, as compared with a figure of little more than £100 million provided by the Tory Government when they were in office and the election was called. We
  1016
  are increasing the provision. We do not have to plan to do the things suggested, because we are already undertaking to do them. Hon. Members should ask the tenants who are occupying the modernised properties whether they notice the difference.
  We are already undertaking policies for alternative kinds of tenancy. The fastest growing kind of tenancy in the country is the co-operative tenancy. We are backing housing associations and local authorities in undertaking this.
  However, we intend to press ahead with a new building programme. The hon. Member for Hornsey said that if freedom were given to local authorities to switch from one kind of expenditure to another we could not complain if they spent more on rehabilitation than on new buildings. I shall not spend too much time on that argument. There is much more involved in the housing investment programme that we are putting to local authorities than that simple proposition.
  On the evidence so far coming to us, there are local authorities which have decided to cut their house building programme without switching their resources to rehabilitation.
  Mr. Michael Morris: The Minister does not let them switch.
  Mr. Freeson: They are not switching. That is the point. They are cutting.
  Mr. Michael Morris Mr. Michael Morris rose—
  Mr. Freeson: The point is that local authorities are not switching their expenditure; they are cutting it. We have already undertaken to switch those allocations to other local authorities which are prepared to take up that expenditure. We have started to do so. I urge hon. Members on the Opposition Benches to persuade their stress area authorities now under Conservative control to maintain the building programmes that those authorities put to my Department, in addition to their rehabilitation policy. That is their responsibility. It is not good enough for Opposition Members to talk about the switching of expenditure when in fact what is at risk is a cut in investment in total.
  I have to put the question to the hon. Gentleman once more and I shall give way on this one. Does he favour——
  Mr. Humphrey Atkins Mr. Humphrey Atkins (Spelthorne)rose in his place and claimed to move, That the Question be now put.
  Question, That the Question be now put, put and agreed to.
  Question put accordingly, That this House do now adjourn:—
  The House divided: Ayes 255, Noes 271.

  Division No. 154]

  AYES

  [10.00 p.m.

  Adley, Robert

  Gilmour, Sir John (East Fife)

  Maxwell-Hyslop, Robin

  Aitken, Jonathan

  Glyn, Dr Alan

  Mayhew, Patrick

  Alison, Michael

  Godber, Rt Hon Joseph

  Meyer, Sir Anthony

  Amery, Rt Hon Julian

  Goodhart, Philip

  Miller, Hal (Bromsgrove)

  Atkins, Rt Hon H. (Spelthorne)

  Goodhew, Victor

  Mills, Peter

  Awdry, Daniel

  Goodlad, Alaslair

  Miscampbell, Norman

  Baker, Kenneth

  Gow, Ian (Eastbourne)

  Mitchell, David (Baslngstoke)

  Bell, Ronald

  Gower, Sir Raymond (Barry)

  Moate, Roger

  Bennett, Dr Reginald (Fareham)

  Gray, Hamish

  Monro, Hector

  Benyon, W.

  Griffiths, Eldon

  Montgomery, Fergus

  Berry, Hon Anthony

  Grimond, Rt Hon J.

  Moore, John (Croydon C)

  Biffen, John

  Grist, Ian

  More, Jasper (Ludlow)

  Biggs-Davison, John

  Grylls, Michael

  Morgan, Geraint

  Blaker, Peter

  Hall, Sir John

  Morgan-Giles, Rear-Admiral

  Body, Richard

  Hall-Davis, A. G. F.

  Morris, Michael (Northampton S)

  Boscawen, Hon Robert

  Hamilton, Michael (Salisbury)

  Morrison, Charles (Devizes)

  Botlomley, Peter

  Hampson, Dr Keith

  Morrison, Hon Peter (Chester)

  Bowden, A. (Brighton, Kemptown)

  Hannam, John

  Mudd, David

  Boyson, Dr Rhodes (Brent)

  Harrison, Col Sir Harwood (Eye)

  Neave, Airey

  Braine, Sir Bernard

  Harvie Anderson, Rt Hon Miss

  Nelson, Anthony

  Brittan, Leon

  Hastmfls, Stephen

  Neubert, Michael

  Brocklebank-Fowler, C.

  Havers, Rt Hon Sir Michael

  Newton, Tony

  Brooke, Peter

  Hayhoe, Barney

  Nolt, John

  Brotherton, Michael

  Heath, Rt Hon Edward

  Onslow, Cranley

  Brown, Sir Edward (Bath)

  Heseltine, Michael

  Page, Rt Hon R. Graham (Crosby]

  Bryan, Sir Paul

  Hicks, Robert

  Page, Richard (Workington)

  Buchanan-Smith, Alick

  Higgins, Terence L.

  Parkinson, Cecil

  Buck, Antony

  Hodgson, Robin

  Pattie, Geoffrey

  Budgen, Nick

  Holland, Philip

  Penhaligon, David

  Bulmer, Esmond

  Hooson, Emiyn

  Percival, Ian

  Burden, F. A.

  Hordern, Peter

  Peyton, Rt Hon John

  Butler, Adam (Bosworth)

  Howe, Rt Hon Sir Geoffrey

  pink, R. Bonner

  Carlisle, Mark

  Howell, Ralph (North Norfolk)

  Price, David (Eastieigh)

  Chalker, Mrs Lynda

  Howells, Geraint (Cardigan)

  Prior, Rt Hon James

  Clark, Alan (Plymouth, Sutton)

  Hunt, David (Wirral)

  Pym, Rt Hon Francis

  Clark, William (Croydon S)

  Hunt, John (Bromley)

  Raison, Timothy

  Clarke, Kenneth (Rushcliffe)

  Hutchison, Michael Clark

  Rathbone, Tim

  Clegg, Waller

  Irving, Charles (Cheltenham)

  Rawlinson, Rt Hon Sir Peter

  Cockcroft, John

  James, David

  Rees, Peter (Dover & Deal)

  Cooke, Robert (Bristol W)

  Johnson Smith, G. (E Grinslead)

  Rees-Davies, W. R.

  Cope, John

  Jones, Arthur (Daventry)

  Renton, Rt Hon Sir D. (Hunts)

  Cormack, Patrick

  Jopling, Michael

  Renton, Tim (Mid-Sussex)

  Corrie, John

  Joseph, Rt Hon Sir Keith

  Rhodes James, R.

  Costain, A. P.

  Kaberry, Sir Donald

  Rhys Williams, Sir Brandon

  Crouch, David

  Kellett-Bowman, Mrs Elaine

  Ridley, Hon Nicholas

  Crowder, F. P.

  Kershaw, Anthony

  Ridsdale, Julian

  Davies, Rt Hon J. (Knutsford)

  Klmball, Marcus

  Rifkind, Malcolm

  Dean, Paul (N Somerset)

  King, Evelyn (South Dorset)

  Rippon, Rt Hon Geoffrey

  Dodsworth, Geoffrey

  Kitson, Sir Timothy

  Roberts, Wyn (Conway)

  Douglas-Hamilton, Lord James

  Knox, David

  Ross, Stephen (Isle of Wight)

  Drayson, Burnaby

  Lamont, Norman

  Rossi, Hugh (Hornsey)

  du Cann, Rt Hon Edward

  Langford-Holt, Sir John

  Rost, Peter (SE Derbyshire)

  Durant, Tony

  Latham, Michael (Melton)

  Sainsbury, Tim

  Dykes, Hugh

  Lawrence, Ivan

  St. John-Stevas, Norman

  Eden, Rt Hon Sir John

  Lawson, Nigel

  Scott, Nicholas

  Edwards, Nicholas (Pembroke)

  Lester, Jim (Beeston)

  Shaw, Giles (Pudsey)

  Elliott, Sir William

  Lewis, Kenneth (Rutland)

  Shelton, William (Streatham)

  Emery, Peter

  Lloyd, Ian

  Shepherd, Colin

  Evans, Gwynfor (Carmarthen)

  Loveridge, John

  Shersby, Michael

  Eyre, Reginald

  Luce, Richard

  Silvester, Fred

  Fairbairn, Nicholas

  McAdden, Sir Stephen

  Sims, Roger

  Falrgrieve, Russell

  McCrindle, Robert

  Sinclair, Sir George

  Fell, Anthony

  Macfarlane, Nell

  Skeet, T. H. H.

  Finsberg, Geoffrey

  MacGregor, John

  Smith, Dudley (Warwick)

  Fisher, Sir Nigel

  MacKay, Andrew James

  Smith, Timothy John (Ashfleld)

  Fletcher, Alex (Edinburgh N)

  Macmilian, Rt Hon M. (Farnham)

  Spence, John

  Fookes, Miss Janet

  McNair-Wilson, M. (Newbury)

  Spicer, Jim (W Dorset)

  Forman, Nigel

  McNair-Wilson, P. (New Forest)

  Spicer, Michael (S Worcester)

  Fowler, Norman (Sutton C'f'd)

  Madel, David

  Sproat, lain

  Fox, Marcus

  Marshall, Michael (Arundel)

  Stalnton, Keith

  Fraser, Rt Hon H. (Stafford & St)

  Marten, Neil

  Stanbrook, Ivor

  Fry, Peter

  Mates, Michael

  Stanley, John

  Galbraith, Hon T. G. D.

  Mather, Carol

  Steen, Anthony (Wavertree)

  Gardiner, George (Reigate)

  Maude, Angus

  Stewart, Ian (Hitchin)

  Gardner, Edward (S Fylde)

  Maudllng, Rt Hon Reginald

  Stokes, John

  Gilmour, Rt Hon Sir Ian (Chesham)

  Mawby, Ray

  Stradllng Thomas, J.

  Tapsell, Peter

  Vaughan, Dr Gerard

  Wiggin, Jerry

  Taylor, R. (Croydon NW)

  Vlggers, Pater

  Wigley, Dafydd

  Taylor, Teddy (Cathcart)

  Wainwright, Richard (Colne y)

  Winterton, Nicholas

  Tebbit, Norman

  Wakeham, John

  Wood, Rt Hon Richard

  Temple-Morris Peter

  Walder, David (Clitheroe)

  Young, Sir G. (Eallng, Acton)

  Thatcher, Rt Hon Margaret

  Walker, Rt Hon P. (Worcester)

  Younger, Hon George

  Thomas, Dafydd (Merioneth)

  Walters, Dennis

  Thomas, Rt Hon P. (Hendon S)

  Weatherlll, Bernard

  TELLERS FOR THE AYES:

  Townsend, Cyril D.

  Wells, John

  Mr. Spencer Le Marchant and

  Trotter, Neville

  Whitelaw, Rt Hon William

  Mr. Michael Roberts.

  van Straubenzee, W. R.

  NOES

  Abse, Leo

  Edge, Good

  Lipton, Marcus

  Allaun, Frank

  Ellis, John (Brigg & Scun)

  Lomas, Kenneth

  Anderson, Donald

  English, Michael

  Loyden, Eddie

  Archer, Rt Hon Peter

  Ennals, David

  Lyon, Alexander (York)

  Armstrong, Ernest

  Evans, Fred (Caerphilly)

  Lyons, Edward (Bradford W)

  Ashley, Jack

  Evans, loan (Aberdare)

  Mabon, Rt Hon Dr J. Dickson

  Ashton, Joe

  Evans, John (Newton)

  McCartney, Hugh

  Atkins, Ronald (Preston N)

  Ewing, Harry (Stirling)

  McDonald, Dr Oonagh

  Atkinson Norman

  Fernyhough, Rt Hon E.

  McElhone, Frank

  Barnett, Guy (Greenwich)

  Fitch, Alan (Wigan)

  MacFarquhar, Roderick

  Barnett, Rt Hon Joel (Heywood)

  Flannery, Martin

  McGuire, Michael (Ince)

  Bates, Alf

  Fletcher, Ted (Darlington)

  MacKenzie, Rt Hon Gregor

  Bean, R. E.

  Foot, Rt Hon Michael

  Mackintosh, John P.

  Benn, Rt Hon Anthony Wedgwood

  Ford, Ben

  Maclennan, Robert

  Bennett, Andrew (Stockport N)

  Forrester, John

  McMillan, Tom (Glasgow C)

  Bldwell, Sydney

  Fowler, Gerald (The Wrekin)

  Madden, Max

  Bishop, Rt Hon Edward

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

  Magee, Bryan

  Blenkinsop Arthur

  Freeson, Reginald

  Mahon, Simon

  Booth, Rt Hon Albert

  Garrett, John (Norwich S)

  Mallalieu, J. P. W

  Boothroyd, Miss Betty

  Garrett, W. E. (Wallsend)

  Marks, Kenneth

  Bottomley, Rt Hon Arthur

  George, Bruce

  Marshall, Dr Edmund (Goole)

  Boyden, James (Bish Auck)

  Gilbert, Dr John

  Marshall, Jim (Leicester S)

  Bradley, Tom

  Ginsburg, David

  Maynard, Miss Joan

  Bray, Dr Jeremy

  Golding, John

  Meacher, Michael

  Brown, Hugh D. (Provan)

  Gould, Bryan

  Mellish, Rt Hon Robert

  Brown, Robert C. (Newcastle W)

  Gourlay, Harry

  Mendelson, John

  Buchan, Norman

  Graham, Ted

  Mikardo, Ian

  Buchanan, Richard

  Grant, George (Morpeth)

  Millan, Rt Hon Bruce

  Butler, Mrs Joyce (Wood Green)

  Grocott, Bruce

  Miller, Dr M. S. (E Kilbride)

  Callaghan, Rt Hon J. (Cardiff SE)

  Hamilton, W. W. (Central Fife)

  Mitchell, Austin Vernon (Grimsby)

  Callaghan, Jim (Middleton & P)

  Harrison, Rt Hon Walter

  Molloy, William

  Campbell, Ian

  Hart, Rt Hon Judith

  Moonman, Eric

  Canavan, Dennis

  Hattersley, Rt Hon Roy

  Morris, Alfred (Wythenshawe)

  Cant, R. B.

  Hatton, Frank

  Morris, Charles R. (Openshaw)

  Carmichael, Nell

  Hayman, Mrs Helene

  Morris, Rt Hon J. (Aberavon)

  Carter, Ray

  Heffer, Eric S.

  Moyle, Roland

  Carter-Jones, Lewis

  Hooley, Frank

  Mulley, Rt Hon Frederick

  Cartwright, John

  Horam, John

  Murray, Rt Hon Ronald King

  Castle, Rt Hon Barbara

  Howell, Rt Hon D. (B'ham, Sm H)

  Newens, Stanley

  Clemitson, Ivor

  Hoyle, Doug (Nelson)

  Noble, Mike

  Cocks, Rt Hon Michael (Bristol S)

  Huckfield, Les

  Oakes, Gordon

  Cohen, Stanley

  Hughes, Rt Hon C. (Anglesey)

  Ogden, Eric

  Coleman, Donald

  Hughes, Mark (Durham)

  O'Halloran, Michael

  Colquhoun, Ms Maureen

  Hughes, Robert (Aberdeen N)

  Orme, Rt Hon Stanley

  Concannon, J. D.

  Hughes, Roy (Newport)

  Ovenden, John

  Conian, Bernard

  Hunter, Adam

  Padley, Walter

  Corbett, Robin

  Irving, Rt Hon S. (Dartford)

  Palmer, Arthur

  Cowans, Harry

  Jackson, Colin (Brlghouse)

  Park, George

  Cox, Thomas (Tooting)

  Jackson, Miss Margaret (Lincoln)

  Parker, John

  Crawshaw, Richard

  Janner, Grevllle

  Parry, Robert

  Cronin, John

  Jeger, Mrs Lena

  Pavitt, Laurie)

  Crowther, Stan (Rotherham)

  Jenkins, Hugh (Putney)

  Pendry, Tom

  Cryer, Bob

  John, Brynmor

  Perry, Ernest

  Cunningham, G. (Islington S)

  Johnson, James (Hull West)

  Prescott, John

  Cunningham, Dr J. (Whiteh)

  Johnson, Walter (Derby S)

  Price, William (Rugby)

  Davidson, Arthur

  Jones, Alec (Rhondda)

  Radice, Giles

  Davies, Bryan (Enfleld N)

  Jones, Barry (East Flint)

  ROM, Rt Hon Meriyn (Leads S)

  Davies, Denzll (LlanelH)

  Jones, Dan (Burnley)

  Richardson, Miss Jo

  Davies, Ifor (Gower)

  Kaufman, Gerald

  Roberts, Albert (Normanton)

  Davis, Clinton (Hackney C)

  Kelley, Richard

  Roberts, Gwllym (Cannock)

  Deakins, Eric

  Kerr, Russell

  Robinson, Geoffrey

  Dean, Joseph (Leeds West)

  Kikoy-Silk, Robert

  Roderick, Caerwyn

  Dell, Rt Hon Edmund

  Kinnock, Nell

  Rodgers, George (Chorley)

  Dempsey, James

  Lamble, David

  Rodgers, Rt Hon William (Stockton)

  Doig, Peter

  Lamborn, Harry

  Rooker, J. W.

  Dormand, J. D.

  Lamond, James

  Rose, Paul B.

  Douglas-Mann, Bruce

  Latham, Arthur (Paddinglon)

  Ross, Rt Hon W. (Kllmamoek)

  Duffy, A. E. P.

  Leadbitter, Ted

  Rowlands, Ted

  Dunn, James A.

  Lee, John

  Ryman, John

  Dunnett, Jack

  Lestor, Miss Joan (Eton & Slough)

  Sandelson, Neville)

  Dunwoody, Mrs Gwyneth

  Lever, Rt Hon Harold

  Sedgemore, Brian

  Eadie, Alex

  Lewis, Ron (Carlisle)

  Selby, Harry

  1020

  1021

  Shaw, Arnold (llford South)

  Taylor, Mrs Ann (Bolton W)

  White, James (Pollok)

  Sheldon, Rt Hon Robert

  Thomas, Jeffrey (Abertillery)

  Whitlock, William

  Shore, Rt Hon Peter

  Thomas, Mike (Newcastle E)

  Willey, Rt Hon Frederick

  Short, Mrs Renée (Wolv NE)

  Thomas, Ron (Bristol NW)

  Williams, Rt Hon Alan (Swansea W)

  Silkin, Rt Hon S. C. (Dulwich)

  Thorne, Stan (Preston South)

  Williams, Alan Lee (Hornch'ch)

  Sillars, James

  Tierney, Sydney

  Williams, Rt Hon Shirley (Hertford)

  Silverman, Julius

  Tinn, James

  Williams, Sir Thomas (Warrington)

  Skinner, Dennis

  Tomlinson, John

  Wilson, Alexander (Hamilton)

  Small, William

  Torney, Tom

  Wilson, Rt Hon Sir Harold (Huyton)

  Smith, John (N Lanarkshire)

  Tuck, Raphael

  Wilson, William (Coventry SE)

  Snape, Peter

  Varley, Rt Hon Eric G.

  Wise, Mrs Audrey

  Spearing, Nigel

  Wainwright, Edwin (Dearne V)

  Woodall, Alec

  Spriggs, Leslie

  Walker, Harold (Doncaster)

  Wool, Robert

  Stallard, A. W.

  Walker, Terry (Kingswood)

  Wrigglesworth, Ian

  Stewart, Rt Hon M. (Fulham)

  Ward, Michael

  Young, David (Bolton E)

  Stoddart, David

  Watkins, David

  Stott, Roger

  Weetch, Ken

  TELLERS FOR THE NOES

  Strauss, Rt Hon G. R.

  Weitzman, David

  Mr. Joseph Harper and

  Summerskill, Hon Dr Shirley

  Wellbeloved, James

  Mr. James Hamilton.

  Swain, Thomas

  While, Frank R. (Bury)

  Question accordingly negatived.

  BUSINESS OF THE HOUSE
  Ordered,

  That the New Towns Bill may be proceeded with at this day's Sitting, though opposed, until any hour.—[Mr.Coleman.]

  NEW TOWNS BILL
  Considered in Committee; reported, without amendment.
  10.20 p.m.
  The Under-Secretary of State for the Environment (Mr. Guy Bamett): I beg to move, That the Bill be now read the Third time.
  On Second Reading the Opposition suggested that the House was being asked to authorise an additional £1,000 million expenditure of public money without any proper explanation of how this money would be spent, and over what period. In fact, about three-quarters of the money is required to finance programmes covered by the recently published White Paper on the Government's expenditure plans, Cmnd. 6721.
  These plans provide for an annual rate of investment in new towns over the next few years of about £300 million per year; over half of that would be for housing, the remainder for roads, water and sewerage, environmental expenditure and the building of shopping centres, offices, factories and the many other developments which go to make a town. These are firm plans, though as the White Paper made clear the later years are subject to review by Ministers in this year's Public Expenditure Survey. However, this money Bill is not seeking to raise the borrowing limit any further than would be required to finance the programme into the second half of the financial year 1979–80. The requirement is thus over a relatively short period of two to two and a half years and relates largely to expenditure which will arise from contracts let in 1977 and 1978.
  In addition, the borrowing limit had to provide for about £100 miflion per year which we estimate will be needed to finance revenue deficits—largely in the second- and third-generation towns-caused by inability to meet interest charges out of rents at this early stage of the towns' development.
  I want to deal with the suggestion that new town commercial and industrial assets are so valuable that in a very short time very large capital sums might be
  1024
  raised to fund other development in new towns or, indeed, elsewhere. Frankly, the assertion that disposal of those assets should become a significant, or, indeed, the only, instrument of funding policy is just not good enough. In the debate on Second Reading the hon. Member for Aylesbury (Mr. Raison) said:
  "There are a number of arguments in the property and new town worlds as to the most appropriate use to be made of these assets. I do not wish them to do other than act in the most effective and businesslike manner".—[Official Report, 15th June 1977; Vol. 933, c. 448.]
  How right he was!
  It is absolutely vital that the complexity of the background to the creation of the assets since the new town programme began is fully understood. The structure of the holdings in terms of the leasehold intrests which attach to them, the rates of return and the existence or otherwise of the opportunities of review of rentals have to be taken into account. A fundamental analysis of these interests would have to be undertaken so that a realistic assessment could be made not only of the likely market value of those assets which might be selected for disposal but also to form some assessment of the financial loss which might be incurred by premature disposal, and at the heart of the exercise is the identification of the precise kind of interest which might be disposed of, for there is little doubt that outright disposal of freeholds which are, for instance, subject to long leaseholds at low annual rentals without review clauses—which was certaily the acceptable thing in the early days of the new towns—could be an irresponsible short-term activity.
  In the last 20 years attitudes towards the terms on which sub-interests have been arranged have changed. Between 1957 and 1961, 25- to 21-year periods for reviews of terms were usually adopted. By 1967 14-year review periods were being adopted, and over the last 10 years we have moved to review periods of seven to five years, which are now the custom. This fact alone must have a significant bearing on the proceeds likely to be obtained from a policy of disposals as apparently now advocated by the Conservative Party. I really wonder whether this is something it realises. The truth is that many very large-value increases are locked in for various periods, in some

  1025
  cases up to 70 years. If the value of the reversion were negligible there might be a case for selling the locked-in interest, but there may well be an equally strong case for holding assets to take advantage of a reversion which is in sight and calculable.
  The assets we are talking about in the general category of commercial and industrial are factories, warehouses, service industries, shops, offices and ancillary town centre buildings. These exist in a number of locations built at different times which, as I said earlier, have changed over the years.
  The Conservative Party has made the point that the Government should adopt a positive policy of capitalising on new town assets to provide funding for ongoing development. My right hon. Friend has indicated that he is considering the idea. He gave that indication before the debate on the Second Reading of the Bill. But I hope hon. Members will realise that the examination of the possibilities, the arguments for or against and the organisation and basis of a marketing exercise of great complexity would be an operation demanding the attention of the highest skills and a very real understanding of what is likely in the short term and what is at stake in the long term.
  What is certain is that the analysis of the proposition and, if it were to be adopted, the establishment of a marketing strategy and organisation could not take place in a time scale which leads to a conclusion that the provision made in the present Bill is not required. It is against this background that we are considering the whole future of new town assets and the possibility of their revaluation.
  I ought, too, to point out the legal position. There is no power in the New Towns Act 1965 for a development corporation to dispose of land except in the interest of securing the development of the new town in accordance with proposals approved by the Secretary of State. Thus, a development corporation realising some of its assete would have to apply the proceeds to further development in the same town.
  In the absence of a positive arrangement whereby all sale proceeds were recovered by the Exchequer and specifically earmarked for further new town
  1026
  funding, as the law stands neither the commission nor development corporations could dispose of their assets for the purpose of utilising the proceeds for the benefit of other developing towns. New legislation would be required. In other words, whatever proceeds could be got from disposals would go to the Exchequer and would then have to be loaned out again to the newer towns. This emphasises again the need for the Bill now before the House.
  Contained in the Opposition's case was the reference to Recommendations 10 and 11 of the Expenditure Committee's Report; namely, that new towns should be able to borrow other than from the National Loans Fund, and be allowed greater flexibility generally in their borrowing powers. No one to my knowledge has advanced any convincing argument why new town corporations should be made the exception to the general rule that public corporations in general borrow from the NLF.
  Mr. Peter Hordern: Surely that is not the case with the nationalised industries, which borrow very heavily directly themselves, and also the local authorities. Therefore, why should it extend solely to the public corporations?
  Mr. Barnett: With respect, local authorities are in quite a different situation from new town corporations. They are independent bodies which operate independently financially, as the hon. Gentleman well knows, whereas the new town corporations are public bodies operating in a field where they are primarily interested in long-term finance. The hon. Gentleman should bear this very much in mind. It is in that sense that they are obviously appropriately provided for by the National Loans Fund. They will attract funds—this is the danger—which are already destined for the gilt-edged market.
  The Opposition have not questioned the arguments contained in the Government's response to the report in Cmnd. 6616. The Government examined Recommendations 10 and 11 with great care but came to the conclusion, for the reasons given in that document, that it would not be in the national interest, or in the interests of the new towns themselves, to adopt them.

  1027
  There is one area that we are looking at, and that is bridging finance. We hope to make some progress on this soon. In that respect new towns are looking for short-term finance. In general, any fair examination will show that new towns have done pretty well out of the NLF, and the fact is that they are usually borrowing to fund long-term investment.
  Mr. Arthur Jones: There is great interest in the new towns being able to borrow in the open market rather than from the National Loans Fund. I do not think the Government have given a convincing answer, and I have studied carefully what has been said. Would that not be a means of securing the use of private resources in the new towns in addition to public funds?
  Mr. Barnett: First and foremost, the new towns would be operating in precisely the field in which the gilt-edged market operates. Secondly—this is something the hon. Gentleman should bear in mind because it appears to have been ignored by the Opposition—there is the degree to which private finance is already involved in the new towns. One has only to remember the Milton Keynes shopping centre, which is another example of the way in which private finance has been secured in the new towns. Therefore, to say that private finance is not being put into the new towns does not give a true picture of the situation.
  I must make clear to the House that the net effect of the House not passing this Bill—which appears to be the intention of the Opposition tonight—would probably be to bring the new towns programme to a grinding halt. It would create a great deal of uncertainty among investors and staff in the new town corporations and the people who live there.
  The Joint Parliamentary Secretary to Ministry of Housing and Local Government, Mr. F. V. Corfield, introducing the Second Reading of the Conservative Government's 1964 New Towns Money Bill, said:
  "In asking the House for more money we are not asking for a subsidy. On the contrary, we are asking for authority to continue a policy which has been proved to be sound."—[Official Report,0th January 1964; Vol. 687, c. 724.]
  I echo his views in supporting this Bill. Indeed, we are asking for money to fin-
  1028
  ance a programme which has already appeared and been approved, as part of the Government's expenditure plans.
  I have great pleasure in commending the Bill to the House.
  10.33 p.m.
  Mr. Peter Hordern: As the House will know, the Opposition voted against the Second Reading of this Bill, the principal reason being that we thought that the money involved—a borrowing of £1,000 million from the National Loans Fund—was a very large figure indeed.
  In the Second Reading debate the Government made no attempt to defend the reason for borrowing such a large sum of money. I regret to say that nothing said by the Minister in his Third Reading speech has helped us. If this Bill is voted down tonight, the Government will have to bring in another Bill. The Minister said on Second Reading that the present sum of money will last until September or October. We should be satisfied if the Government were to come forward with a Bill seeking to borrow from the NLF a much smaller sum of money.
  It is important to recognise how substantial this sum of money is and how inadequate are the reasons the Government have adduced for borrowing such a huge sum. A figure of £1,000 million, even by this feckless Government's standards, is still a very great deal of money. So far the new towns have taken 30 years to get through £2,250. Now the Government come forward to borrow £1,000 million which they believe will be spent in about two years. But when every other form of public expenditure is being closely examined, the Government must make out a very good case why such a large sum of money should be supplied to the new towns. They should make out a case—the Minister did not do so in his speech—for showing why moneys should be lent to new towns instead of allowing them to roll over their assets and use those assets as they are supposed to be used. If we accepted this enormous extra charge without any real explanation from the Government—and there has been none tonight—the Opposition would be failing in their duty. That is we shall vote against the Bill tonight.
  We are told that the £1,000 million is supposed to run for two years; that is,

  1029
  £500 million a year. The Minister said that this was in accordance with the public expenditure White Paper. However, I should like to draw the Minister's attention to the financial statement, which shows that the increase in the size of the loan from the National Loans Fund to the new towns for 1977–78 was £403 million. The £1,000 million is supposed to run for two years, so that means that this year the loan will be £500 million and not £403 million. It appears that after a few months the loan to the new towns from the National Loans Fund this year will be larger than the amount that appeared in the financial statement.
  Another thing that is worthy of note is that this is the only part of the public sector to which loans are increasing—other than the National Enterprise Board and the British National Oil Corporation. The loans to local authorities and to housing corporations have been cut. Only the new towns, the NEB and the BNOC are exempt from this process. The new towns are keeping strange company. The House will know that we think nothing of the NEB and the BNOC but that we are in favour of new towns. The point was made clearly on Second Reading that the Opposition bear absolutely no antipathy towards new towns at all. It is not the Conservative Party that has ever cut back the programme for the new towns. It is this Government, and they have done so by cutting back the prospective population for the third generation of new towns by 380,000. That, as was mentioned on Second Reading, will affect the prospects of industrial firms moving to those new towns. The Secretary of State said that the reason why the new towns have been cut back is that the population is likely to be only 51 million in 1990 and not 60 million. However, that is not the only reason. The other reason is the formidable cost of expansion for third-generation new towns, and the borrowing allowed in the Bill will simply make this worse.
  Up to March 1976—the latest accounts available—these third-generation new towns had borrowed £517 million between them at an average rate each of over 12 per cent. I understand that all these new towns are expected to turn over their housing to the local authorities concerned. Tbeae local authorities—particularly
  1030
  Central Lancashire and Milton Keynes—had little or no existing stock of houses. Therefore, the houses are bound to command the highest rents in the country when they are handed over to the local authorities—and the largest rent rebates. It is interesting to note that the interest rate at which all these new towns borrowed capital from the Secretary of State for the Environment through the NFC was twice that of Harlow. Therefore, it cannot make sense to go on borrowing money indefinitely to build houses that nobody will be able to afford to rent.
  It is also interesting that Harlow tenants are not allowed to buy their houses, while tenants in Milton Keynes or Central Lancashire are encouraged to do so. It has nothing to do with the length of the waiting list but is concerned with the cost of housing in those areas. What is the incentive for new firms to move to the new towns where the rents must be higher than anywhere else?
  Mr. Stanley Newens: I am grateful to the hon. Gentleman for giving way in view of the fact that he has mentioned my constituency. Will he make clear why the people on the Harlow waiting list for rented accommodation—there is a considerable list—should be forced to wait longer? That would be the result of selling off houses. Will he give details of the way in which industrialists have been deterred from coming to Harlow because in most respects Harlow is a highly successful new town, as the hon. Gentleman will find if he examines its record?
  Mr. Hordern: I am not saying that industrialists are deterred from going to Harlow. They are attracted to Harlow as they are to my own new town of Craw-ley. However, they are deterred from going to the third-generation new towns that are being cut back and are having to build at very great cost.
  Our policy is plain; it is right to offer tenants the opportunity to buy their homes, first, because they want to buy and, secondly, because the money thereby released is much greater than what could be obtained from rents. The prospects of building more houses—whether in Harlow or anywhere else—must be much better.
  Mr. Newens: What about the waiting lists?
  Mr. Hordern: The waiting lists have nothing to do with it. The hon. Gentleman does not understand the basic economics of the matter. If the Government go on building houses only for rent, it is certain that the supply will dry up.
  It is no wonder that the Government are keen that the corporations in the third-generation new towns should offer tenants the opporuntiy to buy their homes. Otherwise both rents and housing subsidies will go through the roof. Is it still Government policy that the housing assets of these new towns should be handed over to the local authorities? I assume that this is the position. Is it still Government policy that rents must be 50 per cent. of outgoings? I ask the Secretary of State about this in the previous debate. He mumbled and said that it was not Government policy. Let me remind him that the public expenditure White Paper said:
  "In this year the percentage of costs borne by rents, after rebates, will stay at about 43 per cent. Thereafter it is assumed that the percentage will rise so as to exceed 50 per cent by the end of the period, so enabling savings of about £180 million a year to be made by 1978–79."
  Are the Government serious about making these savings? The IMF would like to know if they are not proposing to make such savings. Ministers made no attempt to answer the point in the previous debate.
  I am pleased to see the Minister of State, Treasury on the Front Bench. He will recollect the Chief Secretary to the Treasury saying that the 50 per cent target for rents was "modest". No doubt the Minister of State, as an assiduous Treasury Minister, agrees.
  If the Government are going to have to make sure that rents total 50 per cent of outgoings in third-generation new towns, the rents will not be less than £15 a week and might even be £18 a week. How many people will be able to afford such rents? What can be the sense of borrowing money from the taxpayer to build houses with the most expensive rents in the country—they are bound to rise faster in these new towns than anywhere else in the country—which no one can afford to pay?
  Our first reason for voting against the Bill is that it offends against common sense. The second reason is that no one
  1032
  can say that the new towns should be the only priority in housing. The Secretary of State agreed with this view on Second Reading, but the Government are borrowing £1,000 million for new towns, compared with £129 million for inner cities by 1979–80.
  London is losing jobs at the rate of 100,000 a year, Birmingham has lost jobs to Telford and Redditch, Newcastle has lost 23,000 jobs in the past 10 years, many of them to Washington; Liverpool has lost 300,000 people in the past 10 years, many of them to Runcorn and Skelmersdale; Manchester has lost 250,000 people. What sort of priority is that?
  It would have been understandable if the Government were borrowing for the resuscitation of our great cities that are fast losing industry and people, but that is not the case. They are borrowing for new towns that are already full of commercial and industrial assests, assets that could be recycled either for dockland development or for a new generation of new towns. It is no answer for the Minister to say that fresh legislation would have to be introduced. The Government are not usually backward in introducing fresh legislation. It is only now that they cannot introduce it. That is because they cannot even get it through their own party, let alone the House. They could use the money by recycling the existing funds in the new towns corporations and the Commission for New Towns.
  Why should the Commission be regarded as a holding company for industrial and commercial assets? That was never the purpose of the Commission. The purpose of the Commission and the corporations is to build new towns, to develop new assets, not to keep old ones and to collect rents from week to week. For some reason the Government consider the assets of the Commission to be sacrosanct. It amazes me that the hon. Gentleman put forward the argument that if the assets were sold that might have a serious effect on the gilt-edged market. What does he think is happening in respect of the sale of BP stock? That sale will raise £450 million. That is something that could otherwise have gone to gilts.
  I see that the Minister of State, Treasury nods. He is right to do so. If it

  1033
  were said that the sum is even greater, that would extend the argument. I ask the Under-Secretary of State in future to take the advice of his hon. Friend the Minister of State, who will be able to fill him in on these matters. The hon. Gentleman should not suggest that that is a good reason for not selling new town assets.
  It is curious that the one sector that is not allowed to buy new town assets includes pension funds and insurance companies. No, the private sector is not allowed to buy them. Those who save through their pension and insurance schemes are not allowed to do so. The only bodies that are allowed to buy them are local authorities. I do not know which local authorities will be in a position to buy these assets. Having looked at some of the accounts, I do not know of any new town local authority that can afford the price that should properly be asked.
  The Under-Secretary of State and his right hon. Friend have suggested that local authorities should be expected to borrow money at 12½ per cent. to buy assets which, if they are properly valued, would give a return of 6 per cent. That is exactly what the fringe banks were doing some five years ago. That is the sort of action that commends itself to the Government. The only difference is that it takes them five years to wake up to a bad idea.
  We are not against borrowing, but we are against borrowing at such a rate as to make it impossible for any return to be commensurate with the cost of borrowing. That is another reason for voting against the Bill. It is simply barmy economics. Nothing demonstrates that better than the most recent public expenditure White Paper.
  We are told that £1,000 million will last two years. It has taken 30 years to spend just over £2,000 million, or just over twice as much. We are told that all this is to go to capital expenditure, such as housing and rates. I do not understand what has happened. No one seems to have told the Secretary of State that the new towns housing building programme was supposed to have been cut in the last public expenditure White Paper from £211 million in 1976–77 to £146 million this year and £143 million next year.
  1034
  What is the £1,000 million that will be available to the new towns to be spent on? If it cannot be spent on investment such as building and housing, on what will it be spent? Clearly, the expansion in public expenditure will be much larger than the figure that appeared in the White Paper, which is of such concern to my right hon. and hon. Friends. It seems that cash limits do not operate in the housing sector.
  Although all new town assets are supposed to rise from £78 million to £174 million in 1978–79, who will be allowed to buy them? Apparently only local authorities, which are already plunged in debt, and the tenants of the most expensive houses in the various new towns will be able to do so. How will the £174 million be got out of them? What the Government are doing is contrary to the public expenditure White Paper, against all common sense and something that this country cannot afford. That it why I ask my right hon. and hon. Friends to oppose the Third Reading of the Bill.
  10.51 p.m.
  Mr. Gerry Fowler: I shall be brief. I intended to speak on only one matter, but, having heard the hon. Member for Horsham and Crawley (Mr. Hordern), I now feel that I must briefly mention two other matters.
  The hon. Gentleman suggested that rent levels must historically be very high in he third-generation new towns and must continue to be very high. The notion is that the third-generation new towns have small housing stocks, apart from new town housing. The hon. Gentleman has not done his homework. Telford new town, in my constituency, has in the ownership of the district council no fewer than 12,000 houses. How the hon. Gentleman can suggest that that is a small housing stock for a district with a population of only 113,000 is beyond my comprehension. I suggest that before he again speaks on this subject he should do his homework.
  Mr. Hordern: Will the hon. Gentleman give the House the figures for Milton Keynes, where historically there is no large stock of houses? Indeed, there are no houses at all.
  Mr. Fowler: The hon. Gentleman may be right. I was not talking about Milton

  1035
  Keynes. The hon. Gentleman referred to all the third-generation new towns. What he said was wrong, and that is the end of the matter.
  The hon. Gentleman suggested that Birmingham was losing jobs to Redditch and Telford. Birmingham may have lost a few jobs to Telford and, for all I know, to Redditch—which is represented by one of his hon. Friends—but he knows as well as I do that the employment situation in Birmingham is scarcely related to the jobs lost to Telford and Redditch. Most of the jobs which have gone to Redditch and Telford would not have been in Birmingham in any event. That is certainly true of Telford. Therefore, it is again false to suggest that Birmingham is in some obscure way suffering because of job loss to two new towns in the West Midlands.
  The major point on which I rose to speak relates originally to what the Minister said and to the gist of the speech made by the hon. Member for Horsham and Crawley. On Second Reading and again tonight the Opposition argued that we needed a policy of roll-over assets in the new towns. I can think of a variety of reasons why such a policy might be advanced. One—I believe this to be the true reason—is that the Opposition passionately believe, as we can see from their policy on the sale of council houses, that private ownership is always superior to public ownership and that we should sell public assets into private ownership because private ownership is virtuous.
  The Opposition could, of course, adduce other reasons. There is a possible argument that, in our present economic circumstances, the only way to fund new town development is by selling assets and using the proceeds for such further development. I do not believe that for a moment. Nothing suggests that we have yet reached the point where the only way to continue to fund new town development is by the sale of existing assets.
  Another interesting argument—this seemed to be the one that the Opposition were deploying tonight—is the extraordinary version of the false doctrine of the hypothecation of revenue. That is the view that we should sell what exists in the new towns and apply the proceeds therefrom further to develop them. That is a nonsense doctrine. If we sell the assets of new towns, there is no good
  1036
  reason why we should apply the proceeds resulting therefrom to the further development of new towns rather than to any other public purpose.
  Mr. Hal Miller: That is a stupid argument.
  Mr. Fowler: I hear "That is a stupid argument." Does the hon. Gentleman accept that we should go back to the 1930s doctrine of applying the proceeds of the road fund licence purely to the development of roads? We have rightly gone away from the hypothecation of revenue. It would be fatal to go back to that doctrine for the new towns. I and other hon. Members on this side of the House believe strongly that it is to the advantage of the community that we should allow these assets to increase in value in public ownership rather than to sell them off for a short-term gain and a long-term loss to the community. That is what the Opposition advocate and what can never be accepted by hon. Members on this side of the House.
  10.56 p.m.
  Mr. Hal Miller: I cannot follow the hon. Member for The Wrekin (Mr. Fowler), who developed many inconsistent arguments. He tried to establish the proposition that it was wrong to sell new town assets in order further to develop new towns. Why, therefore, is it right in his view to borrow? If it is right that the Government wish to develop new towns—and the hon. Member subscribes to that policy—why is it wrong to look at different sources of raising money for that purpose?
  I turn to the purpose for which this huge sum of money is being spent. We have not had an adequate explanation from the Minister. I am grateful to him for alluding to various categories of expenditure but they all involved items of capital expenditure—infrastructure, roads, housing. He also included shopping centres. Why is that a necessary subject for expenditure by the Government? Even if one accepts his argument for a moment—which I do not—why is it not possible to raise other money to assist in the development of shopping centres?
  My new town of Redditch has just had a session with estate agents from all over the country about the third phase of the Kingfisher shopping precinct and ways in which they can participate. Why should

  1037
  such a centre be a charge on public funds, particularly when funds are short? We are not approaching this matter from a doctrinaire point of view. We are trying to develop the new town and to find resources to do so. That is a common sense approach. I agree with what my hon. Friends have said on that subject. It is not adequate for the Government to concentrate on capital infrastructure expenditure alone. That is one reason why I am so keen to get other resources in on the development.
  The Government have a huge social task in the new towns. I picked up the Secretary of State on Second Reading when he said that new towns were not taking their share of the afflicted in society. I checked with my own new town and find that in the last five years, of the 2,200 rented houses, 734, or over one-third, were rented to those in the Department's own five categories of need; namely, the unemployed, the retired, the unskilled, the disabled and the single-parent families. It is not correct to say that new towns are not taking their share of disadvantaged people.
  Mr. Guy Barnett: I have before me the words of my right hon. Friend the Secretary of State. On Second Reading he said:
  "The new towns have an important role in catering for the elderly and the disadvantaged members of the community. Their record in the provision of housing for old people is creditable, perhaps less so for the disabled, although it is improving. In my discussions with development corporations I have made it clear that I am looking to the new town to reinforce their efforts in this direction."—[Official Report, 15th June 1977; Vol. 933, c. 394.]
  Mr. Miller: No, but there was a clear implication that more was expected of the new towns. I know that new towns are doing their best to take their share of disadvantaged people, but the Government have not given them the finance or the facilities for the purpose.
  I do not want to rehearse again the argument about the rate support grant, but while that percentage that I mentioned of disadvantaged families have been taken into rented accommodation in Redditch, there has been no increase in the county council social services establishment in the town over that period. The means are not available, therefore, to deal with the
  1038
  problem imported into that town. Forty new lettings a week are being made at the moment. This is not just a question of the Government putting money into bricks and mortar. The services for which the people depend on the Government are services for the people—social services. The Government are falling down here, and that is why I shall join my hon. Friends in voting against the Bill.
  11.1 p.m.
  Mr. Stanley Newens: I have listened with some scepticism to the arguments of Conservative Members to justify their voting against the Bill. I cannot believe that Conservative Members who represent new towns are engaged in anything but a shallow political manoeuvre. If it is successful, they will deprive their own and other new towns of funds, thus bringing many projects to a standstill and producing redundancies and difficulties for all who live in new towns, including their own.
  Mr. Hal Miller: Is the hon. Gentleman really insinuating that there should be no care in the Government's expenditure plans for deprived people, no provision for the social services in the new towns? That suggestion is not worthy of his record in the House.
  Mr. Newens: Of course deprived people should be a prime concern of this Government, but I cannot see why that means that hon. Members opposite should vote against the Bill. If funds to any new town which they represent are cut, deprived people will suffer. Hon. Members would immediately blame the Government, and would then write, protest and lead deputations to get the Government to change that expenditure decision. One reason why politicians are regarded with such suspicion is that they say one thing and do another. It is obvious that Conservative Members do not mean what they say. Is it a worthy exercise to vote against the Bill when they would be the first to protest if funds were cut off?
  Mr. Hordern: The money will last certainly until the end of this year, and if the Government brought forward a Bill to raise £300 million or £400 million, we should have no objection. What we object to is the raising of a large sum with no attempt properly to use the assets of the new towns.
  Mr. Newens: It is ail very well for Conservatives to say that they would not object to a certain amount of money being proposed. But immediately they say that they are conceding my case. If this Bill is defeated tonight, the result will undoubtedly be to make it difficult for new towns that are in need of funds. The hon. Gentleman cannot get away from that by fallacious and specious arguments like those he has been advancing this evening.
  The argument that the new towns should sell off assets is quite fallacious. If housing assets are sold, the most attractive houses, those on which most of the loan has been paid, would be sold off first. Furthermore, as Conservatives have argued, these houses would be sold at 20 per cent. discount. That means that no development corporation, local authority or new town commission could replace a housing unit that had been sold off for as little as it was sold.
  Therefore, the loan debt and the economic rent on the new houses built in place of those sold would be higher. Therefore, as the older houses were sold off the prospect of rent increases would grow greater for the remaining tenants. To lament the high level of rents that the tenants are asked to pay—which was part of the argument of the hon. Member for Horsham (Mr. Hordern)—is to shed what amounts to crocodile tears.
  Mr. Hordern: Will the hon. Member tell the House whether he is against the policy of selling new town houses to tenants in third-generation new towns?
  Mr. Newens: The hon. Member dodges the point by attempting to shift his ground. There is no answer to my point from Opposition Members. But I shall answer the point which the hon. Member put. Regardless of what the Government say, I do not believe it is right to sell off properties which are available for rent as long as there are people who need houses to rent and cannot afford to buy. I would apply that policy both to third-generation new towns and to others.
  Mr. Guy Barnett: In the light of what my hon. Friend the Member for Harlow (Mr. Newens) said earlier, what he has just said reflects Government policy very accurately.
  Mr. Newens: I believe that that is the position. But I want to make my situation quite clear. In no circumstances will I agree that it is correct to sell off housing assets while there are people who cannot afford to buy a house and need to rent. It is totally wrong. It is deprived people with whom I am concerned, and with whom the Government are concerned in bringing this Bill before the House tonight.
  In voting against the Bill, the Opposition will demonstrate the damaging character of their policies for new towns. I hope that they will go to their own electorates and proclaim as loudly as possible that they are prepared to cut off the funds necessary for developing these new towns. If they do, their own populations will see very clearly what a Conservative Government would mean for the people of the new towns. It is nonsense for the hon. Member for Horsham and Crawley to suggest that we should superimpose the situation in older city centres on to new towns. The Front Bench and Back Benches on this side are equally concerned about rundown city centres and new towns. The position adopted by the Opposition on Second Reading and to-night is absolutely hypocritical, and the House would do well to demonstrate how strongly it rejects it.
  11.10 p.m.
  Mr. Michael Morris: I hope that the hon. Member for Harlow (Mr. Newens) will stand in the centre of Harlow and explain to the 80 per cent. of occupiers who must remain rented for ever that that is his policy and Labour Party policy. I hope that he will tour the country telling the rest of the nation that that is the position.
  Mr. Newens: Let me assure the hon. Gentleman that in Harlow there is a list of people who want houses to rent but there is no list of people wanting to buy houses. I am all in favour of those who want to buy being able to buy.
  Mr. Morris: They all have to live outside Harlow if they want to buy—that is clear.
  I am conscious that the House has had to listen to a housing debate that left much to be desired, so I shall not detain the House for long. The key fact is that

  1041
  there is disappointment on this side that what the Minister has called the Conservative new frontier of financial responsibility has been received quite so frostily by the Government. On Second Reading the Secretary of State said:
  "The practice of setting borrowing limits on new towns allows the House to review from time to time the progress of the new towns and the value which they give in return for the substantial public investment in them."—[Official Report, 15th June 1977; Vol. 933, c. 392.]
  All that my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) has said to the House on Second Reading and tonight is that it is the rôle of the House to question, to assess and to judge what is being proposed. The Minister could do better. I have heard him do better on many subjects than he has been able to do on this Bill. He has not said to the House "In the past two years we have achieved this and that. The reason the money has run out earlier than we expected is that we have done better than we planned." We have had no assessment. There has just been a statement of the overall situation.
  We have had no forecast of how long the £1,000 million is to last. We are told that it will last two years but with no firm argument. I hope that in winding up the Minister will answer some of the financial questions posed by my hon Friend. If I heard the hon. Gentleman aright, he said that the money would be spent at the rate of £300 million a year. My hon. Friend checked in the White Paper and found a figure for housing of £143 million, which is less than 50 per cent. of the annual expenditure. The figures do not tie up. It behoves the House to question.
  The hon. Member for Harlow may be able blandly to assume that £1,000 million can be just tossed aside because he—in Harlow—needs a little extra money. I am prepared to stand up and be counted in Northampton and have a debate with him any time he likes in Northampton about whether the money should be just voted like that or whether the House should question and probe. I know that the people of Northampton want to question where the money is going and over what period it will be spent.
  1042
  I confess to some disappointment with the Government's response about the roll-over of assets. As I understand it, the hon. Gentleman says that the Government will look at the situation, that they will undertake an assessment, that it is a complicated one, that it requires some expertise. One hopes that the expertise is readily available. That was a disappointing response, albeit a small advance.
  I am also slightly disappointed that we have had no response to the proposition about the pooling of costs of new town houses in relation to sale. That would meet one of the points raised by the hon. Member for Harlow. If we were allowed to pool the cost price of new town houses and sell on the basis of the pooled cost, it would overcome certain points that have been made in the House. I believe that in the short and medium term that is the only viable way forward for substantial sales of housing assets in the third-generation new towns with substantial numbers of houses to sell.
  I return to the point that my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) made so clearly. It was again symptomatic that the Minister, in his catalogue of expenditures, mentioned housing, roads and shopping centres, but made no mention of health facilities. I do not wish to bore the Minister, but this is a real problem, and the sooner his Department adds health facilities to the list the sooner we shall have a total approach to the needs of the new towns.
  Mr. Timothy Raison: This debate has not focused very much on one of the facts that the Minister revealed, that £100 million a year of the sum for which he is asking is revenue deficit. It has been assumed that the money is going in capital investment. That £100 million, if applied to the great health needs in my hon. Friend's area, my own county, Buckinghamshire, and many other places, could be far better spent. What we have heard from Labour Members has been absurd.
  Mr. Morris: I am grateful to my hon. Friend, who shares my regional health authority, and who, like me, is very much aware of the problems.
  Mr. Deputy Speaker (Mr. Oscar Murton): Though the hour is late, the

  1043
  debate is growing even wider. We must stick to the question of new towns.
  Mr. Morris: I am guided by you, Mr. Deputy Speaker, but it is difficult to have a new town without a health service, though I suppose that that is what we now have in Northampton.
  Mr. Deputy Speaker: The hon. Gentleman did not understand me too well. Perhaps it was my fault. We must discuss only what is in the Bill.
  Mr. Morris: What my hon. Friend the Member for Horsham and Crawley has persistently maintained is that £1,000 million is, in anybody's money, a great deal of money. It is the job of the House to scrutinise that expenditure. There are enough resources to last until certainly the autumn and probably the whiter. We should welcome the Government's coming back with a Bill containing a smaller figure and some substantiation of how long it will last and to what effect it will be put.
  11.17 p.m.
  Mr. Guy Barnett: The hon. Member for Horsham and Crawley (Mr. Hordern) and several other Conservative Members referred to the £1,000 million as a large sum. I explained in my speech—I wonder whether certain Conservative Members were listening—that that sum concerned that expenditure which has already been approved in the public expenditure White Paper and that this is part of on-going programmes for which contracts have been let.
  Mr. Raison: I seem to remember that there were certain difficulties about the public expenditure White Paper. I am not sure that it was approved by the House. I seem to remember that the Government ran into certain trouble. Even if the White Paper was approved, which I recall it was not, it is not the programme by which Supply is granted to the Government. The public expenditure White Paper is simply a statement of intentions over the next few years. For Supply, the Government must ask the House specifically for money. It is a constitutional abuse, a complete misreading of the situation, to say that the White Paper has granted sums of money to the Government.
  Mr. Barnett: I did not argue that it had granted sums of money to the
  1044
  Government. That is the purpose of the Bill. That is why a money Bill is being placed before the House. As Conservative Members have rightly argued, the Bill has provided occasions on which we have debated very fully, on Second Reading and Third Reading, the new towns programme. I have tried to help the House as far as I can with information that has been asked for.
  The hon. Member for Northampton, South (Mr. Morris) mentioned the figure of £143 million. That is the housing figure for England only. The figure of £170 million is the figure for England, Wales and Scotland in the White Paper. That is what is covered by the Bill. As for the figure of £1,000 million that has been quoted, I made it clear that what we were talking about was capital expenditure at a rate of about £300 million a year. What the Government are asking the House for is not a subsidy and not a grant but the right for the National Loans Fund to lend money to the new towns corporations in the future in the light of their needs.
  Mr. Hordern Mr. Hordern rose—Ȕ
  Mr. Barnett: I shall not give way. I have given way a great deal this evening.
  We have given as much information as it is reasonable to give, or as any previous Government have given, about the new towns programme. The House must accept that the Government have put forward their proposals in the public expenditure White Paper, and the individual towns—Ȕ
  Mr. Hordem Mr. Hordem rose—Ȕ
  Mr. Barnett: I shall not give way to the hon. Gentleman. I have listened to his speech, and I am now proposing—Ȕ
  Mr. Hordern Mr. Hordern rose—Ȕ
  Mr. Deputy Speaker: Order. If the Minister does not desire to give way, he cannot be pressed to do so.
  Mr. Barnett: I am trying to reply to the speeches that have been made, and the hour is late, as you have said, Mr. Deputy Speaker. I am doing my best to help hon. Members who have spoken, and my task is not made easier by constant interruptions. I gave way generously

  1045
  when I opened the debate, and I am conscious that I speak again by permission of the House.
  Mr. Hordern: The Minister said that the investment programme for the new towns will be £300 million in this year. He also said that the public expenditure White Paper figure was £170 million. He must, therefore, be saying that the new towns investment programme is almost double the public expenditure allowance for the purpose. That White Paper was produced only a few months ago. Are the Government now proposing to sanction twice as much investment in the new towns as appeared in the White Paper
  Mr. Barnett: No. Clearly the hon. Gentleman has not been listening to me. When I mentioned the figure of £170 million, I was talking about housing alone. When I spoke of the £300 million, I was talking about office and factory developments and the other things which new towns need. We are talking about a capital expenditure on average of £300 million a year. The figure of £300 million appears in the capital expenditure proposals year by year, and on that basis, adding to it the revenue deficit of roughly £100 million a year, the total figure is made up.
  I thought that I had already replied to the point about the length of time that this sum will last. The answer is that it will last between two and two and a half years. We cannot say precisely how long down to the last month, and it would be unwise for us to try to do so in the light of the factors, such as rates of interest, how fast the corporations will be able to get ahead with their tasks, and what the rate of inflation will be at the time. All these factors will inevitably determine the rate at which the new town corporations take up the tasks which we are laying on them.
  The hon. Member for Horsham and Crawley repeated the argument about the apparent disparity between the large sum of money that we are making available to the new towns corporations and the money we are making available to the inner cities. He must learn not to compare unlike with unlike. To talk of the borrowing requirements of the corporations is one thing; to talk of the inner cities is another. A whole range of funds is avail-
  1046
  able to the inner cities, as my right hon. Friend has repeatedly made clear.
  First—and I think that the Opposition support this—the rate support grant has been geared generously to help inner cities, which have many social problems, and the Government's main programmes have been redesigned to show that they regard the problems of the inner cities as major problems. The Chancellor of the Exchequer's recent proposals for the construction industry are an example of that policy, and the larger grant proposed to the urban programmes are a major part of the Government's policy designed to help inner cities. It is not fair, therefore, to compare the amount made available in this way to the inner cities, which are annual figures, with those for the new towns, which are on a basis, as I have said, of two to two and a half years. The inner city figure is also one that we hope to increase in future years as economic circumstances improve.
  It is suggested that somehow the Government are opposed to the investment of funds from private sources in the new town corporations. That is not true, as I have explained. I made it clear that Milton Keynes city centre is dependent upon £23 million of investment by the Post Office pension fund. The hon. Member for Bromsgrove and Redditch (Mr. Miller) said that the same was true of his town. There is a limited quantity of pension funds available.
  I explained that the Government are not rigidly opposed to the possibility of the sale of certain assets. What I tried to do, since the Opposition are obviously interested in this matter, was to be as helpful as I could to the Opposition in explaining some of the difficulties which might be involved in view of the length of leases which had been let in the early development of new towns and the difficulties which might be involved in protecting the national interest, while naturally considering carefully, as we are doing, the proposal that certain assets possibly could be sold. We are considering that possibility in the light of the Expenditure Committee's Report and the Opposition's suggestions.
  Local authorities have a perfect right to have aspirations to own industrial and commercial assets, and we are considering that also, whatever the hon. Member

  1047
  for Horsham and Crawley may say. If we can find ways in which local authorities which have aspirations in that direction may become the owners of certain properties which are owned by new town corporations or by the New Towns Commission, we shall want to facilitate that.
  A debate of this kind is of enormous value in airing issues which affect new towns, and I welcome the opportunity which this debate and the Second Reading debate have given us to debate new town matters in general. I wish that there were more such opportunities, and I agree heartily with the hon. Member for Ashford (Mr. Speed), who spoke on
  Second Reading, about the need for plenty of opportunities to debate them. However, I cannot but comment on the total irresponsibility of the Opposition in voting against the Government on Second Reading—apparently they propose to do so again on Third Reading—because, were they to be successful, the consequence of their actions would be highly damaging to the new towns programme and to the degree of certainty that one wants to provide to the private interests in which they appear to be so interested.
  Question put, That the Bill be now read the Third time.
  The House divided: Ayes 146, Noes 118.

  Division No. 155]

  AYES

  [11.28 p.m.

  Archer, Rt Hon Peter

  Garrett, W. E. (Wallsend)

  Morris, Rt Hon J. (Aberavon)

  Armstrong, Ernest

  George, Bruce

  Murray, Rt Hon Ronald King

  Ashton, Joe

  Gilbert, Dr John

  Newens, Stanley

  Atkins, Ronald (Preston N)

  Gould, Bryan

  Noble, Mike

  Atkinson, Norman

  Grant, George (Morpeth)

  Ogden, Eric

  Barnett, Guy (Greenwich)

  Grocott, Bruce

  Palmer, Arthur

  Bates, Alf

  Hamilton, James (Bothwell)

  Park, George

  Bean, R. E.

  Harrison, Rt Hon Walter

  Parry, Robert

  Benn, Rt Hon Anthony Wedgwood

  Hatton, Frank

  Pavitt, Laurie

  Bennett, Andrew (Stockport N)

  Hooley, Frank

  Penhaligon, David

  Bishop, Rt Hon Edward

  Horam, John

  Prescott, John

  Blenkinsop, Arthur

  Howell, Rt Hon D. (B'ham, Sm H)

  Roberts, Albert (Normanton)

  Boyden, James (Bish Auck)

  Howells, Geraint (Cardigan)

  Robinson, Geoffrey

  Callaghan, Jim (Middleton & P)

  Hoyle, Doug (Nelson)

  Roderick, Caerwyn

  Canavan, Dennis

  Huckfield, Les

  Rodgers, George (Chorley)

  Cartwright, John

  Hughes, Mark (Durham)

  Rooker, J. W.

  Clemitson, Ivor

  Hughes, Robert (Aberdeen N)

  Rose, Paul B.

  Cocks, Rt Hon Michael (Bristol S)

  Hughes, Roy (Newport)

  Ross, Stephen (Isle of Wight)

  Cohen, Stanley

  Hunter, Adam

  Rowlands, Ted

  Coleman, Donald

  Irving, Rt Hon S. (Dartford)

  Silkin, Rt Hon S. C. (Dulwich)

  Colquhoun, Ms Maureen

  Jackson, Miss Margaret (Lincoln)

  Skinner, Dennis

  Concannon, J. D.

  Jeger, Mrs Lena

  Small, William

  Conian, Bernard

  John, Brynmor

  Smith, John (N Lanarkshire)

  Cowans, Harry

  Johnson, James (Hull West)

  Snape, Peter

  Cryer, Bob

  Jones, Barry (East Flint)

  Stallard, A. W.

  Cunningham, G. (Islington S)

  Kerr, Russell

  Stott, Roger

  Cunningham, Dr J. (Whiteh)

  Kilroy-Silk, Robert

  Swain, Thomas

  Davidson, Arthur

  Lamborn, Harry

  Thomas, Dafydd (Merioneth)

  Davies, Bryan (Enfield N)

  Lamond, James

  Thomas, Jeffrey (Abertillery)

  Davis, Clinton (Hackney C)

  Latham, Arthur (Paddington)

  Thomas, Ron (Bristol NW)

  Deakins, Eric

  Lestor, Mist Joan (Eton & Slough)

  Thorpe, Rt Hon Jeremy (N Devon)

  Dean, Joseph (Leeds West)

  Loyden, Eddie

  Tinn, James

  Dempsey, James

  Lyon, Alexander (York)

  Wainwright, Edwin (Dearne V)

  Dormand, J. D.

  Lyons, Edward (Bradford W)

  Wainwright, Richard (Colne V)

  Douglas-Wann, Bruce

  McCartney, Hugh

  Walker, Terry (Kingswood)

  Duffy, A. E. P.

  McDonald, Dr Oonagh

  Ward, Michael

  Dunnett, Jack

  McElhone, Frank

  Weetch, Ken

  Dunwoody, Mrs Gwyneth

  MacFarquhar, Roderick

  Wellbeloved, James

  Eadie, Alex

  MacKenzie, Rt Hon Gregor

  White, Frank R. (Bury)

  Ellis, John (Brigg & Scun)

  McMillan, Tom (Glasgow C)

  Wigley, Dafydd

  English, Michael

  Madden, Max

  Willey, Rt Hon Frederick

  Ennals, David

  Mahon, Simon

  Williams, Rt Hon Alan (Swansea W)

  Evans, Gwynfor (Carmarthen)

  Mallalieu, J. P. W

  Williams, Alan Lee (Hornch'ch)

  Ewing, Harry (Stirling)

  Marks, Kenneth

  Wilson, Alexander (Hamilton)

  Fernyhough, Rt Hon E.

  Maynard, Miss Joan

  Wise, Mrs Audrey

  Flannery, Martin

  Mendelson, John

  Woodall, Alec

  Fletcher, Ted (Darlington)

  Millan, Rt Hon Bruce

  Woof, Robert

  Foot, Rt Hon Michael

  Miller, Dr M. S. (E Kilbride)

  TELLERS FOR THE AYES:

  Fowler, Gerald (The Wrekin)

  Mitchell, Austin Vernon (Grimsby)

  Mr. Joseph Harper and

  Freeson, Reginald

  Molloy, William

  Mr. Ted Graham.

  NOES

  Aitken, Jonathan

  Boscawen, Hon Robert

  Bulmer, Esmond

  Atkins, Rt Hon H. (Spelthorne)

  Bottomley, Peter

  Burden, F. A.

  Awdry, Daniel

  Boyson, Dr Rhodes (Brent)

  Butler, Adam (Bosworth)

  Bell, Ronald

  Brooke, Peter

  Carlisle, Mark

  Berry, Hon Anthony

  Brotherton, Michael

  Chalker, Mrs Lynda

  Biffen, John

  Buck, Antony

  Clark, Alan (Plymouth, Sutton)

  Clarke, Kenneth (Rushcliffe

  Lawson, Nigel

  Roberts, Michael (Cardiff NW)

  Clegg, Walter

  Le Merchant, Spencer

  Roberts, Wyn (Conway)

  Cooke, Robert (Bristol W)

  Lester, Jim (Beeston)

  Rossi, Hugh (Hornsey)

  Cope, John

  McCrindle, Robert

  Sainsbury, Tim

  Corrie, John

  MacKay, Andrew James

  Scott, Nicholas

  Douglas-Hamilton, Lord James

  McNair-Wilson, M. (Newbury)

  Shelton, William (Streatham)

  Drayson, Burnaby

  McNair-Wilson, p. (New Forest)

  Shepherd, Colin

  Dykes, Hugh

  Marshall, Michael (Arundel)

  Shersby, Michael

  Eden, Rt Hon Sir John

  Mates, Michael

  Silvester, Fred

  Edwards, Nicholas (Pembroke)

  Mather, Carol

  Sims, Roger

  Fairbairn, Nicholas

  Mawby, Ray

  Skeet, T. H. H.

  Fisher, Sir Nigel

  Maxwell-Hyslop, Robin

  Smith, Timothy John (Ashfield)

  Fowler, Norman (Sutton C'f'd)

  Meyer, Sir Anthony

  Spence, John

  Gardner, Edward (S Fylde)

  Miller, Hal (Bromsgrove)

  Spicer, Jim (W Dorset)

  Goodhart, Philip

  Monro, Hector

  Sproat, lain

  Goodhew, Victor

  Montgomery, Fergus

  Stanbrook, Ivor

  Gow, Ian (Eastbourne)

  Morris, Michael (Northampton S)

  Steen, Anthony (Wavertree)

  Gower, Sir Raymond (Barry)

  Morrison, Charles (Devizes)

  Stokes, John

  Grylis, Michael

  Neave, Airey

  Stradling Thomas, J.

  Hannam, John

  Nelson, Anthony

  Taylor, Teddy (Cathcart)

  Hastings, Stephen

  Neubert, Michael

  Tebbit, Norman

  Hodgson, Robin

  Newton, Tony

  Temple-Morris, Peter

  Hordern, Peter

  Page, Rt Hon R. Graham (Crosby)

  Thatcher, Rt Hon Margaret

  Howell, Ralph (North Norfolk)

  Page, Richard (Workington)

  Townsend, Cyril D.

  Hunt, David (Wirral)

  Pattie, Geoffrey

  van Straubenzee, W. R.

  Hunt, John (Bromley)

  Percival, Ian

  Viggers, Peter

  Hutchison, Michael Clark

  Prior, Rt Hon James

  Walder, David (Clitheroe)

  Johnson Smith, G. (E Grinstead)

  Pym, Rt Hon Francis

  Weatherill, Bernard

  Jopling, Michael

  Raison, Timothy

  Wells, John

  Kaberry, Sir Donald

  Renton, Rt Hon Sir D. (Hunts)

  Winterton, Nicholas

  Kimball, Marcus

  Renton, Tim (Mid-Sussex)

  Kitson, Sir Timothy

  Rhodes James, R.

  TELLERS FOR THE NOES:

  Lamont, Norman

  Rhys Williams, Sir Brandon

  Mr. Peter Morrison and

  Latham, Michael (Melton)

  Ridley, Hon Nicholas

  Sir George Young.

  Lawrence, Ivan

  Rippon, Rt Hon Geoffrey

  Question accordingly agreed to.

  Bill read the Third time and passed.

  INCOME TAX (DOUBLE TAXATION RELIEF)
  11.40 p.m.
  The Minister of State, Treasury (Mr. Denzil Davies): I beg to move,
  That an humble Address be presented to Her Majesty, praying that on the ratification by the Government of the United States of America of the Protocol set out in the Schedule to the Order entitled the Double Taxation Relief (Taxes on Income) (The United States of America) Order 1977, a draft of which was laid before this House on 16th May, an Order may be made in the form of that draft.
  The Double Taxation Relief Order before the House today concerns a proposed second amending protocol to the new convention with the United States of America which, together with a first amending protocol, was approved by the House on 12th January. This further protocol provides two modifications to the convention: one of them is about the domicile position of certain American women, and the other is about the treatment of income paid out of trusts.
  The domicile point arises in connection with the tax treatment in this country of investment income—arising outside the United Kingdom—of American women who are resident in this country and whose husbands have United Kingdom domicile. Under the Domicile and Matrimonial Proceedings Act 1973 a woman marrying on or after 1st January 1974 no longer automatically acquires her husband's domicile. She is treated as an independent person for these purposes, and this means that she can have a different domicile from that of her husband. For United Kingdom tax purposes the concept of domicile is a significant one because while individuals resident in the United Kingdom are generally liable to tax here on their world income, wherever arising, there is a different rule for people who, although they are resident here, are nevertheless not domiciled in the United Kingdom: their foreign source investment income is not taxable here if it is not remitted to this country.
  In the debate in the House on 12th January on the Double Taxation Relief (United States of America) Orders—that is to say, the convention and the first amending protocol—hon. Members drew attention to the differing treatment which
  1052
  could apply to American women married to men with a United Kingdom domicile dependent on whether or not their marriage took place before or after 1st January 1974. I undertook to look into this further to see whether anything might be done, within the confines of the convention, to bring American wives married before 1st January 1974 on to the same tax footing as those who married on or after that date.
  I am glad to be able to tell the House that we have felt able to meet the concern of the House about this matter and the protocol provides that American women who before 1st January 1974 married men with United Kingdom domicile will be treated as if they married on 1st January 1974 when it comes to determining their domicile for United Kingdom tax purposes within the meaning of the Convention.
  The second matter with which this protocol is concerned is the treatment under the convention of income paid out of trusts and is not concerned with the point about domicile. This primarily concerns income from discretionary trusts. Payments out of discretionary trusts have, since 1973, been treated for United Kingdom tax purposes as items of income in their own right. As such this income would fall within the scope of Article 22 of the convention, which provides a rule for eliminating double taxation on income which is not expressly dealt with in other articles of the convention. This would mean that the country of residence of the beneficiary would have sole taxing rights over income paid out of discretionary trusts, and this was not what was intended by either country when the convention was negotiated. What was intended was that the country of source of the income would have taxing rights also, and this is what the protocol provides. Double taxation will be avoided, as is normal in these cases, by the country of residence giving credit for tax charged by the country of source, and where doubts or difficulties arise about this the respective tax, authorities will be able to reach a solution under the mutual agreement procedure provided for by Article 25 of the convention.
  I commend the terms of this protocol and I hope that the House will see fit to approve it.
  11.45 p.m.
  Mr. Peter Hordern: As the Minister said, this protocol is another interim stage towards ratification. The progress that the Minister has reported to the House, particularly in respect of American wives, is good. I congratulate the Minister on carrying out his undertaking and on not only looking at the position of American wives of United Kingdom citizens but actually doing something about it. While not all American wives will not be satisfied about this, their dissatisfaction will arise from the high levels of tax in this country rather than from particular distinctions artificially drawn against them—distinctions between those American wives who married before 1974 and lived in this country and those who came here and were married after 1974. There was no possible justification for that distinction. The House is grateful to the Minister for the progress that has been made in that direction.
  However, I am left with a question in mind about the position of American males married to British wives. I take the example of a retired American male married to a British citizen here, who is domiciled in the United States but who is resident here. Will he be taxed on a remittance basis only—as is the case with American wives married to British subjects? If so, that is obviously acceptable. However, if that is not the case, it is strange that it is not included in the protocol, in which only wives are mentioned. Perhaps the Minister could clear that point up for us.
  What is the position of the American woman who is working here, for example, for a United States corporation? As the House knows, the position of the American male working for an American corporation or any other business here is that if he stays here less than nine years only half of his income arising in this country is subject to tax at all and the rest only on a remittance basis. I take it that that is also the position of an American woman working for an American corporation, but I should be grateful if the Minister would tell the House whether it is so.
  All these devices—and, indeed, the one that is currently being discussed in Committee about relief on overseas earnings—are simply a reflection of the crazy level
  1054
  of tax in this country. None of these negotiations would have been necessary if tax here were not so high.
  I am also grateful for what the Minister has said about Article 22 of the original convention and about discretionary trusts. I do not have any particular questions to ask him on that. I understand they are to be taxed under the relevant domestic law where the discretionary trust resides. However, what happens, for example, in the case of a discretionary trust which is resident in the Bahamas? Which of the taxing authorities—Britain or the United States—will be able to impose the tax?
  Finally I turn to the most important problem that still arises in this convention and that is what one might briefly refer to as the California problem. We discussed this during our last debate on this double tax agreement. It arises because of the California tax which, I am told, is a unitary tax for the application of the California State franchise tax to subsidiaries of multinational companies located in that State. I understand that this means that the California authorities attempt to tax the subsidiaries of multinational companies on income that arises outside the State of California.
  It is serious enough that this should be done in one State, but I understand that Oregon, Alaska, Illinois and Louisiana are moving in the same direction. Unless California's activities can be curtailed, as proposed in the convention, other States will follow suit. The California authorities have estimated that the prohibitory clause will entail a loss of revenue of $125 million for them, but this indicates only the severity of the tax that subsidiaries of United Kingdom multinational corporations will have to pay in California if the clause is not allowed to go through.
  What stage has the process reached? I understand that the Senate External Affairs Committee is considering the matter, and any views that the Minister of State can bring to bear will be welcomed by the House. This is a matter of great importance. I do not think that the House could ratify an agreement that allowed one State to tax income arising from anywhere in the world for the purposes of that State's own revenue. If the precedent were accepted, many

  1055
  other countries would be interested in such a form of tax.
  I hope that this will not occur, that the American Senate will pass the convention as it stands and that we need not be troubled about it. The House will be anxious to learn whether the Minister has anything to report.
  11.53 p.m.
  Mr. Geoffrey Johnson Smith: I join my hon. Friend the Member for Horsham and Crawley (Mr. Hordem) in thanking the Minister for the small concession, Natural justice cried out that he should have given it, and it was monstrous that we should ever have thought that we could get away with it in the first place.
  Can the Minister of State clarify two points for me? First, am I right in assuming that an American male who came here to work and was married to a British female would be taxed only on a remittance basis, where as an American female who is married to a British male would, unless she goes through the process of proving that she has or wishes to have another domicile, be taxed on the full amount of her income, whether she remits any or not?
  I may be wrong, but it seems that the American female is not being treated equally with the American male. If that is so, can the Minister give any justification for that situation?
  My second point concerns the Domicile and Matrimonial Proceedings Act 1973. I declare an interest as my wife is American. The Act says that after it comes into force the domicile of a married woman:
  "shall, instead of being the same as her husband's by virtue only of marriage, be ascertained by reference to the same factors as in the case of any other individual capable of having an independent domicile."
  I assume that she then make the choice—"I am married to an Englishman but I decide that my domicile should remain in the United States". If that is the decision that she makes, I assume from the drafting of the Act that very few people would quarrel with it, and that for all intents and purposes she establishes by that simple declaration that her domicile remains in the United States.
  However, Section 2 states that where a woman is married before 1974 and
  1056
  "had her husband's domicile by dependence, she is to be treated as retaining that domicile (as a domicile of choice, if it is not also her domicile of origin) unless and until it is changed by acquisition or revival of another domicile either on or after the coming into Force of this section."
  I am not a lawyer but I assume that the section is stating that if a marriage took place before 1974 the wife is not in the same position as her sister who married after 1974. It seems that an American woman or a French woman, for example, has to prove in some way that her domicile is in some other place. That does not apply to someone married after 1974.
  To avoid the full penal burden of taxation in this country, an American woman married before 1974 presumably has to go through the whole process to try to show that her domicile is elsewhere whereas her sister does not and the American male does not. There is no question of being taxed only on what she remits here. Such matters all hang on this domicile business. It does not matter if the money has been created exclusively by French people or American people. I restrict my references to Americans because my wife is an American.
  Anyone in this country who was married before 1974 will find that every cent comes under British penal taxation if he cannot prove that his domicile is elsewhere. Leaving aside whether this country's taxation is penal, which is a matter of some dispute, although less and less of one between many of us on both sides of the House, the question of natural justice arises. I do not see what right a country has to tax the income of a person who does not bring income here, although I can see the right that we have to tax income which is brought here.
  It seems that the concession that has been made tonight, although welcome, is modest and does not meet in toto the natural justice that I consider should be met.
  11.58 p.m.
  Mr. Denzil Davies: I deal with the three issues of substance that have been raised. The first is domicile and the effect of the Domicile and Matrimonial Proceedings Act 1973. Leaving aside double taxation treaties, the general law is that if a person is not domiciled in this country a worldwide income, as it were is not

  1057
  taxable here unless remitted into the country. That is what I understand to be the general law.
  Before the Divorce and Matrimonial Proceedings Act 1973 a married woman took the domicile of her husband. Irrespective of whether she could prove an independent domicile of her own, she automatically took her husband's domicile. If an American lady married a person domiciled in this country, she became of British domicile even though she might be able to prove that she was still domiciled in the United States. Having "acquired" British domicile before January 1974, her worldwide income was taxable in this country even though it was not remitted. It is towards that mischief that the protocol is being introduced.
  The general law of domicile was that after 1st January 1974 if the same American lady were to marry the person domiciled in this country she would not automatically acquire British domicile although she might have British domicile. If she is married to somebody with British domicile living in this country, it may be decided on the facts of that case that she has given up United States domicile and has acquired domicile in this country. But, because of that Act, she is not automatically presumed as having acquired United Kingdom domicile. After 1st January 1974 she may be able to prove that, despite the fact that she is married to a person domiciled in this country and may be bringing up a family here, she is still domiciled in the United States of America. If she could show that, she would not, under our general tax law, pay United Kingdom tax until the income was remitted.
  The object of the protocol is to bring American ladies who were married before the 1973 Act came into force into line with those who married after 1st January 1974. They will now be given the opportunity to prove that they are of United States domicile and to get the benefit of the remittance basis in relation to their income. I think that is a fair provision. It goes as far as we were asked to go. There is now no discrimination between one group and the other regarding the pre- and post-1st January 1974 situation.
  Mr. Johnson Smith: It may be that this does not apply to the hon. Gentleman's
  1058
  Department, because the Act was concerned with domicile, not taxation. However, I should have thought that the wording of the Act made it clear that there was no need for proof after 1974, whereas there was need for proof before 1974. That makes a difference, does it not?
  Mr. Davies: No. I think that there is still need for proof. Domicile is a question of fact. The Act provided that there was no automatic presumption that because someone married a person of British domicile that person was also of British domicile. The person concerned still has to state what her domicile is. The Act cannot change that.
  The hon. Member for Horsham and Crawley (Mr. Hordern) asked, as he did last time—and I did not answer satisfactorily—"What about this trust in the Bahamas?" I am not sure about the trust in the Bahamas. I understand that the protocol is based on where the income arises. If the income arises in the United Kingdom, the United Kingdom, as a result of what I hope the House will approve tonight, gets first bite, as it were, of the tax, but credit for that may be given to a United States' resident by the United States authorities. If the original convention were to stand, in that situation the United States authorities would have the primary taxing power and the United Kingdom authorities would have no power to tax at all. The object of the protocol is to apply what is generally considered to be the conventional rule, that the country in which the income arises has the first bite of tax and that the other country can give tax credit.
  Mr. Hordern: Perhaps the Minister will let me know the answer to the question that I have put to him on two successive occasions about the trust in the Bahamas. I think that it would be of more general interest if I were to table a Question and he were to answer it later. Will he now deal with the position of the American male married to a British woman living here? What is his taxation basis for income remitted or not remitted here? Is it on all fours with that of the American woman?
  Mr. Davies: Happily, we are not concerned tonight with the American male. If he is domiciled in the United States

  1059
  although living in this country, this does not affect him. The protocol deals with the specific problem which arises partly as a result of the Domicile and Matrimonial Proceedings Act 1973.
  Mr. Johnson Smith: I understand from the Minister that an American male need not prove his domicile. Is it correct that if he were domiciled in this country he would be taxed on his American income whether he remits it or not?
  Mr. Davies: If he is domiciled in this country it is only fair that this country should claim his tax. But the expression "American male" is not applicable. If he is American he is an American citizen.
  On the question of trusts, we are concerned with where the income arises and not with where the trust is situated. I was also questioned about the California unitary basis of taxation. I understand that the Senate foreign affairs committee will be considering the whole treaty in the middle of next month. These matters will be decided according to rules and procedures. What happens in the light of what is decided will be considered. We must await the outcome.
  Question put and agreed to.
  Resolved.
  That an humble Address be presented to Her Majesty, praying that on the ratification by the Government of the United States of America of the Protocol set out in the Schedule to the Order entitled the Double Taxation Relief (Taxes on Income) (The United States of America) Order 1977, a draft of which was laid before this House on 16th May, an Order may be made in the form of that draft.
  To be presented by Privy Councillors or Members of Her Majesty's Household.

  NEWPORT (DEVELOPMENT AREA STATUS)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Frank R. White.]
  12.6 a.m.
  Mr. Roy Hughes: I welcome the opportunity to raise the need for development area status for Newport, even though the hour is late. My first and basic point is that the present development area boundaries are grossly unfair to Newport. Only a small area of Wales is not included in the development area
  1060
  —the coastal resorts in North Wales and what one might call the Wye Valley in Gwent. One does not associate those areas with industrial development.
  The area in South Gwent which is represented largely by Newport is the only industrial area that does not enjoy development area status.
  The situation for Newport has deteriorated considerably in recent years. I raised the issue on 6th October 1974 when I was told by the then Minister of State that a close watch would be kept on the situation in Newport and that he and the Government were prepared to be flexible. He said:
  "If we become convinced of the need for further changes in the boundaries we shall not hesitate to take action."—[Official Report, 6th November 1974; Vol. 880, c. 1214.]
  I am still waiting for this action for Newport. Newport Corporation, the Gwent County Council and the people of that county, particularly those who are unemployed, are still waiting for action.
  I raised the matter on that occasion because of the announcement in August 1974 of Cardiff's inclusion in the development area. Over the years there has been considerable rivalry between these two towns, not least on the rugby field, but certainly in regard to industrial development. The announcement therefore came as a great shock to Newport, particularly since it is now encircled by towns and villages enjoying development area status—Cardiff on one side and the mining valleys of Gwent on the other.
  What further evidence is needed to justify Newport's inclusion? Facts have been supplied over the months and years. It is on a par with Cardiff in terms of unemployment. There has been a wrangle over the dispersal of several thousand defence jobs from London. The Welsh Office has twisted and turned in every way to ensure that they went to Cardiff, although the staff were anxious to go to the admirable site of Tredegar Park in Newport. The matter is still in the melting-pot. Because of the recent public expenditure cuts, this costly project will probably not now go ahead, but if the staff's agreement at the time had been accepted, it might by now have been well under way.
  Presumably the decision to give Cardiff development area status was based on the

  1061
  supposed forthcoming closure of East Moors steel works, but that closure is now in the melting-pot again, at least until 1980. Cardiff has numerous advantages as a capital city, as its rateable values testify. Relatively, it is more prosperous than Newport. Under the present arrangements, therefore, Newport is at a distinct disadvantage.
  On 14th April this year, the Government announced that Shotton in North Wales and Humberside were to be given development area status. Before the announcement, why was not Newport Corporation alerted to the fact that these matters were again in the melting-pot? New evidence could have been brought forward to advance Newport's case. But, again, it was a bolt from the blue.
  There is a further dilemma in that the possible inclusion of Humberside could be highly detrimental to Newport. There is a certain project—an industrial development proposed by an international consortium that wants to establish a factory somewhere in the United Kingdom to make insulating material. It was apparently considering Newport. I have not been concerned with the intimate negotiations, but I have a letter dated 5th May from the chief executive of the Newport council—a man who is very experienced in these matters. He says:
  "The problems besetting Newport are well illustrated by the following case. Over the last two years an international consortium has been carrying out an intensive survey throughout the United Kingdom into setting up a factory to produce insulating materials. The factory would employ 350 people and occupy a 30-acre site. After long negotiations we were very optimistic that the consortium would settle on the Reevesland Industrial Estate at Newport. The major factor was its easy access to the motorway which would ensure that the company's vehicles could deliver its products to its major distributors in the South-East and West Midlands and return in the same day. However, because Humberside, an Intermediate area, like Newport until recently, has just been granted Development Area Status, the consortium is now likely to establish the proposed factory there."
  This is the observation of the chief executive of the Newport council about a project that could be very advantageous to South Wales as a whole.
  Many of these jobs would go to people in towns and villages such as Crosskeys, Blackwood and Abercarn, towns that are already in the development area, and
  1062
  areas that have always been very loyal to Labour. Are they to be told that their people can remain on the dole because the Labour Government are not prepared to give development area status to the area where this factory could be sited?
  I remind the Government that each day 20,000 people travel down from the valleys to work in Newport. Following local government reorganisation, the whole issue of industrial development no longer rests solely in the hands of the Newport council. It is partly the responsibility of the Gwent County Council. Mr. Gordon Probert, the county planning officer for that authority, has pointed out recently in a report that Gwent will require 30,000 new jobs in the next 15 years. So many of the unemployment problems of the mining valleys of Gwent could be solved by Newport, if it were given the right Government backing to which it is entitled.
  People in Gwent are coming to the conclusion that everything is going West—in the Welsh sense. First, there was the announcement a few weeks ago that no less than £850 million was to be invested in the steel works at Port Talbot. The mind boggles at such a figure. Yet the unemployment in the town and in the surrounding area is roughly comparable with that of Newport, and has been over the years, as the employment statistics bear out. There is no justification for Port Talbot being in the development area and Newport not being in it.
  Further along the coast, in Llanelli, the employment situation over the years has been superior to that in Newport. We have never received a straight answer when we have asked why Port Talbot and Llanelli are in the development area but Newport is not. There is no rhyme or reason to it.
  Newport has had more than its share of industrial difficulties. We had the closure of the tube works, with a loss of 1,500 jobs; the closure of the British Aluminium factory, with a loss of 450 jobs; and the loss of the iron ore trade in the docks. Now there is a new list of smaller establishments on the closure list—half of the Whitehead works now owned by the British Steel Corporation; the pipe mill at Llanwem; Westing-house; Connor and Davies; and the bus depot, with a loss of 60 jobs to the town.

  1063
  Newport has the motorway, but it has not prevented closures over the years. As to expenditure on major road projects in Wales, the development along the coast to West Wales—the M4—has scooped the pool. I have the official document "Roads and Transport Document, Wales", which lists schemes costing over £250,000. I do not see any mention of Gwent in the whole of this sheet. The vast bulk of the expenditure is going on the M4 extension, but even in the trunk road schemes there is no mention of Newport, let alone Gwent as a whole.
  Ebbw Vale is suffering thousands of redundancies. Roads are badly needed up there. Road works at Aberbeeg, the Risca bypass and the Cwmbran bypass should receive high priority, yet Gwent is well back in the queue.
  There has even been an allegation recently that Gwent County Council has had to take money earmarked as a subsidy for public transport to keep up road maintenance and perhaps some minor new works. If we had a Welsh Assembly, the Gwent representatives would have something to say about the situation. I cannot believe that in these matters the Welsh Office is giving Newport and Gwent the backing we should be receiving. After all, 20 per cent, of the people of Wales live in Gwent. South Wales should be treated as a single industrial entity. It is grossly unfair to isolate Newport, the only industrial part of South Wales not in the development area.
  I repeat that all the evidence points to the fact that Newport is being discriminated against and has been discriminated against in recent years. This in turn is detrimental to job opportunities, not only for Newport but for the valleys of Gwent as well. The vast bulk of investment, both industrial and for roads, is going West. It is time that the whole of Gwent woke up and realised what was happening.
  The Minister is a fair-minded man. All that we are asking for is a bit of fair play. Let us have a bit of Welsh chwara-teg.
  12.25 a.m.
  The Minister of State, Department of Industry (Mr. Alan Williams): First, I thank my hon. Friend the Member for Newport (Mr. Hughes) for giving us the opportunity for this discussion. I know
  1064
  from looking at Hansard how vigorously he has fought over the years for his constituency. The issue to which he has returned tonight is one about which he genuinely feels very strongly and one that he puts forward sincerely.
  I should like to make certain basic points to my hon. Friend. The first thing to remember about the objective of regional policy is that it is not intended to deal with the unemployment caused by recession. It is intended to deal with underlying structural unemployment. One of the difficulties that have confronted the Government when we have had to consider our scheduling of areas has been to assess how far the needs and difficulties of the areas in the worst economic recession the Western world has known since the war are because of a deep-seated underlying malaise and how far they are a reflection of what we hope is a temporary recession which will gradually abate and then leave the areas with far more normal levels of unemployment. That is the first consideration—whether it is a long-standing structural difficulty from which an area suffers.
  A further point that we must bear in mind is that assisted areas are already extensive, as my hon. Friend has intimated in relation to Wales. Forty-three per cent, of all employees and 65 per cent, of land area already come within assisted areas. About half the employees in assisted areas are in the special development and development areas. I know that my hon. Friend will accept, even if not in relation to his own constituency, that the more one extends the boundaries without compensatory cutback of the boundaries elsewhere, the more one dilutes the assistance that is going to areas of need. Therefore, in considering any extension of boundaries one must bear in mind its impact on other areas which are already scheduled and which may have greater need.
  I fully appreciate the point which my hon. Friend rightly made about Newport as a focal point in commuting terms. Equally, as he and I are very familiar with the Gwent valleys, for reasons of family background, I know that he will accept the counter-point that can be made. He said that we should give the status to Newport because Newport would then provide jobs for the valleys. It could well be that those representing

  1065
  the valley constituencies would say in response "Give this status to Newport and it diminishes the opportunities of the valley communities to attract the industry that they need within their own boundaries". It is an argument which can be made either way.
  My hon. Friend asked why Newport was not alerted to the fact that the recent changes were being contemplated, so that it had the opportunity to present new information. I assure my hon. Friend that no authorities were specially alerted. So many have applied for development area status over the years that it would have been administratively impossible to cope with the bus-loads of deputations that would have beaten a track to the Department's door, only to repeat points that were known to the Government anyway.
  Furthermore, we had indicated on more than one occasion that regional policy was under continuous review. That is still so. I am to see two deputations tomorrow, and I saw several last week from authorities that feel they should be upgraded. My hon. Friend is welcome to bring a deputation should he wish. He can then make his case in more detail than is possible in 15 minutes.
  My hon. Friend asked, "Why not do some downgrading in Wales?" That is for him to assess. I looked at the employment situation there and felt that, in present circumstances, I would not be justified in any downgrading. But I did downgrade certain areas in, for example, North Yorkshire and Scotland.
  The fact that certain areas were not included in the recent announcement and were invited separately to submit representations did not mean that they were not considered. Officials of various Departments carry out a detailed analysis of the situation in all areas which conceivably could merit a change in designation, be it a change to a higher or to a lower grading. All the areas which were in contention were looked at and considered even before the matter reached Ministers.
  When making changes, we have to bear in mind statutory requirements. Under the legal situation, the Secretary of State has to have regard to all the circumstances, actual and expected, in-
  1066
  cluding the state of employment and unemployment. Unemployment is a factor, but it is not the sole factor. Present unemployment is a factor, but possible trends in the future also have to be taken into account.
  I want to draw attention to certain favourable things which have happened in my hon. Friend's constituency, be cause, rightly, he listed certain disadvantages from which it has suffered. We have to bear in mind, to begin with, that the move by the Government towards greater selectivity in the use of support to industry is a favourable trend in Newport. Under our industry schemes, for example, Newport is eligible for the same level of grant as in other development areas. Six firms which have received grants under the ferrous foundry scheme have received them on the same basis as firms in development areas.
  In addition, Newport still remains eligible for regional development grants for building for advanced factories, and for regional selective assistance, and the Welsh Development Agency and the European Regional Development Fund are also sources available to Newport.
  Under Section 7 powers—regional selective assistance—offers valued at £1,250,000 have been made for 11 projects in Newport, involving a total expenditure of £28 million, and these are expected to create or safeguard 1,600 jobs. A Government advance factory has been built at Rogerstone and has been provisionally allocated. We hope that the jobs will arise from it within the next two years. The Welsh Development Agency in March announced its first major venture in investment, a loan of £150,000 to N. Mole & Sons Limited, the tool-making company, to enable it to purchase new plant and to provide working capital. Furthermore, the WDA is proposing to undertake two land reclamation schemes in the constituency.
  The European Regional Development Fund has supported three infrastructure projects, two in relation to the provision of industrial estates and the third in relation to the supply of electricity to industry. Under Section 8, the national scheme for financial support, three offers totalling £79,000 have been made to projects in Newport under the ferrous foundry scheme. Since 1975, six industrial development certificates have been

  1067
  approved for Newport, giving a total of about 650,000 square feet of extra factory space.
  Our estimate is that approximately 1,600 manufacturing jobs are in the pipeline for Newport in addition to the jobs which Newport will obtain as a result of Government dispersal. My hon. Friend will accept that, although St. Mellons may not be in Newport, it is accessible as an employment centre to people from Newport.
  Mr. John Stradling Thomas: It is the distortion which disturbs us. I support the hon. Member for Newport (Mr. Hughes) on this point. St. Mellons and Rogerstone are in our constituencies; we have a common interest.
  1068
  It is difficult for the Government to resolve the dilemma. That is the burden of the speech of the hon. Member for Newport. I support what he has said.
  Mr. Williams: For many years people have been worried that the communications links in South Wales have created a distortion towards this corner of South Wales——
  The Question having been proposed after Ten o'clock on Monday evening and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at twenty-four minutes to One o'clock.

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  Unemployment Benefit
  Tax Regulator Powers
  Tax Regulator Powers
  Domestic Credit Expansion
  Domestic Credit Expansion
FOREIGN AND COMMONWEALTH AFFAIRS
  Gilbert and Ellice Islands
  Gilbert and Ellice Islands
  Rhodesia
  Rhodesia
EUROPEAN COMMUNITY
  Parliamentary Salaries and Expenses
  Parliamentary Salaries and Expenses
  Passports
  Passports
  Commonwealth Membership
  Commonwealth Membership
  Nuclear Tests
  Nuclear Tests
PRICES AND CONSUMER PROTECTION
  Motor Oils
  Motor Oils
  Retail Prices
  Retail Prices
  Prices (Northern Ireland)
  Prices (Northern Ireland)
  Electrical Plugs and Sockets
  Electrical Plugs and Sockets
  Ticket Touts
  Ticket Touts
  Potatoes
  Potatoes
EMPLOYMENT
  Farm Tractors
  Farm Tractors
  Construction Industry (Apprenticeships)
  Construction Industry (Apprenticeships)
  Scotland
  Scotland
  Picketing
  Picketing
  Unemployed Persons
  Unemployed Persons
  Construction Industry
  Construction Industry
  Job Creation
  Job Creation
  Trade Unions
  Trade Unions
  London
  London
  Telford New Town (Skillcentre)
  Telford New Town (Skillcentre)
  Self-employed Persons
  Self-employed Persons
  Engineering Training
  Engineering Training
  Local Authority Contracts (Lifts)
  Local Authority Contracts (Lifts)
  Kirkby
  Kirkby
  Teachers
  Teachers
  Training
  Training
  Expenditure
  Expenditure
  Construction Industry Training Board
  Construction Industry Training Board
  Asbestos
  Asbestos
ENVIRONMENT
  Construction Industry (Contracts)
  Construction Industry (Contracts)
  Beaches (Waste Disposal)
  Beaches (Waste Disposal)
  House Building
  House Building
  Furniture (Local Government Expenditure)
  Furniture (Local Government Expenditure)
  Community Land
  Community Land
  British Urban Development Services Unit
  British Urban Development Services Unit
  Lake District Planning Board
  Lake District Planning Board
  Planning Blight
  Planning Blight
  Mobile Homes Review Body
  Mobile Homes Review Body
  Construction Industry
  Construction Industry
  Government Press Centre
  Government Press Centre
  Acton
  Acton
  Construction Industry (Apprentices)
  Construction Industry (Apprentices)
TRANSPORT
  Departmental Advertising
  Departmental Advertising
  Traffic Damage
  Traffic Damage
  Disabled Drivers (Licences)
  Disabled Drivers (Licences)
  Driving Licences
  Driving Licences
  Motor Cycle Headlamps
  Motor Cycle Headlamps
CIVIL SERVICE
  Schools Inspectors (Pensions)
  Schools Inspectors (Pensions)
  Government Contracts (Tenders)
  Government Contracts (Tenders)
  University College at Buckingham
  University College at Buckingham
  Computers
  Computers
  Cleaning Contracts
  Cleaning Contracts
DEFENCE
  Departmental Correspondence
  Departmental Correspondence
  Television Programme "World in Action"
  Television Programme "World in Action"
  Cyprus
  Cyprus
  RAF Greenham Common
  RAF Greenham Common
  Recruitment (Advertising)
  Recruitment (Advertising)
TRADE
  Multi-Fibre Arrangement
  Multi-Fibre Arrangement
  Commercial Agents
  Commercial Agents
  Uganda
  Uganda
  Steel
  Steel
  Business Names (Registration)
  Business Names (Registration)
NORTHERN IRELAND
  Architects
  Architects
  Multiple Sclerosis
  Multiple Sclerosis
  Cattle Exports and Imports
  Cattle Exports and Imports
WALES
  Homeless Persons
  Homeless Persons
  Family Planning
  Family Planning
  Playgroups
  Playgroups
  A55
  A55
  Speech Therapy
  Speech Therapy
  Hill Cattle
  Hill Cattle
  Rabbits
  Rabbits
  Maternity Grant
  Maternity Grant
SOCIAL SERVICES
  Smoking and Road Accidents (Medical Costs)
  Smoking and Road Accidents (Medical Costs)
  Spinal Injury Units
  Spinal Injury Units
  Pharmacists
  Pharmacists
  Birth Records (Adopted Children)
  Birth Records (Adopted Children)
  Mental Patients
  Mental Patients
  Forensic Psychiatry
  Forensic Psychiatry
  Population Statistics
  Population Statistics
  Secure Psychiatric Units
  Secure Psychiatric Units
  Self-employed Persons
  Self-employed Persons
  Supplementary Benefit
  Supplementary Benefit
  Unemployed Persons (Scotland)
  Unemployed Persons (Scotland)
  Pensions (Overseas Recipients)
  Pensions (Overseas Recipients)
  Benefit Payments (Departmental Staff Discretion)
  Benefit Payments (Departmental Staff Discretion)
  Multiple Sclerosis
  Multiple Sclerosis
  Employment
  Employment
  Naudicelle
  Naudicelle
  Family Income Supplement
  Family Income Supplement
  Low-income Families
  Low-income Families
  Poliomyelitis
  Poliomyelitis
  Wheelchairs
  Wheelchairs
  Unruly Certificates
  Unruly Certificates
  Preventive Medicine
  Preventive Medicine
  Family Incomes
  Family Incomes
  Dietary Control
  Dietary Control
  Unemployment Benefit
  Unemployment Benefit
  Disabled Persons (Vehicles)
  Disabled Persons (Vehicles)
  Nurses (Psychiatric and Geriatric Patients)
  Nurses (Psychiatric and Geriatric Patients)
  Foreign Patients
  Foreign Patients
  Abortion
  Abortion
SOCIAL SERVICES
  Medical Students
  Medical Students
  Whooping-cough Vaccination
  Whooping-cough Vaccination
  Pensions (Payment Methods)
  Pensions (Payment Methods)
HOUSE OF COMMONS
  Members' Secretarial Allowance
  Members' Secretarial Allowance
INDUSTRY
  Plessey Company Ltd
  Plessey Company Ltd
  British Petroleum Company Ltd.
  British Petroleum Company Ltd.
  Motor Manufacturing
  Motor Manufacturing
  Courtaulds Ltd.
  Courtaulds Ltd.
  Government Aid
  Government Aid
EDUCATION AND SCIENCE
  Schools (Ripley)
  Schools (Ripley)
  University of Aberdeen
  University of Aberdeen
  Poultry Research Centre
  Poultry Research Centre
  Arts Council
  Arts Council
  Teachers
  Teachers
  Intelligence Quotient (Sub-normal Children)
  Intelligence Quotient (Sub-normal Children)
  Fuel Technology
  Fuel Technology
  Energy (Research)
  Energy (Research)
  Higher and Farther Education
  Higher and Farther Education
HOME DEPARTMENT
  Taxation (Emigrants)
  Taxation (Emigrants)
  Remanded Juveniles
  Remanded Juveniles
  Unruly Certificates
  Unruly Certificates
  Juvenile Offenders
  Juvenile Offenders
  Metropolitan Police Dwellings
  Metropolitan Police Dwellings
  Probation Committees
  Probation Committees
  Community Development Projects
  Community Development Projects
  Local Government Grants (Kent)
  Local Government Grants (Kent)
SCOTLAND
  Lands (Ownership)
  Lands (Ownership)
  Teacher Training
  Teacher Training
  Teachers
  Teachers
  Advance Factories
  Advance Factories

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

HOUSING ASSOCIATIONS: VOUCHER PAYMENTS
Lord JANNER: 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 any investigations by the Department of Health and Social Services are proceeding to discover whether all the £14 per week vouchers issued to Novo Housing Association were properly spent on persons who previously had been sleeping rough; whether any unused vouchers were returned to the Minister; and what steps Her Majesty's Government are taking to ensure that funds for the needy are channelled into registered housing organisations and not into those like Novo and Second Genesis.
Lord WELLS-PESTELL: No, my Lords. Payment by voucher is simply an alternative to the normal method of weekly cash payments to supplementary benefit claimants. The Supplementary Benefits Commission must be satisfied that the board and lodging charge is reasonable, but it is for the claimant to decide whether the services provided are acceptable to him. If not, he is free to move elsewhere. All vouchers, including those unused or partially used, are returned to the issuing office by the hostel at the end of the period specified. Only registered housing associations can qualify for housing associations and hostel deficit grants. Novo and Second Genesis were not registered and did not receive a grant from the Department of the Environment. But there were no grounds for refusing to pay benefit to individuals by voucher to enable claimants to stay at their hostels if they so desired.
Lord JANNER: My Lords, may I ask my noble friend whether he is aware of the serious position that arose in respect of the two associations that I have mentioned in my Question? In view of the very serious manner in which these vouchers were handed out and in which assistance was given through people who themselves had a bad criminal record—it was described very well in "Longfellow Road" produced by Yorkshire Television—does he not think that we should have a thorough investigation into what is happening? This is particularly important because provision of suitable facilities should be available to those homeless who need them, and any interference in affording proper facilities, by people who are not failing to do so, is extremely serious.
Lord WELLS-PESTELL: My Lords, we must not fall into the error of confusing two entirely different situations. There is a situation, in which another Government Department is concerned and interested, relating to grants through the Greater London Council. That is a matter which is outside the jurisdiction of the Department of Health and Social Security which, through the Supplementary Benefits Commission, is responsible for the vouchers. A service of board and lodging was provided by these two organisations which was considered reasonable from the point of view of the service they gave and what they charged for it. Vouchers were issued accordingly. If any claimant in receipt of a voucher was not satisfied with the service or food provided, he had only to return to the local office and say so, and that voucher would have been cancelled and another voucher would be issued in respect of another organisation.
Lord HALE: My Lords, is my noble friend aware that the account of the activities of these organisations shown at considerable length on television, while not being accepted as necessarily conclusive or accurate, surely provides a very grave case indeed? Someone should be investigating the operations of these two associations and questioning how and why they came to be appointed to perform these difficult and delicate duties. Irrespective of whether or not he is responsible, is my noble friend in a position to say that whoever has responsibility is making a full inquiry?
Lord WELLS-PESTELL: My Lords, I can deal only with the part of the Question relating to vouchers, which is the major part of the Question. I have endeavoured to do this. I know that there is a serious concern felt by another Department of Government which is dealing with this matter. I will gladly undertake to draw this matter to the attention of my right honourable friend the Secretary of State, with a view to seeing whether it can be pursued in another way.
Lord JANNER: My Lords, while appreciating the last statement made by my noble friend, as this is such a very serious matter and led to such terrible action—which I believe now has been remedied to some extent by the Greater London Council—may I ask my noble friend whether he thinks it is extremely important from the point of view of the general public as a whole. Does the Minister agree that at a time when money should certainly not be spent on anything which is of a disastrous nature such as the case exposed by Yorkshire Television a full investigation should be undertaken to see what remedy can be applied? Is it not for the Ministry to ensure that action is taken as quickly as possible in case any further abuse—and this was a terrible abuse—takes place?
Lord WELLS-PESTELL: My Lords, I have already said that I will call the attention of the Secretary of State to what your Lordships have said. I want to point out to my noble friend that practically the whole of his Question deals with vouchers issued to one particular organisation. I have dealt with that matter, and I have dealt with the second part of the Question relating to funds being made available to people who need them.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, is the noble Lord aware that we should all like to wish the noble Lord, Lord Janner, many happy returns of the day?
Several noble Lords: Hear, Hear!
Lord JANNER: My Lords, may I thank the noble and learned Lord and your Lordships.

SHIPPING CHARGES AND THE EASTERN BLOC
2.43 p.m.
Baroness WARD of NORTH TYNESIDE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a statement on competition with the Eastern bloc in world liner trade, in view of the retaliatory action reported to have been taken by France, Holland and West Germany.
Lord ORAM: My Lords, so far as I am aware, no retaliatory action has been taken by France, the Netherlands or the Federal Republic of Germany. The Soviet Government are well aware that Her Majesty's Government and the Governments of other European countries have contingency powers which enable them to take retaliatory action. However, it was made clear to Mr. Guzhenko the Soviet Minister of Mercantile Marine, during his recent visit to the United Kingdom, that we would first wish to explore the possibility of reaching a reasonable accommodation.
Baroness WARD of NORTH TYNESIDE: My Lords, while thanking the noble Lord for that Answer, may I say that he will be as aware as I am of the action taken by Great Britain? Having regard to the Answer to my Question, pointing out that France, West Germany or Holland appear to have taken no action, can he get Her Majesty's Government to buck them up, in view of the fact that we do a lot for them in many ways? Is it not a fact that they ought to be encouraged, and even perhaps pushed, to do more for us in this very important matter to help our people in this country against the Soviet Union and their low freightage charges?
Lord ORAM: My Lords, concern about these matters has been expressed in the European countries to which the noble Baroness refers. I think it would be true that, to be effective, any retaliatory action would have to be taken by European countries in concert. Therefore, if it came to the point where we have to take

393
action—we hope it would not—we certainly would be in touch with the other countries on the Continent.
Lord CAMPBELL of CROY: My Lords, as the British shipping industry is very large in comparison to Britain's economy in the world, can the noble Lord tell the House what the Government see as the next step following the visit of Mr. Guzhenko, and what further stage is likely to be reached in these very important discussions?
Lord ORAM: Not at this stage, my Lords. The noble Lord will recall a Question by the noble Baroness on Thursday last about the consultations which took place during the course of last week. She then indicated that she would be putting down a Question in something like a week's time. That will give us an opportunity of assessing the results of those consultations. I think that would be a better time at which to make any such Statement.
Baroness WARD of NORTH TYNESIDE: My Lords, may I ask the noble Lord this further question: Would he give me an assurance that he will not forget?—because I am sure he will be aware that Governments of all Parties also want a little pushing.
Lord ORAM: My Lords, I can give the noble Baroness that assurance and if I should be at all defective I am sure she will remind me.

STOKE MANDEVILLE GAMES: BAN ON RHODESIANS
2.47 p.m.
Baroness VICKERS: 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 will state the reason for refusing visas for five black and live white disabled Rhodesians to attend the games organised at Stoke Mandeville in July 1977.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, the
394
reason, as we advised the President of the International Stoke Mandeville Games Federation, was that those concerned would have participated in the games as a team representing Rhodesia. To have allowed this would have constituted a form of recognition of the illegal régime, and as such would have been contrary to both the spirit and the letter of the various Security Council mandatory resolutions relating to Rhodesia.
Baroness VICKERS: My Lords, while thanking the noble Lord for that Answer, may I ask him whether he does not think it is very unfortunate that disabled people, who have nothing to do with politics and who have been training themselves during all these years to enter these games, should have to suffer from these entry restrictions? May I also ask him whether the Minister for the Disabled has been consulted on this matter, and whether he cannot persuade the Government to change their minds on humanitarian grounds?
Lord GORONWY-ROBERTS: My Lords, I agree that it is most unfortunate that these people should be placed in this position, but the fault does not lie at our door. It lies at the door of the illegal regime which has produced the circumstances which make it mandatory on us to take this action. As regards what the noble Baroness said about consulting my right honourable friend the Minister for the Disabled, I believe he is well aware of the situation, but I shall myself see him to ascertain whether the suggestion the noble Baroness has made can be implemented in some way. I doubt it very much, as there are a number of considerations here that she, as well as we, I am sure, would wish to keep in mind. Were an exception, however attractive, to be made in these circumstances, we might run the risk of a boycott by other countries, preventing other paraplegics from attending these games, and perhaps many more may be prevented in that way than the small number for which we might make an exception in this case.
Lord DERWENT: My Lords, has the noble Lord been told that in fact other countries would not attend, or is he merely imagining it?
Lord GORONWY-ROBERTS: My Lords, I have given to the House the best

395
advice that has been proffered to me, as one consideration that has to be borne in mind when we take a difficult decision like this.
Lord SHINWELL: My Lords, will my noble friend not agree with me, and with everybody else who takes a reasonable view of these matters, that it seems somewhat farcical and absurd that, because Mr. Smith has committed an alleged illegal action, we should take it out on a number of disabled people on the ground of colour?
Lord GORONWY-ROBERTS: My Lords, I wonder whether my noble friend is being somewhat less than fair. Nobody is taking anything out of these admirable and intrepid people. There is the utmost sympathy for them. Indeed, individuals from Rhodesia, who would normally qualify for a passport, may come to Britain to take part in sporting events as individuals, but not as representatives of the illegal régime. It is Mr. Smith who is using these paraplegics in order to assert the possibility of recognition of his illegal régime.
Lord HARMAR-NICHOLLS: My Lords, does the noble Lord not think that the Government are straining at a gnat, having swallowed a camel, particularly when one remembers that, very sensibly, the new Foreign Secretary met the head of the alleged illegal regime, in order to see whether we could get on a level, and whether something could come out of it? This seems to be rather piffling alongside that.
Lord GORONWY-ROBERTS: My Lords, I always listen with great respect to what the noble Lord says. But I do not think I can agree with him that what he and others have said about such an act is for consideration.
Lord BROCKWAY: My Lords, while it is clear that Mr. Ian Smith is exploiting these disabled persons to gain recognition of his Government, may I ask whether it would be possible for our Government to say that if this team of disabled came as representing the disabled, rather than Mr. Smith's Government, our Government would be prepared to accept them?
Lord GORONWY-ROBERTS: My Lords, I think that my noble friend puts more precisely what I said in my last answer but one. As individuals making application, the position would be quite different.
Lord MONSON: My Lords, can the Minister say whether sporting teams from Cambodia or Uganda would be allowed into this country, in the unlikely event of anybody being allowed out of either of those countries? If so, would he not agree that the ruling regimes of both of those countries are at least a hundred times more illegitimate, in the popularly understood sense of the term, than the Smith régime?
Lord GORONWY-ROBERTS: My Lords, however obnoxious other Governments—and I name none at the moment—may be, they are not in quite the same position as the illegal régime of Rhodesia.
Lord BARNBY: My Lords, would it not be right to say, to use the noble Lord's own words in answer to the Question, that it is rather less than fair on the noble Lord's part to say that the cause of this often stupid interference with regard to sport or games is the Prime Minister of Rhodesia?
Lord GORONWY-ROBERTS: My Lords, stupid interference with sports begins I should say, with stupid and inhuman interference with the rights of blacks as well as whites to take part in sports.
Baroness VICKERS: My Lords, in view of one of the noble Lord's replies, may I ask whether, if these 10 individuals apply separately, they will be considered?
Lord GORONWY-ROBERTS: My Lords, they will be considered in the normal way. The position would be quite different from their applying as a team.

EEC ENERGY COUNCIL: MINISTERS MEETING
2.54 p.m.
The Earl of LAUDERDALE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a Statement about the proceedings of the Council of Energy Ministers in Brussels on 14th June 1977.
Lord STRABOLGI: My Lords, the second meeting of the EEC Energy Council during the United Kingdom Presidency took place in Luxembourg on 14th June. The Council had a useful discussion on nuclear energy questions, identifying several points on which further study by the Community could help to develop nuclear energy with the maximum degree of safety and public acceptability. In a discussion on key coal proposals, the United Kingdom stressed the need for Community preference. No agreement was reached on a proposal to aid investment in coal fired power stations, but the concept was remitted for further study. In a discussion on refinery surpluses, there was a broad consensus on the external aspects, but not on the extent to which the Community should discuss any national plans for new construction, albeit on a non-binding basis. The United Kingdom's reserve was explained; the question is to be studied further. Some progress was made in discussing arrangements for reductions in oil consumption in the event of a crisis.
The Earl of LAUDERDALE: My Lords, in thanking the noble Lord for that reply, may I first apologise to him, and through him to the House, for having misphrased the Question by referring to a meeting in Brussels which was, in fact, held in Luxembourg? But may I ask him whether he can tell us what are the several points remitted for further study in regard to nuclear energy?
Lord STRABOLGI: My Lords, I accept that the noble Earl made a small mistake about the venue of the conference. Of course, the first meeting was in Brussels last March. With regard to the nuclear questions, these were mainly concerned with the development of the reactor programme in the EEC, and the fact that the somewhat ambitious programme for the construction of reactors has steadily been revised downwards. But the United Kingdom always thought that the original programme was somewhat unrealistic.
Lord AVEBURY: My Lords, the Minister talked about there being the maximum degree of safety and public acceptability. Can he say whether it is the intention that additional procedures of a European dimension should be grafted on to those which already exist in this country, as to the protection of nuclear installations and the approval of sites at which sensitive nuclear materials are to be used or manufactured?
Lord STRABOLGI: My Lords, the discussions on nuclear energy questions were not concerned with non-proliferation aspects.
Lord AVEBURY: My Lords, I did not say that.
The Earl of LAUDERDALE: My Lords, may I ask the Minister two further questions arising out of his helpful and informative reply? First, can he tell us when the Energy Council will meet next? Secondly, can he tell us whether the Government will make a Statement to the House about tomorrow's discussion with regard to the future of the JET project?
Lord STRABOLGI: My Lords, the date of the next meeting will be proposed by the Belgians, whose presidency is next term. It will probably be in the autumn, but of course I cannot say further than that. With regard to JET, I think this is a question that could probably be discussed through the usual channels, but I may say now that this was not on the agenda for the Council of Energy Ministers.
Lord AVEBURY: My Lords, I did not mention nuclear proliferation. I asked the Minister whether any additional measures were contemplated of a European dimension, with regard to public acceptability on questions such as the determination of sites which will handle or process sensitive nuclear materials. I am thinking particularly, in the present context, of the Windscale Inquiry, which is in progress at the moment. Is it the intention of Ministers that there should be additional procedures on a European scale, over and above those that are determined nationally, for the approval of such sites?
Lord STRABOLGI: My Lords, I am afraid I cannot answer that question. I am answering about proceedings in the report of the Council of Energy Ministers, not about the policy, necessarily, of Her Majesty's Government.
The Earl of LAUDERDALE: My Lords, will the noble Lord agree, and perhaps pass it on to his colleagues, that although JET was not on the agenda for the Energy Ministers it is very relevant to our energy problems? Furthermore, is he aware that many of us hope that we can have a Statement after the meeting, which I think takes place tomorrow, to discuss its future?
Lord STRABOLGI: Yes, my Lords; of course that may well be so, but JET is a matter for the Research Council. At the moment, we are talking about the Energy Council.

GRUNWICK LIMITED: DISPUTE
2.59 p.m.
Lord HAILSHAM of SAINT MARY-BONE: My Lords, I beg to ask Her Majesty's Government the Question of which it seems I have given Private Notice, namely:
"To ask Her Majesty's Government whether they will make a Statement on the preservation of law and order outside the Grunwick Processing Laboratories, in view of the great increase in picketing?"
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House, it seems that at a convenient moment after 3.30 my noble friend Lord Harris of Greenwich will answer this Question in the form of a Statement.

SALE OF MANORS BILL [H.L.]
3.10 p.m.
Report received.
Clause 5 [power of councils to acquire Lordships and conditions as to valuation]:
The Earl of KINNOULL The Earl of KINNOULL moved manuscript Amendment No. 1A:
Page 2, line 32, at end insert—
400
("( ) The price for transfer to the council under subsection (2) above shall be settled by the independent valuer in accordance with the following rules—

(a) the value of the lordship shall, subject as hereinafter provided, be taken to be the amount which the lordship if sold in the open market by a willing seller might be expected to realise;

(b) no account shall be taken of any depreciation of the value of any land comprised in the lordship which is attributable to the fact that (whether by way of allocation or other particulars contained in the current development or by any other means) an indication has been given that the land is, or is likely to be, acquired by an authority possessing compulsory purchase powers.")

The noble Earl said: My Lords, I beg to move manuscript Amendment No. 1A. Perhaps I could explain that it has arisen at fairly short notice following the very helpful advice I received from the Department of the noble Baroness, Lady Birk. All the Amendments at the Report stage of this Bill are tidying up Amendments, following the helpful points made in Committee on 23rd May. The House will recall that Clause 5 of the Bill gives parish councils the right to acquire lordships of the manor under certain limited conditions. Under the provisions of Clause 5 the terms of sale are described.
My noble friend Lord Sandford, who sadly cannot be with us today, quite properly raised in Committee a number of points on Clause 5 concerning rights to compensation. The result of this is manuscript Amendment No. 1A, which seeks to ensure that the seller of the lordship does not suffer any loss in value of the lordship by selling to the parish council. Paragraph (a) of the Amendment confirms the basis of the value of the sale to be the value in the open market, if sold by a willing seller. Indeed, it is in similar terms to Section 5 of the Land Compensation Act 1961. Paragraph (b), again under the Land Compensation Act, covers the problem of the depreciation that might occur because a local authority has its eyes on some future plan for taking part of that land. I believe that these points cover those which were raised in Committee by my noble friend. I beg to move.
On Question, Amendment agreed to.
Clause 6 [Application of certain Acts to manorial records]:
The Earl of KINNOULL The Earl of KINNOULL moved to leave out Clause 6.
The noble Earl said: My Lords, Clause 6 was inserted in the Bill during the Committee stage to try to strengthen the protection of the old manorial records. Since then there have been very helpful discussions between the Departments of the noble Baroness, Lady Birk, and the Master of the Rolls and, indeed, the Promoters, and it has been decided that this clause is unnecessary. I beg to move.
On Question, Amendment agreed to.
Clause 8 [Interpretation]:
The Earl of KINNOULL The Earl of KINNOULL moved Amendment No. 2:
Page 3, line 24, fter ("marriage") insert ("or by gift, settlement").
The noble Earl said: My Lords, again this Amendment covers a point which was raised by my noble friend Lord Clitheroe during the Committee stage. The House will recall that Clause 8 covers certain cases which were not included in the Bill. My noble friend particularly asked that cases such as gifts or settlements should be included, and I am happy to include these in the Bill. I beg to move.
On Question, Amendment agreed to.
Clause 9 [Short title and extent]:
The Earl of KINNOULL The Earl of KINNOULL moved Amendment No. 3:
Page 3, line 35, after ("of") insert ("Lordships of").
The noble Earl said: My Lords, this Amendment concerns the Short Title of the Bill. Again it arises from a point made by my noble friend Lord Sandford when he queried the Short Title. I am advised that, strictly speaking, "manor" is a lordship, whereas "Lordship" —as many of my noble friends will know, does not necessarily infer the ownership of a manor. The purpose of a Short Title is to be as explicit as possible as to the purposes of a Bill. I am happy, however, to meet my noble friend's wishes, and the purpose of this Amendment is so to do. I beg to move.
Lord SANDYS: My Lords, in the absence of my noble friend Lord Sandford I should like to thank my noble friend Lord Kinnoull for bringing forward this Amendment which has his support. The
402
alteration of the Short Title will be invaluable in the examination by another place of the Bill, because it indicates a difference from what we have at present.
On Question, Amendment agreed to.

CONSTRUCTION OF ROADS (TIME LIMIT) BILL [H.L.]
3.5 p.m.
Report received.
Clause 1 [period for constructing roads]:
Lord AVEBURY Lord AVEBURY moved Amendment No. 1:
Page 1, line 8, after ("authorisation") insert ("or, if in the case of a trunk road there is no such authorisation, from the date of the approval of the Treasury thereto").
The noble Lord said: My Lords, I have been doing my best to meet the criticisms which have been expressed by the noble Baroness, Lady Stedman. This Amendment is designed to cope with the point which she raised first of all on Second Reading in col. 862. The noble Baroness referred to it again during the Committee stage. The point is that while motorways were covered by the original wording of the Bill, all-purpose trunk roads would not have been. The noble Baroness explained the difference between the two as being that in the case of a motorway a draft scheme is published under Section 11 of the Highways Act 1959, while for a trunk road there has to be an order which is made by the Secretary of State.
Having studied the matter, I am not at all clear why the expression "authorisation" should cover a scheme and not an order. However, I accept entirely that the noble Baroness will have been advised by her Department that that is the case. Therefore I have tabled this Amendment, by which the matter can be quite easily dealt with. Section 26 of the 1959 Act provides that the Secretary of State:
"…may, with the approval of the Treasury, construct new highways".
So where there is no authorisation, we can start the clock, for the purposes of subsection (1), at the point of the Treasury having given approval. Therefore I beg to move Amendment No. 1.
On Question, Amendment agreed to.
Lord AVEBURY Lord AVEBURY moved Amendment No. 2:
Page 1, line 15, after ("authorisation") insert ("or approval").
The noble Lord said: My Lords, this is consequential on the previous Amendment. I beg to move.
On Question, Amendment agreed to.
Lord AVEBURY Lord AVEBURY moved Amendment No. 3:
Page 1, line 18, at end insert—
("(4) For the purpose of subsection (1) above a road shall be deemed to have been begun when—

(a) works of preparation of, or construction on, the land on which the road is to be built have commenced and at the time when such works were so commenced it was intended by the Secretary of State that such works would continue without interruption until the completion thereof; or

(b) a contract has been entered into for that purpose.")

The noble Lord said: My Lords, so far as I can see, there is no definition of the word "begun" either in the Highways Act 1959 or in the Town and Country Planning Act. It was at the suggestion of the Council for the Protection of Rural England that we inserted the definition given in this Amendment with a view to making the matter as clear and specific as possible. I beg to move.
On Question, Amendment agreed to.

RENTCHARGES BILL
3.10 p.m.
Lord FLETCHER: My Lords, I beg to move that this Bill be read a second time. In moving its Second Reading, I hope it will not be necessary for me to trouble your Lordships with any great details. The Bill comes to us from another place where it had a cordial reception. It had a considerable examination in the Committee stage and certain changes were suggested.
The simple object of the Bill is to prohibit the creation of land charges, either in law or in equity. The reason for the Bill is that for some time past it has been recognised that a rentcharge is anomalous. A rentcharge is defined as a payment made, issuing out of land in any
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way other than a rent reserved by a lease or tenancy, or a sum payable by way of interest—as, for example, under a mortgage.
Your Lordships will appreciate that tenure of land is capable of various forms of ownership. Apart from the actual owner, the freeholder, there can be leases, either under a short lease or a long lease. There can be mortgage interest; there can be interest for life, there can be interest for remainder. A freeholder of land may have his land subject to certain rights of way: if it is arable land, it may be subject to various easements in favour of the local authorities, rights of drainage, sewage and so forth. But a person who owns a house in fee simple thinks of himself as being the absolute owner of that house, subject to any mortgage interest he has to pay.
In various parts of the country, particularly the North-West of England and the South-West of England, the custom seems to have grown up fairly recently of rent charges being created, obliging the owner of the land for the time being to make a payment in perpetuity to somebody who has no other interest in the land at all. It is felt that that is not only anomalous but also contrary to what one ought to consider as the philosophical approach to real property law. In addition to that, it creates a great deal of resentment, annoyance and inconvenience.
There are not only simple rentcharges; there are complicated rentcharges. A simple rentcharge arises in this way. If a builder builds a house and sells it to a purchaser, in the ordinary way he exacts a price, but sometimes, particularly, I gather, in the Manchester area, in addition to exacting a price, a capital sum, he asks the purchaser to pay an annual sum in perpetuity and that is called a rentcharge. When that purchaser comes to sell it, his purchaser finds it very anomalous that he should have to go on paying that rentcharge in perpetuity.
A more complicated set of circumstances arises where the owner of land sells his land to a developer, and the developer puts up perhaps four or five or half a dozen houses. The original owner exacts a rentcharge on the whole land. The developer or builder puts up five or six or more houses, and the purchaser of

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each of those houses finds that he is liable, not merely for the part of the rentcharge applicable to the house he has bought, but for the whole of the rentcharge. It is true that there are possibilities of getting apportionment, and I will come to that later. But in practice it is found that where such a rentcharge exists, the owner of the rentcharge is content to collect his rentcharge from one particular person, leaving that unfortunate person to collect an appropriate proportion of the total rentcharge from his neighbours, which creates a great deal of trouble and sometimes involves loss. Therefore, the primary and the first object of the Bill is to prohibit in future creation of any rent-charges. I hope that that is a proposition which will commend itself to your Lordships without any elaboration.
The second problem is what to do with existing rentcharges. The whole of this subject was a matter of very deep inquiry by the Law Commission, and the Bill is based upon a Bill prepared by the Law Commission and on a very valuable report prepared and issued by them in August 1975. Here may I say, as one who had a relatively minor part to play in the establishment of the Law Commission, that I think we should recognise how indebted we are to the work of the Law Commission for dealing with a complicated technical subject of this kind and producing not only a Bill—which, I gather, has Government support, although it is not a Government Bill—but also an elaborate report justifying it.
As I was saying, the Law Commission, having recommended the prohibition of any future rentcharges, went on to consider what should be done about existing rent-charges, and they came to the conclusion that they should be abolished or extinguished. That was rather more controversial, but I hope it will not be controversial in this House. Obviously, to extinguish existing rentcharges could be tainted with expropriation unless safeguards are taken. Therefore, the solution provided is that rentcharges shall be extinguished after a period of 60 years.
The period of 60 years, about which there is no magic, is chosen for this reason. Most of these rentcharges are relatively small, perhaps £20 a year, sometimes more. It is felt that an obligation to pay or to receive £20 a year in
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60 years' time, at the present rate of inflation, or indeed at any rate of inflation, will probably produce a position in which the amount involved is derisory. No one would like to hazard a guess what £20 a year will be worth in 60 years' time. It is felt, therefore, that no great hardship is being caused to the owners of rentcharge if, instead of having a rentcharge in perpetuity, it is limited to the next 60 years. So that is the secondary object of this Bill.
There are two other subsidiary but not unimportant objects of the Bill. As I have indicated, one of the great inconveniences of rentcharge is that it applies to the whole of the land on which it was originally created, although that land may have been divided and subdivided. Therefore, it has always been thought that anybody who is subject to a rentcharge but owns only a fraction of the land which is bound by the rentcharge should be able to apply to have his liability apportioned. Unfortunately, the procedure for apportionment under the existing law is complicated and not inexpensive. Therefore, this Bill contains provisions, which I need not elaborate, for simplifying the machinery under which anyone liable to a rentcharge may have it apportioned so that his liability in future is limited to the specific amount relative to the house or the amount of land he enjoys, part of what was a much larger area.
The second incidental object of the Bill is to simplify the provisions for redeeming a rentcharge. Those at the moment are not as simple as they might be. We have no experience as to how many people want to redeem rentcharges. It might be thought that there are not very many, because obviously it is no great temptation to exchange the liability of paying a small annual sum for that of paying a very much larger capital sum. However, there are those who want to redeem their rentcharges and under this measure the procedure for doing so is simplified.
I should like to draw your Lordships' attention to one other matter. As noble Lords will realise, an existing rentcharge—a perpetual rentcharge—can be redeemed under the existing law and its value can be ascertained by an appropriate actuarial calculation. Of course, the same is not

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true in respect of a rentcharge which is not perpetual but which is extinguished after 60 years. Therefore, there must be some provision for calculating the appropriate sum to pay on redemption according to whether redemption takes place in one year, 10 years, 20 years or 50 years. That has been worked out. Noble Lords will find in Clause 10 an algebraic formula which will be more readily understood by those engaged in higher mathematics than by me and which I hope I shall not be asked to explain or justify. However, if I am pressed I shall do my best.
I need refer to only one other matter. Obviously some administrative arrangements will have to be made to give effect to the provisions in the Bill for simplifying the procedure for redemption and apportionment. It is very appropriate that it should have been left to the Secretary of State to make provision by Orders in Council for the machinery for dealing with that, rather than by attempting to include it in the Bill. As a result of those short few words I hope that your Lordships will find this Bill worthy of a Second Reading and one which removes an anomaly under the law which at the present time is the cause of a great deal of frustration, resentment and anger.
Moved, That the Bill be now read 2a.—(Lord Fletcher.)
3.23 p.m.
Baroness ELLES: My Lords, the noble Lord, Lord Fletcher, has certainly led us through the intricacies of the Rentcharges Bill with some considerable skill. Indeed, we are grateful to him for doing so and for explaining the purposes of the Bill. The law of property has always been a rather closed area to most of us, even to students of the law, and here I take the opportunity to thank Professor Cheshire for his invaluable book which helped not only the majority of lawyers through their student days but certainly those who do not practise the law at all. As we know, the law of property is indeed a preserve which non-specialists, even lawyers, enter with great fear and trepidation. So it is with fear and trepidation that I speak today on this Bill. But our task has certainly been made much easier by the very clear explanation given by Report No. 68 of the Law Commission. It
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has been an invaluable document in helping to explain the purposes up to now of rentcharges and the reasons why rentcharges should in future be abolished or extinguished.
However, I should like to put another side to the case which the Law Commission has advanced in its document, because the reason given in the document for abolishing a payment undertaken on the purchase of a freehold property, that a higher proportion of rent payers find perpetual rent charges "conceptually unattractive", I find singularly unattractive. I find those two words equally conceptually unattractive and I do not consider that that is sufficient basis for saying that rentcharges should be abolished. Perhaps it is fair to mention (and I do not think that this is emphasised in the report) that some very learned institutes—and I refer in particular to the institute which in common parlance has the name of the Institute of Conveyancers—submitted evidence in favour of retention of rent-charges as being a convenient way of paying for a transfer of title to land other than by raising mortgages. Indeed, it might even be quite beneficial in some cases where the capital value of a house might be reduced on the basis of paying a rentcharge in perpetuity. An appendix to the Institute's evidence by a solicitor of high repute and long-standing in the North West of England said that in all the 27 years of his practice he had only 10 cases which caused any difficulty at all in relation to rentcharges.
Therefore, it is not necessarily correct to state that conveyancing is made more complicated when there is a rentcharge to be considered. I believe that that is a fair statement to make in view of the very definite representations made in the Law Commission's report that there is very little evidence to show that they should be retained. I must confess, being of another part of the legal profession, that I was somewhat surprised to read in the speech of an honourable Member in another place that sometimes solicitors do not understand the system. That seems to be a very poor reason for abolishing something; it rather points to the fact that solicitors should be better trained before they enter the profession and serve the public.
Nevertheless, the criticism contained in paragraphs 29 and 30 explains the

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difficulty of rent collecting by one plot owners to pay an overriding rentcharge. That seems to me to be a very much more realistic and practical reason for recommending abolition. It must make it extremely difficult—particularly with the mobility of the population and change of ownership—to get hold of present owners, and the usually very low sum to be collected is nowadays apparently, and it seems to me, completely out of proportion to the highly inflated costs which may be involved in its collection.
It was also made clear during the proceedings in another place, particularly by Members from the Manchester and Bristol areas, that a great deal of inconvenience, and indeed hardship, could be caused by the payment of such small sums, especially by the rent payer responsible for the overriding rentcharge. However, a rentcharge in perpetuity cleared several years ago is understandably of very little relevance to a new house purchaser today, as he probably paid a full price for his title and the amount of the rentcharge was probably not taken into account when the capital sum was paid over. However, regrettably, it seems to be some indictment on the legal profession—and I say that only in accordance with the evidence given in another place and not with any evidence that I have—that very often a purchaser is not even aware of having to pay a rentcharge and is taken by surprise when lie is asked for it. This, I believe, is something which has been carried on which is detrimental to the citizen.
To be fair, rentcharges are not quite so unacceptable either to the owner who receives the rentcharge or to some institutions. It was said in another place that builders in different parts of the country were beginning to introduce a system of rentcharges when selling off developed plots and, therefore, rentcharges should be abolished before new ones were created; and that to be done quickly. That may be convenient for conveyancers and for the registration of property, but it is not clear to me if a system is convenient, proving to be successful and is used by builders as a means of raising funds—after all, it presumably stops people from having to take out mortgages—that it is necessarily a reason to abolish rentcharges. Also, I am not convinced that charities—particularly long-estab-
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lished charities, some of which I understand rely on rentcharges for their sources of income—will not suffer from the abolition of rentcharges.
I am not an expert on charges, and I do not pretend to be, and regrettably I have not had time to consult the Charity Commissioners or other charitable bodies, but I got the impression from the debate in another place that not sufficient care and attention was paid to this particular aspect because, as we know, rentcharges in the hands of a charity are able to be used for tax reclaim to that amount, thereby increasing the income of the charity. I do not know whether, on the abolition of rentcharges, a charity would be able to invest its income in the same way and get that rebate on tax. I very much doubt it. I think the abolition of rentcharges may have a deleterious effect on the net income of a charity, but perhaps somebody in your Lordships' House might be prepared to comment on that, if not now then at a later stage in the Bill. If, however, we are to accept the recommendation of the Law Commission, subject to one or two amendments, I support that if you are going to have abolition of rentcharges on the principle as accepted, it is quite right that the Government have removed from one of the exceptions paragraph 8 of Schedule 1 of the Leaseholders Act. I think that is a sensible step.
There are still one or two aspects of the Bill which could possibly be improved and in fact the noble Lord, Lord Fletcher, touched on those particular aspects. If the rentcharge is so unattractive and there are social difficulties—and I accept that there must be social difficulties in the areas where rentcharges are relevant, and it was manifestly explained in another place—then why is the period going to be 60 years and not a shorter time?—because the people who are suffering from it now quite clearly will never benefit from the effects of this Bill. Could not some more satisfactory way be found of terminating these rentcharges, especially for those who we are told suffer considerable difficulties in collecting equitably apportioned overriding rentcharges? It seems to me that this might be a procedural matter rather than one to be contained in the Bill, but obviously the department will have to think of some effective way of dealing with this particular inconvenience.

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I think the Bill does not deal adequately with this particular aspect, nor as to the method by which a rentcharge can be redeemed. Surely, if it is a social and physical difficulty for one or other individual, the answer is that the matter should be dealt with locally. However much publicity or information there is to an individual, the very idea of writing to a Government Department must have a restrictive and frustrating effect on that individual. Certainly I believe that Members on this side of the House who have to give their minds to this particular problem would very much rather see either a local authority dealing with the request, or possibly it being dealt with through the Post Office. I know there are questions of public expenditure, but it seems to me that there might be some more satisfactory way of getting round this particular problem.
Finally, if this Bill is to be passed and to get on to the Statute Book—and I think the overriding conclusion is that it must get on to the Statute Book and ultimately rentcharges must be abolished—the sooner it is done the better. And for those solicitors who do not understand the system and for those solicitors who do understand it, I should have thought it would be very much more convenient if a fixed date could be announced early in the stages of the Bill through your Lordships' House so that they know that the abolition of rentcharges—covering 60 years—will start from 1st September or from the 1st October, whatever it might be, regardless of whichever Party will be in Government.

GRUNWICK LIMITED: DISPUTE
3.34 p.m.
The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich): My Lords, with the leave of the House, I will now repeat a Statement being made in another place by my right honourable friend the Home Secretary in answer to a Private Notice Question on the Grunwick dispute. The Statement is as follows:
"I understand and share the concern felt by Members in all parts of the House about the events outside the Grunwick Laboratories. The Commissioner of
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Police of the Metropolis informs me that his officers are attempting to maintain, in conditions of considerable difficulty, both the rights of peaceful picketing and the freedom of those not prepared to be persuaded by the pickets to enter and leave the premises.
"A number of people have been charged with offences arising out of incidents last week. As the police action in these cases will be before the court it would be wrong for me to make any comment about particular incidents.
"Complaints which have been made about the conduct of police officers during incidents last week are already being investigated in accordance with the new complaints procedure, which includes a review by the independent Police Complaints Board.
"It is a matter for concern that certain of those present may latch on to industrial action by a trade union as an excuse for breaches of the law, and particularly for violence against the police. This kind of activity, I know, has no place in responsible trade unionism, and I was glad to note the appeal by Mr. Grantham, General Secretary of APEX, for a reduction in the number of pickets."
That is the end of the Statement, my Lords.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, this is a very serious matter, and I am grateful to the noble Lord, Lord Harris of Greenwich, for repeating what has been said in another place. I can only apologise to the House for the fact that I did not quite latch on to the procedural problem involved, so that I was rather taken aback when I was expected to ask a Private Notice Question myself at an earlier stage in the proceedings.
I am sure the House also will be grateful for the recognition by the Home Secretary of the very widespread concern about what is going on and indeed what continues to be going on, because some of us heard of the most disreputable events outside the Grunwick premises on the one o'clock news. I am sure also that the House will agree that it is not desirable for the Home Secretary—and it would be equally undesirable for me—to make any comment upon the general merits of the dispute. But will not the noble Lord

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agree that the law of picketing is of peaceful picketing and not of either insulting or violent picketing. The weapon of the picket is persuasion, not shouting insults like" scab"; not using violence or throwing bottles and not intimidating either by threats or by the mere force of numbers.
I think the House would wish me to say—and I am sure the Government will agree—that the police need our fullest understanding and support in this matter. The good reputation of trade unionism, not less than of this country, generally resides in the peaceful use of persuasion and not in breaches of the law, and I think that the House looks to the Home Secretary and to the Attorney General to enforce the law if, as I believe, it is being breached by a number of persons who probably have no direct interest in the dispute and who may, for aught I know, have no membership of the union concerned.
Baroness SEEAR: My Lords, from these Benches also we should like very much to thank the Minister for repeating this Statement. We would add our comment on the obvious right of peaceful picketing, but emphasise the distress that it causes to see picketing of a non-peaceful nature which cannot do any good to real trade unionism generally. We should also like to say that we recognise, and we hope that it will be widely recognised, that the police are put in an extremely difficult position and need the support of the general public in trying to carry out a very difficult duty. Is the Minister able to give us any information at all about the number of people involved in the picketing who are really in no way connected with the dispute but who are there for reasons of their own, which are not reasons which have to do with the resolution of this dispute?
Lord HARRIS of GREENWICH: My Lords, if I may say so, I am obliged to the noble Baroness and to the noble and learned Lord for the way in which they dealt with this matter. As the noble and learned Lord rightly said, this is a matter of some delicacy and certainly I do not think that it would be appropriate, representing as I do on this occasion the Home Office, for me to become involved
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in the actual merits of this particular dispute. That would be quite inappropriate.
The noble and learned Lord said that this was a serious matter, and I agree with him. He said that there was widespread public concern, and I agree with him on that also. I also agree with him that the essence of picketing is peaceful persuasion and certainly it is desirable to ensure that the rights of pickets in a situation of that sort are safeguarded. That is right, and it is also a duty of the police, just as it is their wider responsibility to maintain the Queen's peace.
Certainly I agree with the noble Baroness that the police have been put in a difficult position as a result of the incidents in the last few days. Unhappily, I cannot answer the question which the noble Baroness put to me about how many of those who are now outside the laboratories are in fact directly or indirectly connected with the dispute, because there would be no way in which the police would be able to establish the answer to that particular question. Although it is right that the allegations made against named police officers should be investigated, and that is being done, I think it is only right that we should pay tribute to the police for the way in which they are discharging their responsibilities at the moment.
Lord MONSON: My Lords, may I ask the Minister what is being done to prevent the cowardly and contemptible attacks in the middle of the night on the homes of those who do not wish to participate in a strike?
Lord HARRIS of GREENWICH: My Lords, any complaint of that kind should be addressed to the police, and I am quite sure that the matter will be investigated.
Baroness GAITSKELL: My Lords, while many of us deplore unpeaceful, disruptive picketing, is it not deplorable that Mr. Ward, the head of Grunwick, refuses to see or to speak to either the Home Secretary or whoever is involved?
Lord HARRIS of GREENWICH: My Lords, my noble friend raises a question about a meeting which my right honourable friend the Secretary of State for Employment is endeavouring to arrange. I am not in a position to say what progress

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he has made in that particular matter at the moment. I know that we all want to see this dispute resolved, but I do not think that it would be appropriate for me today to become involved in the merits of this particular dispute.
Lord PAGET of NORTHAMPTON: My Lords, have we not reverted to a somewhat feudal situation in which there is competitive law and competitive force in our society? At the moment, we find our baronial law in conflict with public law, and public force in conflict with the panoply of baronial armies.
Lord HARRIS of GREENWICH: My Lords, that is a question of such subtlety that I am not sure that I am in a position to answer it.

RENTCHARGES BILL
3.43 p.m.
Second Reading debate resumed.
The LORD CHANCELLOR (Lord Elwyn-ones):My Lords, may I now move to a domain a little more technical. While its origins do not go hack to Roman law they certainly go back a long time. I should like first of all to pay a number of compliments in relation to the Rentcharges Bill, first, to the Law Commission itself. Indeed, it has been fitting that my noble friend Lord Fletcher, who was in some ways the midwife of the Law Commission, certainly in another place, should be introducing into this House one of its measures of law reform. It has produced an excellent solution to the problems created by the rentcharge system.
Secondly, I should like to thank the honourable Member in another place, my old friend Mr. Fred Evans, who so gallantly undertook the piloting of this difficult Bill through another place. Thirdly, I should like to thank my noble friend Lord Fletcher himself for the clarity with which he has expounded the practice and machinery of rentcharges. On the whole, in another place the Bill received general approval from all sides of that House. While the noble Baroness, Lady Elles, has properly pointed out
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some matters which do not give her full satisfaction, the effect of her speech has also been broadly to support the Bill.
I think it is now generally accepted that the rentcharges system is outmoded, socially burdensome, and a legal anachronism. There are at least four objections which I think can be levelled at the system. I do not think they are merely conceptual; I think they are very real. Indeed, the noble Baroness herself identified some of the real objections. First, I think it serves no useful purpose now. As a method of financing the purchase of land, it has been overtaken by the mortgage system, and is of course subject to the impact of inflation. The curious thing is that it is prevalent only in the areas of Greater Manchester and Bristol. I understand that in Bristol it is called the "Bristol twist", which is no doubt typical of the open-mindedness of the occupants of that great city.
Next, the system militates against the concept of freehold ownership. The owner of the rent is not a landlord, with some stake in the land and some obligations to the tenant. The vast majority of rent-charges are perpetual, and one can reasonably ask, "How can I be the outright owner of my house when I have to pay a perpetual rent to someone else?". I have had a number of letters from people who are utterly bewildered by having to pay a rent exacted by someone who is not a landlord, and indeed to have to pay it for ever. The purchasers of land loaded and burdened with rentcharges are, more often than not, taking on a burden negotiated in the 19th century, and they are lumbered with them and it is not surprising that they are unpopular.
Thirdly, when land subject to a rentcharge is sub-divided, as my noble friend pointed out, the rentcharge remains attached to the land and the rent owner can collect the whole of the rent from anyone he chooses. The person he does choose has then the embarrassing and sometimes impossible task of reimbursing himself from the other affected householders one by one. Of all the defects in the system this is perhaps the worst, and I have had correspondence from elderly and infirm householders who have suffered great hardship when they have found themselves having to become rent collectors. Fourthly, rentcharges compli-

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cate conveyancing and increase its cost. I think the explanation of why that should be so in paragraph 25 of the Law Commission's Report is convincing, although I understand from the noble Baroness that some concerned have not found it so.
Those are the main defects of the system. Of course the existing law provides some relief, for there are provisions in the Law of Property Act 1925 and the Landlord and Tenant Act 1927—and I am bound to say that I share the trepidation of the noble Baroness in exposition of any matters connected with the law of property—which enable rent payers to have their liability to the rent owner quantified by means of apportionment, and to get rid of the rent altogether by means of redemption. The machinery of apportionment and redemption is administered by the Department of the Environment, and in Wales by the Welsh Office. I think it is well administered. But applications for apportionment and redemption are now comparatively rare in relation to the total number of rentcharges, and the reason for this is that the machinery itself is very cumbersome and the expense of making an application is heavy.
I now turn briefly to the provisions of the Bill itself. Its pattern is simple and it can be explained, as indeed it has been already, under four headings: prohibition; extinguishment; apportionment; and redemption. By prohibition I mean the provision in Clause 2 which prevents the creation of new rentcharges in the future. I do not think that there will be any serious dispute about the need for that, bearing in mind the defects of the system that I have mentioned. I should, however, mention that there are many types of rentcharge which fall outside the mischief at which the Bill is directed. The right to create these special kinds of rentcharge is preserved in Clause 2(3). I think it is fair to say that, but for the need to be precise, these rentcharges would never have been included in the Bill at all. All of them serve a useful purpose and none of them is open to the objections which I have mentioned.
Secondly, extinguishment. It is, I believe, unthinkable that existing rentcharges should go on for ever. But the Government take the view that it is also unacceptable that they should be abolished at a stroke, to mention an old expression.
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Rentcharges are a form of property and are not simply to be confiscated without compensation. The Law Commission examined this problem in detail and their solution is given effect to in Clause 3 which provides, broadly speaking, that all existing rentcharges are to come to an end after 60 years unless they have an earlier termination date.
The Law Commission worked out how much, given a certain rate of interest, would have to be set aside every year out of £1 in order to produce an income of £1 at the end of a given period; their calculations are set out in paragraph 58. They show that if the period taken is 60 years and the rate of interest is 10 per cent., the total amount needed to be set aside of £1 each year to produce an income of £1 is 0·33p. That, I admit, involves a technical loss to the rent owner, but it comes into the category of de minimis. I do not think charities are likely to suffer in any substantial degree from what is proposed. Charities are in no different position essentially from other trustees, and it may well be that they should sell their rentcharges as a wasting asset or avail themselves of their right to compel redemption, which is a privilege owned only by charities; but no doubt we can return to this subject if any matters arise in regard to it.
I accept what the noble Baroness, Lady Elles, said, that a slightly larger sacrifice could be made and a slightly shorter period introduced, or a smaller sacrifice and a longer period; but on balance I believe that the Law Commission's conclusion is correct and I take comfort from the fact that this was the view in another place. It is, I am afraid, inevitable that some existing rentcharges may continue for some time, but I hope that the provisions of the Bill, to which I will refer briefly, will result in the disappearance of a substantial proportion of rentcharges long before the 60-year period has expired.
Baroness ELLES: My Lords, perhaps the noble and learned Lord will permit me to interrupt on this point, which was one I raised about the income tax position of charities. As I understand it at the moment, the rent that is received by a charity in the form of a rentcharge can be used to reclaim tax from the Inland Revenue on that sum, whereas presumably,

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if they were to set up a sinking fund under the present scheme, they would lose that benefit. Is that a correct interpretation of the present position?
The LORD CHANCELLOR: I should like notice of that question before answering it, my Lords, and I will, with permission, refer to it at a later stage. I cannot with confidence give the noble Baroness an immediate answer, but I will certainly have it looked into.
I was about to turn to the question of apportionment, which is dealt with in Clauses 4 to 7. In substance those clauses do not differ greatly from the existing machinery for apportionment. There are, however, two matters to which I would draw the attention of the House. First, the procedure will be very much simpler for the applicant, who will not, as at present, need to bring in the other rent payers. It is also proposed that new regulations, to be made under Clause 5, will provide simple application forms and virtually eliminate the need for legal advice. I hope that, as a result, the applicant's costs will be very low indeed. Moreover, he will not, as at present, be liable for any costs which the rent owner may incur in supplying information about his title, and that is dealt with in Clause 15 (2).
Then the question of redemption. The right to redeem a rentcharge, the procedure for redemption and the price of redemption are dealt with in Clauses 8 to 10. Here again, as in the case of apportionment, the procedure is considerably simplified and I hope that this will encourage rent payers to rid themselves of their burdens. My noble friend referred briefly to Clause 10, which sets out the alarming formula for redemption, but I hope your Lordships will not be unduly alarmed; one does not like algebra in a Bill, but it is perhaps better that it should appear there and be faced rather than be in regulations. However, it is a tried formula. It is not an original invention for the purposes of this Bill; it appears in the Land Tenure Reform (Scotland) Act 1974, dealing with feu duties, which I understand are somewhat similar to rentcharges, and I understand that the algebraic formula has not presented any particular problems there. It is also comforting to know that its operation will be a matter for the Department of the Environment and the Welsh
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Office, and will therefore not impose on applicants the burden of working out their liability.
The Law Commission recommended that the administration of the machinery for apportionment and redemption should be undertaken by district councils, and I gather that the noble Baroness is inclined to take that view also. I think there is a good deal of merit in it, but as it would involve extra public expenditure and added manpower, and as there is in existence, within the Departments, the present machinery and administration, to which I referred, I do not think we should embark on that additional burden at this stage, but we will see how the matter works out.
On the question of commencement, the position is that for some of the clauses to which I have referred regulations will have to be drafted, and that will be done as soon as possible. However, I am afraid I cannot today give a firm date for commencement. Some of the Bill's provisions, for example Clause 2, come into force one month from Royal Assent, and I think that applies to one other clause as well. That is all I think I need say about the Bill, which I commend to the House as a valuable measure of social and law reform.
3.58 p.m.
Lord FLETCHER: My Lords, I am grateful for the warm welcome which the Bill has received and for the comments made by my noble and learned friend the Lord Chancellor, and the noble Baroness, Lady Elles, was kind enough to give general approval to the Bill. I am also glad to note that the noble Baroness made a number of detailed points which she thought required further examination; I will deal with some of them and, on others which I am not able to deal with now, I will, having made a note of them, contact her if I am able to obtain further information.
At one stage I thought the noble Baroness was making some unnecessarily critical remarks about members of the legal profession in Manchester and elsewhere and was doubting whether they were sufficiently well-educated to be able to deal with some of the complicated problems that arise as a result of existing rentcharges. I do not think that is true. In my view a number of solicitors practising there are so well-educated and are

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well able to deal with these problems but find considerable difficulty in explaining the present complicated legal position to their clients; and often, when they do, their clients, generally purchasers of houses, become much more irritated at the existing legal procedure. That is one reason why I hope we shall be able to remove that grievance by passing the Bill into effect.
The noble Baroness also expressed doubt as to whether the figure of 60 years was the most appropriate and pointed out that, in many cases, it would not affect the payers of rentcharges who are now alive. I have great sympathy with that view. Had the matter been left to me, I should have preferred the terminal date to be 30 rather than 60 years. However, this is a minor point; the Bill passed in another place with a figure of 60 years and, although I should prefer 30 years, I do not think it worth while amending the Bill in that particular, though I have sympathy with what the noble Baroness has said.
The noble Baroness also made what I thought were some very pertinent observations about the phrase in the Law Commission's report which said that these rentcharges were "conceptually unacceptable". I believe that my noble and learned friend endorsed that comment. When I read the report of the Law Commission, I was a little puzzled by this phrase. What I believe it means is that a member of the public, if he owns a house which is freehold—if it is leasehold, the question does not arise—expects to pay rates on it and to pay mortgage interest if, as in the majority of cases, he has had to raise a mortgage. However, he finds it very difficult to understand under what system of jurisprudence he or his successors can be expected to pay in perpetuity a sum of money to somebody who has no interest whatsoever in the land. I myself find that not only conceptually unacceptable but also philosophically and legally unacceptable.
As the noble Baroness and my noble and learned friend upon the Woolsack will know, this was something that this House attempted to correct in 1290 with a Statute passed in the reign of Edward I and designed to stop what was then called
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"subinfeudination" and to lay down the maxim that, although one could assign a fee simple, one could not create a fee simple. It was due to the ingenuity of certain mediaeval lawyers that they were able to circumvent the intention of the legislature of the time by creating these perpetual rentcharges. I feel that this is another sound reason why, at this belated stage, we should try to remove what was thought conceptually unacceptable as long ago as 1290.
The noble Baroness raised another question to which I attach great importance and to which my noble and learned friend upon the Woolsack has referred. That is the effect of the Bill upon charities. In this House, we have on a number of occasions, as my noble friend the right reverend Prelate will know, expressed a great deal of sympathy with charities. I, like the noble Baroness, should feel disturbed if I thought that the provisions of this measure would have a serious adverse effect on charities. It is perfectly true that some charities have found it convenient to invest their funds in the purchase of rentcharges and that they have enjoyed certain tax benefits by virtue of doing so because, as I understand it, the person who pays a rentcharge is entitled to deduct tax. He is then enabled to pass on that tax payment if the beneficiary is a charity to the charity, in which case the charity can obtain some additional benefit. I am not sure whether that particular benefit to charities is confined to payments that they receive by way of rentcharges, but I hope that the charities will be able to find some equally convenient method of investing their funds so as to enable them to get commensurate advantage. As my noble and learned friend upon the Woolsack has said that he will investigate the matter, I feel that it would be better not to pursue it further at this stage.
Finally, questions have been raised about the administration of this Bill. Technically, as I understand it, that does not arise under the Bill itself because the administration, whether it is through district councils, local authorities, the Post Office or the Department of the Environment, is a matter which is left to orders to he made by the Secretary of State. Having said that, can I endorse

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what the noble Baroness has said by saying that I hope that whatever administrative machinery is introduced, everything possible will be done to simplify that machinery, so as to enable those people who now have to suffer by paying rentcharges to get them apportioned and redeemed in the simplest possible way without any unnecessary bureaucratic red tape, if I may say that without sounding offensive. With those words, I hope that we can pass the Bill. If there should be any other questions they can no doubt be dealt with at the Committee stage.
On Question, Bill read 2pap, and committed to a Committee of the Whole House.

PNEUMOCONIOSIS, BYSSINOSIS AND MISCELLANEOUS DISEASES BENEFIT (AMENDMENT) (No. 3) SCHEME 1977
4.8 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL rose to move, That the draft Pneumoconiosis, Byssinosis and Miscellaneous Diseases Benefit (Amendment) (No. 3) Scheme 1977, laid before the House on 23rd May, be approved. The noble Lord said: My Lords, it might be helpful if I first say a little about the scheme in general, and how it fits in with the overall pattern of provisions for industrial injury. Benefits for accidents and diseases resulting from employments after 4th July 1948 are provided by the Industrial Injuries Scheme, while those suffering from the effects of accidents or diseases resulting from earlier employment receive weekly payments under the old Workmen's Compensation Acts.
The purpose of the Benefit Scheme, as I propose to call it, is to fill a gap between those provisions. The Workmen's Compensation Acts had absolute time limits for claiming and so workers suffering from certain diseases, where the period between exposure to the cause at work and the disease first becoming evident can be many years, are unable to claim under the former Acts. Nor can they claim under the Industrial Injuries Scheme if they left the employment which caused the disease before that Scheme came into effect.
The Benefit Scheme which is made under what has now become the Industrial Injuries and Diseases (Old Cases) Act 1975 provides allowances out of the National Insurance Fund to workers suffering from these diseases who are thus debarred from claiming under either of the other provisions. It provides allowances for partial and total disablement, and additional allowances to meet certain special circumstances; for example, where there is a need for constant attendance, for which the Industrial Injuries Scheme makes provision for its own beneficiaries. Indeed, the purpose of the Benefit Scheme is to ensure that the payments its beneficiaries receive are broadly in line with those payable under the Industrial Injuries Scheme to those suffering from the same disease.
One of those diseases is byssinosis, a slowly developing respiratory disease which can disable workers exposed to cotton or flax dust in certain processes in the textile industry. The requirement in the regulations under the Industrial Injuries Scheme that a worker should have spent 10 years in the process has now been reduced to five years. The similar change in the amendment to the Benefit Scheme which is now before your Lordships has had to await the passing of the Social Security (Miscellaneous Provisions) Act amending the requirement where it also appears in the Industrial Injuries and Diseases (Old Cases) Act, under which the Benefit Scheme is made.
It is a matter of some concern to us that it has taken so long, but we simply had to wait for the Social Security (Miscellaneous Provisions) Act before we could repeal what was present in the previous Act. I know from personal experience that this caused some concern to some of your Lordships, particularly to the noble Lord, Lord Hale, who over a period of some time asked a number of Questions, to which, let me readily admit, I did not give, and was not able at the time to give, very satisfactory Answers. I hope that the noble Lord will feel that we have accomplished something now. In a sense I think it could be said that it is in some measure a tribute to his persistency that we have reached the stage that we have reached.
The wording of the amending Scheme is designed to ensure that any further

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reduction in the period under the Industrial Injuries Scheme shall automatically apply to the Benefit Scheme, so that it should not be necessary to come to the House on this matter in the future. Because the Benefit Scheme refers to claims arising from employment which ended before July 1948, there are now rather less than 300 claims a year, and only a very few of these are for byssinosis. While, therefore, only the occasional case is likely to be affected by this change, I think it right that we should provide equality of treatment for any claim that does arise. I therefore commend the Amendment Scheme to your Lordships, because it does precisely that. I beg to move.
Moved, That the draft Pneumoconiosis, Byssinosis and Miscellaneous Diseases Benefit (Amendment) (No. 3) Scheme 1977, laid before the House on 23rd May, be approved.—(Lord Wells-Pestell.
4.14 p.m.
Viscount LONG: My Lords, we are all very grateful to the noble Lord, Lord Wells-Pestell, for giving us this information which is vital and important to those who suffer from these diseases. I am also certain that many of the sufferers will be happy to know that this correction in the Act has now been made, though the timing for some of them, as the noble Lord said, was rather irritating. I came across pneumoconiosis three years ago when we were dealing with one of the Coal Board's Bills, and I had no idea how many sufferers there were at that moment. I noticed that the noble Lord said that with the other diseases there were 300 claims coming through a year. I wonder whether that figure includes pneumoconiosis as well, or does it relate to the other diseases? On this side of the House we would not hesitate to accept what the noble Lord has said. There must surely be happy relief now for those who, having had these dreaded diseases, want to claim.
Baroness WARD of NORTH TYNESIDE: My Lords, I, too, should like to say how glad I am that this Scheme has been introduced. Every now and again something crops up, particularly in industrial areas, which seems to have been overlooked. It has taken a long time to convince people that a scheme of this kind is necessary. I am very pleased that it has been introduced, especially
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because for many years, when in another place, I represented an industrial area, and I knew of the problems that could, and did, arise. So, I should like to offer my warmest congratulations, and to say how happy I am that the Scheme is being introduced.
4.16 p.m.
Lord HALE: My Lords, I appreciate very much the clear statement made by my noble friend on the Front Bench. I venture to think that he made one minor error when he said that this measure brings this disease into conformity. So far as I know, this is the only lung disease in which it is obligatory upon the applicant for benefit to establish a long period of service in the nominated area of the factory which is supposed to be most liable to produce dust. Perhaps the noble Viscount, Lord Long, will take it from me that the figure of 300 relates to byssinosis. For pneumoconiosis there is an immense figure, for which special provision has been made. I suppose by far the largest number of claims emanate from work underground in the coal mines, for which the Government, in conjunction with the Coal Board, have provided very special benefits indeed, which they persistently deny to the cotton workers. I should also like to point out that the figure of 300 is partly due to the fact, as my noble friend will readily concede, that the cotton industry is at the moment providing far less employment than in the great days of Oldham when there were 800,000 people employed in it, when Oldham was known as the great cotton industrial town of the world. It may be that with our diversity of industries we have had some industrial compensation.
I turn now to the procedure of the Government so far as this particular aspect is concerned, and here I wholly exempt the noble Lord on the Front Bench, who has been most helpful and most courteous, and his colleagues who are investigating in massive detail the question of asbestosis, which is another form of pneumoconiosis, as indeed is byssinosis itself. A special problem of byssinosis is that it is a vegetable dust disease. It was not at all observable with the old X ray photography. Anyone who has seen a miner's lungs full of the metal will see something quite stupendous in its appearance. But the procedure of the Government has been

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rather on the line of Cardinal Newman's most famous hymn:
"…I do not ask to see
The distant scene; one step enough for me".
The Minister for the disabled has a considerable knowledge of, a profound interest in, and an earliest desire to deal with this problem, which has been an embittered political problem for 40 years. My first job was to try to help to get it scheduled as an industrial disease in the first place, and concessions have been made from time to time, though not many, because cotton does not involve many votes. Let us be frank: at this moment votes are the major concern of the Government, and their policy has to be based from day to day upon the defection of one here or the defection of one there. So we have had a series of useful steps, and I am grateful.
I hope the House will permit me just a moment to pay tribute to Dr. Schilling, whose investigations over many years, particularly at London University, where he was given ample provision for investigation, established the fact that byssinosis was byssinosis and not bronchitis, as the opponents of compensation were apt to say. I was told the other day that no doctor now doubts that byssinosis is an identifiable industrial disease, caused, of course, by cotton dust in the lungs.
My Lords, there are just two further points I should like to make. I take it—I do not think there is any doubt—that when this order comes into force it will not cone into force retrospectively, of course, but the five years of service will be calculated from the time it commenced. Of course, the application itself will be made after the Act comes into force, and must be made after the Act comes into force; and inasmuch as there is no res judicata in the case of applications for benefit, I have no doubt, too, that persons whose claims have been disallowed solely on the ground that they have not been able to prove 10 years' continuous employment in the nominated processes will now be free to re-claim if they can conclusively establish the five years. Those are the only two points I mention quite casually. I of course gave notice to my noble friend of my intention to speak, and I told him I was going to be as uncontroversional as I always am. I therefore do not propose to ask him a
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question which I may decide to put down for Written Answer in respect of certain other aspects.
My Lords, although regarding myself as naive and unsophisticated—and, indeed, in some matters, it has been conclusively established, gullible to the point almost of imbecility—no member of the class of sentient mammalia could fail to note, first, that these concessions have been made at a time when they are going to cost the Government a great deal less than they would have done had they been granted when the disease was rampant and the number of sufferers was many more. Secondly, the Government have never yet made that limited concession which would give to the cotton workers the benefits which have been given to the miners, particularly of course in relation to old cases in which people have nothing left now but to breathe away their lives with little resource at all. Thirdly, of course, the question of provision of this essential proof of employment, and so on, makes it much more difficult, according to the practising lawyers who know something about this branch of the law, to bring a claim for damages at common law. This point has already been won by asbestos workers and, so far as I know, by every other worker in the field.
Subject to that, my Lords, I thank my noble friend for his constant courtesy, and I am very happy to see something, if so little. It is not an easy time in Oldham. The Cardinal, in his hymn, referred to the difficulties. What are the words? I rely on the right reverend Prelate.
The Lord Bishop of NORWICH The Lord Bishop of NORWICH:
"Lead, kindly Light, amid the encircling gloom,
Lead Thou me on…".
Lord HALE: I am grateful to the right reverend Prelate. The Cardinal himself suffered a great deal of unmerited "encircling gloom". I do not wish to see "the distant scene" myself, even though the Chancellor tells us, on his observations of his sea shells and a few glowworms, that a brighter scene may be with us in six months' time. I do not anticipate it myself with the same confid-

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ence, but I am grateful for the introduction of this Motion and for the passing of this order.
4.25 p.m.
Baroness VICKERS: My Lords, I apologise to the noble Lord for not being here when he opened his remarks, but I should like, if I may, to congratulate the noble Lord, Lord Hale, because I remember what happened in the other House and in this House when we had debates late at night. I think we all agree that he has been the moving spirit in getting some action taken. I should like to ask the noble Minister what the phrase "Miscellaneous Diseases" actually covers. It does not cover asbestosis, because there would then be no need to have this inquiry which is going on now in which we have all been asked to give evidence. So I would he grateful if the noble Lord could let me know whether, if any fresh information comes out of this inquiry, we shall have another order covering asbestosis or whether it will be included in the phrase "Miscellaneous Diseases" in this order. I thank the noble Lord very much for the interest he has taken in this extremely important subject. I hope it will be of great benefit to the many sufferers in future years.
4.27 p.m.
Lord WELLS-PESTELL: My Lords, I am very grateful to the noble Lords and noble Baronesses who have taken part in this discussion today. It may appear that there is some difference between my noble friend Lord Hale and myself over a question which the noble Viscount, Lord Long, asked me. The noble Viscount, Lord Long, asked me whether these 300 cases all stem from byssinosis or pneumoconiosis. I think I must make this clear. I was talking about the benefit scheme, and under the benefit scheme—the one before your Lordships this afternoon—the 300 claims a year are mainly in respect of pneumoconiosis, and only a few of them in respect of byssinosis. That is under this scheme. As to the number of claims made under the industrial injuries scheme, there are far more claims for byssinosis than there are under this scheme. I think that probably answers the question.
I am grateful to the noble Baroness, Lady Ward, for her acceptance and endorsement of the action which has been taken. Again, if I may return to my noble
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friend Lord Hale who asked me whether the five-year period comes into effect immediately, the answer is, "Yes". Upon this coming into force, then those who have a five-year period of employment and who feel that they are entitled to make a claim will be able to do so. I take the point made by my noble friend Lord Hale about cotton workers and the concession which the Government made to the miners, but I hope I am not going to be misunderstood when I say that the Government made a substantial sum of money available in order that miners could be covered in this particular way because it was a nationalised industry and the Government have some responsibility. That is why, as I say, some special provision was made some time ago for miners. It has not been done for other groups because a Royal Commission is sitting at the present moment —the Pearson Commission—who are considering civil liability for personal injury. With great respect, I think that we must await the outcome of that.
Lord HALE: My Lords, will the noble Lord permit me to intervene? Those of us who have been active in this matter have given up asking questions or making comments while the Pearson Commission, an excellent Commission, are sitting; and, indeed, Mr. Max Madden and Mrs. Taylor gave evidence before that Commission. Out of respect for the Commission, we have made virtually no reference except when implicit in a sentence or argument. Meantime, the employers have spent £400,000 on a special fund to issue propaganda about the disease. All noble Lords here, I know, have been circularised with coloured pamphlets and invitations to cocktail parties; and some of this propaganda has been exhibited to me. As I mentioned the word once, may I make clear that we are awaiting the report of the Royal Commission when we shall be able to discuss also the report from the Social Committee at Luxembourg on the matter which is a monumental document of great profundity.
Lord WELLS-PESTELL: My Lords, the noble Baroness, Lady Vickers, talked about miscellaneous diseases. Only two come to my mind. One is asbestosis; the other, the slow progressive cancers which can stem from certain industrial diseases.
On Question, Motion agreed to.

MISUSE OF DRUGS ACT 1971 (MODIFICATION) ORDER 1977
4.32 p.m.
Lord WELLS-PESTELL: My Lords, I beg to move that the Misuse of Drugs Act 1971 (Modification) Order 1977, a draft of which was laid before this House on 25th May, be approved. The order will add two groups of drugs to the drugs controlled under the Misuse of Drugs Act 1971. It is the third such order to come before the House since the 1971 Act was passed. As the technical nature of these orders presents difficulties to the layman —and I want to make it clear that I have no scientific knowledge at all, certainly none in the field of chemistry; and if I may say so with great respect, I do not find this order very simple to understand—we have again followed the practice adopted when the last order was before the House in 1975, of placing in the Libraries of both Houses copies of a memorandum explaining the order in reasonably simple terms—although that is a matter of opinion—but in rather more detail than is possible in the Explanatory Memorandum appended to the order itself. I hope that your Lordships will have found the memorandum helpful, and that it will serve to ease my task of presenting the order to the House and arguing, if necessary (and I hope it will not be so), the case for controlling the substances to which it relates.
The statutory background to the order is that, under the Misuse of Drugs Act 1971 and its subordinate regulations, drugs which are judged to have physically and socially harmful effects when they are misused are made subject to controls which are designed to restrict their use to legitimate medical and research purposes. The drugs are listed in Schedule 2 to the Act where they are divided into three classes—A, B and C—broadly in accordance with the assessment of their harm if they are misused. Offences in respect of the drugs attract the various penalties set out in Schedule 4, depending on the class in which the drug concerned is placed. Regimes of control of the lawful use of drugs, which have regard to the harmfulness of the drug and whether or not it is used for medical purposes, are specified in the Misuse of Drugs Regulations 1973.
From time to time it becomes necessary to add or remove drugs from the controlled
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list, or to move them from one class to another. This can happen because of changes in the international control of narcotic drugs, or because the Advisory Council on the Misuse of Drugs, which keeps under review the situation in the United Kingdom with respect to the misuse of drugs, recommends that the situation requires it. The relevant provisions of the Act permit such changes to be made by Order in Council.
The order which we are now considering has been prepared on the recommendation of the Advisory Council on the Misuse of Drugs. Its purpose, as I have already mentioned, is to add two groups of compounds to the controlled list of drugs in Part I (or Class A) to Schedule 2 to the Act. The groups are the derivatives of a chemical substance called tryptamine, and certain derivates of another substance called phenethylamine. Some 40 of these compounds are already known to exist, but I understand that it is possible for some hundreds to be synthesised.
To explain how the Advisory Council came to recommend these substances for control I should like to refer back to the last such order, the Misuse of Drugs Act 1971 (Modification) Order 1975, which came into operation on 1st May 1975. That order added to the list of controlled drugs a substance which is commonly known as Bromo STP (Dimethoxy-bromoamphetamine). I have asked what "STP" means. There is more than one opinion, but I understand that it could be regarded as "serenity, tranquillity and peace".
This drug, which is, in fact, a derivative of phenethylamine, was discovered by the police during the spring and summer of 1974 to be circulating widely among drug misusers; and its origin was subsequently traced to a clandestine laboratory operating in the Midlands. American experiments had shown it to be a more potent hallucinating drug than either STP (Dimethoxy-methylamphetamine), another phenethylamine derivative, or LSD, both of which were already controlled under the 1971 Act as Class A drugs. Because it had no legitimate medical use, the Advisory Council recommended that it should be quickly brought under control. At the same time the Council took note of the fact that further substances of a like nature but which would not be caught

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by the entries in the Schedule to the Act could he synthesised with relative simplicity by making minor molecular changes to the basic structure of the chemical. The Council accordingly instructed its Technical Sub-Committee to explore the possibility of closing the door on the production of such substances for misuse purposes, but with the minimum interference with possible legitimate medical and research use, by controlling all possible variations in each series by means of a generic description, or formula. The result of the Technical Sub-Committee's work is embodied in the draft order.
My Lords, at this point I hope you will bear with me because I confess that I am not very familiar—if familiar at all—with some of the points I have to mention. The Technical Sub-Committee found that the particular compounds which produced undesirable hallucinogenic effects fell into two categories. First, compounds derived from tryptamine, or from ring-hydroxy tryptamines which have been substituted at the nitrogen atom of the side chain by an alkyl group or groups. Examples of this category which are already controlled under the Act are psilocin and psilocybin. The second category was that of compounds derived from phenethylamine by alkyl or other substitution in the aromatic ring. Examples of this category which are already controlled under the Act are mescaline, and STP and Bromo STP to which I have already referred. The Sub-Committee considered that generic control of these two groups of compounds was feasible; and that, in view of their known biological, and in particular hallucinogenic, activity, the grave physical toxicity of some of them, and the police evidence of an existing or potential abuse likely to cause social problems, control in generic terms was in practice preferable to ad hoc control of individual compounds applied retrospectively after damage had been done.
The medical, pharmaceutical and other relevant interests were consulted and the generic formulae now embodied in the draft order have been constructed in the light of their views. Care has been taken to devise the formulae in such a way as to exclude compounds, which could be described as tryptamine or phenethylamine derivates, but which have important medical uses, such as ephedrine and adrenaline. In one case, however, one
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of these two formulae unavoidably includes a substance which is used in medicine, and your Lordships will have noted that in paragraph 3(c) of the draft order, the substance methoxyphenamine, which is used in the treatment of bronchial asthma and bronchitis, is specifically excluded from control.
My Lords, it may be helpful if, in conclusion, I explain the type of control to be placed on the two groups of compounds. If this Order is approved by both Houses, when it is made, my right honourable friend the Home Secretary will lay before Parliament, regulations which will prescribe the circumstances and conditions in which the drugs may be used. As none has any medical or commercial use at the present time, all that are subsumed by the formulae will be available for research purposes only, on licence of the Home Secretary. It will be possible suitably to modify this regime of control, if in due course any of the compounds is found to have a beneficial use, so that legitimate medical or commercial use may he able to proceed with the least possible hindrance while control is maintained over unlawful use. I hope that what I have said has enabled the House to grasp the nature and purpose of this draft order. I think I can claim that I have grasped that much. Its provisions have been considered by the Advisory Council on the Misuse of Drugs as is required by the Act and it is on the Council's recommendation that the changes are proposed. My Lords, I beg to move.
Moved, That the draft Misuse of Drugs Act 1971 (Modification) Order 1977, laid before the House on 25th May, be approved—(Lord Wells-Pestell.)
4.45 p.m.
Viscount LONG: My Lords, I know all of us are very grateful to the noble Lord, Lord Wells-Pestell, for handling a very difficult and terrifying brief. That is all I can say about it. He said he is not an expert, a doctor, chemist or scientist. I too am not a doctor, scientist or chemist and would not pretend to understand what these drugs do, until I am either ill or ready to be buried.
We are grateful that the Government are watchful and keeping these drugs under observation at all times. Some sound absolutely terrifying. If they got

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into the wrong hands, for instance children's, many would probably die for, the want of knowing how to handle them, having taken them in one way or another. Just to look at paragraph 3 of the order is terrifying. The words used are very long and look like the worst type of English language nightmare. All I am going to say is that we agree with the noble Lord. Those are who interested and understand these matters will be able to read about them in the Library; but we will not argue on this matter with the noble Lord or the Government.
Lord PLATT: My Lords, it is customary for the layman to associate the doctor with some supernatural powers. I should like to assure noble Lords that there is not one doctor in thousands who understands the exact nature of these drugs. The noble Lord has made clear to us the reasons for this order and the kinds of substances which are included in it. I should like to support it.
Lord WELLS-PESTELL: My Lords, I am most grateful to the noble Viscount and to the noble Lord, Lord Platt. As the noble Lord, Lord Platt, and your Lordships know, I have been very well briefed in this matter. I found that the more I tried to go into it, the less I understood. I reached a stage of spending a lot of time knowing less and less.
On Question, Motion agreed to.

UNFAIR CONTRACT TERMS BILL
4.48 p.m.
Lord JACQUES: 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 Jaques.)
Lord AIREDALE: My Lords, I think that this opportunity should be taken to point out that the Second Reading debate took place very nearly a month ago, and yet about 75 per cent. of the Amendments on the Marshalled List were not available to your Lordships last Thursday, the last Sitting Day, and only became available from the Printed Paper Office last
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Friday. I do not think that we get the best value out of Committee stages if we put down Amendments at the eleventh hour like this. It is unfair to noble Lords. It is unfair to those who have to advise the noble Lord who is in charge of the Bill who presumably have to devote their weekend to preparing their advice. I think it is extremely unfair to people outside Parliament who are going to be affected by the legislation and who wish to follow it closely and put down suggestions for the Committee stage. I should like to see the Procedure Committee recommending, and the House agreeing, to regard with disfavour Amendments which are put down, say, within a week of the day appointed for the Committee stage, unless of course the pressure on the timetable makes a week an unreasonably long time.
Lord LYELL: My Lords, I was going to preface my remarks on the Amendments which stand in my name on the Marshalled List by issuing a number of apologies. First of all, I hope your Lordships will accept an apology on behalf of my noble and learned friend Lord Hailsham, who has his name on one or two Amendments towards the end of the list but who, through no discourtesy to your Lordships, is answering questions elsewhere in your Lordships' House at this moment on another extremely important matter.
I also proffer my own apologies to the noble Lord, Lord Jacques, and to your Lordships, first of all, on the number of Amendments which stand in my name and, secondly, as to their timing and when they were put down. Your Lordships will believe me, I am sure, when I say that Amendments and pleas for consideration are still coming in, and were coming in even at 2.30 this afternoon. Many of the outside interests concerned, of course, do not appreciate the difficulties so eloquently outlined by the noble Lord, Lord Airedale. He pointed out that about 75 per cent. of the Amendments had been put down at a late stage. Certainly the gist of his remarks would tend to veer in my direction, and I would accept everything that he has said. I should like to apologise for any inconvenience which has been caused. For my own part, I certainly would not expect or ask for any detailed explanations today. Most of my Amendments will be in the form of

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probing Amendments, some may refer to drafting changes, and others may be entirely a matter of taste. There are very few which are substantive, and so I would hope that we shall be able to obtain preliminary soundings from the noble Lord, Lord Jacques, and on behalf of the Government. The noble Lord, Lord Airedale, mentioned pressure of Business in your Lordships' House. So far as I am concerned, that is indeed true, but certainly that is no excuse for what has happened. I should like to apologise once again to the noble Lord, Lord Jacques, and to your Lordships.
Lord JACQUES: My Lords, I should like to take the opportunity to express the greatest sympathy with the point of view put forward by the noble Lord, Lord Airedale. The practice of putting down Amendments at the last minute is extremely unfair to Members of the House because they do not get a chance to see the Amendments in good time; but it is far more unfair to the civil servants who have to prepare answers and often have to work all day on Saturday and Sunday in order to do so. It is also, of course, very unfair to those people who are handling the Bill and who get little time in which to consider the Amendments. I have known occasions when, because Amendments have been late, I have been at the Dispatch Box and have had to read a brief I had never seen before, because the Amendments did not come in until a few moments before the Committee stage was due to begin.
I determined that when I retired from the Front Bench one of the first things I would do would be to appear before the Procedure Committee and insist that there should be at least three clear Sitting days after all the Amendments had been put in, so that there should be at least three Sitting days' notice. That would have to apply to the Government as well as to Members of your Lordships' House. I think it would be a godsend, particularly at a Committee stage, to everybody concerned because, following the Committee stage, there are further stages when Amendments could be put. I hope that one day the noble Lord, Lord Airedale, together with myself and perhaps a Member from the Conservative Benches will be able to appear jointly before the Procedure Committee and put that point of view.
Lord LYELL: My Lords, I should like to second that proposal put by the noble Lord, Lord Jacques, and I should be delighted to represent my noble friends on this side of the House, particularly bearing in mind the fact that the noble and learned Lord, Lord McCluskey, the noble and learned Lord who is sitting on the Woolsack at this moment and I were involved in very lengthy proceedings within this House on a Bill which is at present wending its way through another place. In that connection, some of the Amendments which came from all quarters were indeed perilously close to the three Sitting days' deadline which has been so ably advocated by the noble Lord, Lord Jacques. May I say that I entirely agree with the point he made; he is absolutely right in what he says, and I am sure that my noble friends on these Benches would second his proposal most warmly.
The LORD CHANCELLOR: My Lords, may I say how much I, too, agree with what was said by the noble Lord, Lord Airedale. I am glad that he raised the question. I confess that I myself was able to read the bulk of the Amendments for the first time only this morning. I should like also to express my gratitude for the generosity expressed, typical of the noble Lord, Lord Lyell, in accepting responsibility for the fact that the bulk of these Amendments were received by us this morning. That is not his own fault, but those advising him—I understand an organisation of considerable substance and manpower—may read with dismay the comments which have been made, and if, on a future occasion, they seek to have their point of view put in this House, or indeed in another place, I hope they will act more expeditiously, because this Bill has been in their hands for a very long time.
This matter, of course, was canvassed in the Renton Report and a rigid timetable was suggested there. However, I fear we have already fallen behind and so I would support measures, especially those emanating from without the regions of Government, for this to be done. But in Government circles, too, I think it is only fair to legislators, to Parliamentary draftsmen, to the civil servants who have to consider these matters, and also to members of this House and perhaps even to Ministers, that we should mend our

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ways and avoid this sort of situation in the future. Perhaps we might now proceed as expeditiously as we can with the Committee stage of this Bill.
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD DERWENT in the Chair.]
Clause 1 [Scope of Part I]:
4.57 p.m.
Lord LYELL Lord LYELL moved Amendment No. 1:
Page 2, line 1, at beginning insert ("In so far").
The noble Lord said: It might be for the convenience of the Committee if I were to speak to Amendments Nos. 1 and 2 together. We put forward these Amendments in the hope of clarifying the drafting. First, the word "as" seems to have a number of meanings. We believe that the one which is intended here is "in so far as" or possibly "to the extent that". Secondly, we believe that the exceptions are not necessarily made by Schedule 1. It seems that they are made in Schedule 1, because the Schedule merely lists the exceptions. These are small Amendments and we wondered whether we might ascertain if the drafting was correct. I beg to move.
Lord JACQUES: I have had consultations regarding these Amendments. We are satisfied that the original wording in both cases is absolutely clear and we can see no reason for changing the wording.
Lord LYELL: Having received an unequivocal reply like that from the noble Lord, Lord Jacques, I certainly do not seek to pursue these matters today. I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Lord JACQUES Lord JACQUES moved Amendment No.3:
Page 2, line 3, leave out from ("1") to end of line 5.
The noble Lord said: I think it would be for the convenience of the Committee if I were to speak to Amendments Nos. 3 and 78 together. So far as Amendment No. 3 is concerned, it is a drafting Amendment. It deletes the words:
"and are subject also to section 26 (contracts
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for sea carriage of passengers and their baggage subject to regulation under the Athens Convention of 1974)".
from Clause 1(2). They are now considered to be unnecessary.
So far as Amendment No. 78 is concerned, that is a technical Amendment dealing with the same matter. A number of technical defects in Clause 26 have come to light, and Amendment No. 78 is a complete redraft and puts right the things that were wrong. The policy remains the same. The new clause, like the old one, provides interim arrangements covering the Athens Convention on the carriage of passengers and their baggage by sea, which the United Kingdom has signed but has not yet implemented. I beg to move.
Lord LYELL: Am I right in thinking that, if this Amendment were accepted, I should not be able to speak on Amendment No. 80 which stands in my name?
The LORD CHANCELLOR: I should have thought not, but if I am right in that I think that we ought to give latitude to the noble Lord to deal with Amendment No. 80, in any event.
On Question, Amendment agreed to.
5.1 p.m.
Lord AIREDALE Lord AIREDALE moved Amendment No. 4:
Page 2, line 8, leave out from beginning to second ("liability").
The noble Lord said: This is a matter of drafting. Subsection (3) coins a phrase "business liability", and it then proceeds to define it. Is this phrase a useful one to coin? The word "business" is already defined in the interpretation clause, and we all know what "liability" means. So would it not be better to let subsection (3) say what it has to say, without going through the motions of coining a rather unnecessary phrase and then proceeding to define it? I beg to move.
Lord JACQUES: The purpose of this Amendment is to improve what is apparently tautological wording. But few words are saved, and we feel that it is better to give emphasis to business liability, which would be lost if this Amendment were accepted. We think it is much clearer, on reading the Bill, to

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refer to "business liability" and then to define it, which is what the Bill does at present. We believe that the Bill would not be so clear with the Amendment.
Lord AIREDALE: I think that I should always be prepared to give way on a matter of mere drafting, so I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord JACQUES Lord JACQUES moved Amendment No. 5:
Page 2, line 14, at end insert ("of the occupier").
The noble Lord said: I think it will be for the convenience of the Committee if, in moving this Amendment, I also speak to Amendments Nos. 54 and 58, because they do the same in Scottish law as Amendment No. 5 does in English law. This Amendment is necessary to ensure that the Bill does not apply to terms and notices imposed by an occupier of premises who uses the land solely for private purposes. The kind of situation which this Amendment deals with is one where the owner of a house with a large garden allows a travelling circus to put on a performance in his garden. Terms or notices relied upon by the occupier of the house and garden who uses the premises for private purposes should not be subject to control, and this Amendment achieves that objective. I beg to move.
Lord LYELL: May I seek clarification from the noble Lord, Lord Jacques? He gave an excellent example of a private householder arranging for a circus, or for some similarly dangerous activity, on private land. But if an accident occurred, or one of the wild beasts attacked an onlooker who was one of the householder's guests, would there be no case to answer at civil law?
Lord JACQUES: I should have thought that that would be a liability as between those holding the circus and the person who suffered damage, and not for the occupier of the private house.
On Question, Amendment agreed to.
5.6 p.m.
Lord LYELL Lord LYELL moved Amendment No. 6:
Page 2, line 18, leave out ("inadvertent") and insert ("reckless").
The noble Lord said: This Amendment follows on from the second report of both Law Commissions on exemption clauses. In their second report, the term "inadvertent" was used, and we believe that this was done for two reasons: first, to indicate that reference was being made to something more than what we normally understand by the word "negligent" in the English law of tort, and by what I am told is culpa in the Scottish law of delict; and, secondly, to indicate that intentional and unintentional breaches of duty were to be covered. But it is quite possible that the word "inadvertent" implies some stricter liability, although this would not appear to be the purpose of the Bill, and liability for damage, irrespective of any intention to cause damage, would be covered. However, throughout the United Kingdom the law on negligence still depends upon proof of a fault; that it is the intention of the wrongdoer, his disregard for the consequences of his act or his omission.
This Amendment will substitute the word "reckless" for "inadvertent". That is the concept which is already known, and we understand that it is correctly understood in both English and Scottish law. Also, we believe that it will avoid the dangers which I have attempted to outline. We have noted that the Scottish Law Commission did not use the word "inadvertent" in the Bill which it appended to the second report, but referred to "breaches of duty (whether intentional or not)". This last snippet might be a little semantic, but I should be grateful for such guidance as is forthcoming. I beg to move.
Lord JACQUES: This Amendment, by substituting "reckless" for "inadvertent", weakens the protection afforded by the Bill. The word "inadvertent" was chosen as the equivalent of "done negligently"; that is, without reasonable care. "Reckless" means done without caring about the consequences, which is more serious than to do something inadvertently, but not as deliberate and premeditated as doing something intentionally. "Inadvertent" and "intentional" cover the extremes of the kind of breach that the Bill deals with. "Reckless" could be said to he between the two. Its substitution for "inadvertent" creates the wrong result, in that it puts ordinary negligent breaches outside the scope of the Bill, which is a nonsense.
The LORD CHANCELLOR: Quite right!
Lord LYELL: we are very grateful for that reply from the noble Lord, Lord Jacques, together with the obiter dictum from the Front Bench opposite. It was a quite considerable clarification. The noble Lord, Lord Jacques, was beginning to skate upon thin ice, and if I were one of the Olympic judges I would award him 5·9 for technical merit and the same for artistic expression. But I am grateful for his explanation, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 1, as amended, agreed to.
Clause 2 agreed to.
Clause 3 [Liability arising in contract]:
5.10 p.m.
Lord AIREDALE Lord AIREDALE moved Amendment No. 7:
Page 2, line 33, after ("consumer") insert ("(within the meaning of section 11(1) of this Act)").
The noble Lord said: This Amendment is a forward reference to Clause 11 where the expression "deals as consumer", which occurs in subsection (1), is defined. Without it, the reader, reading Clause 3 and the expression "deals as consumer", may fall to speculating what these words mean and he will be wasting his time. I think that with his next Amendment the noble Lord, Lord Lyell, is on the same point as I am. I am bound to say that in the last hour or two it has occurred to me that as the expression "deals as consumer" occurs so many times between Clause 3 and Clause 11 it would be better drafting to print the three subsections of Clause 11 as part of Clause 3. I throw that out as a suggestion for the future, but in the meantime I beg to move this Amendment.
Lord JACQUES: It is common practice in legislation for a phrase to be defined once, and for all uses of the phrase to be taken as having that meaning, unless the contrary is stated. I cannot understand why the noble Lord sees fit to add this reference to Clause 3 but not to other places in the Bill where it would be equally necessary if a concession were made so
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far as Clause 3 is concerned. For example, if it is used in Clause 3, logically it should be used in Clause 4. We feel that the Bill is satisfactory as it is at present and that it is unnecessary to add this definition to one clause and not to any others where the same circumstances apply.
Lord DRUMALBYN: Although that may be so, is not the thought valid which the noble Lord, Lord Airedale, says has occurred to him in the past hour or two; that is, that it would be better to have Clause 11 as part of this clause so that we know what we are speaking about when we read Clause 3?
Lord JACQUES: It is not common practice to have definitions at the beginning of a Bill; they are usually given towards the end. It is a point we should look at and I give the noble Lord that undertaking without making any promise to him, because clearly the Bill is following common practice.
Lord DRUMALBYN: While it may be common practice to reserve an interpretation clause until the end, this does not mean that a substantive clause governing following clauses should not come before instead of after them.
The LORD CHANCELLOR: As has been indicated, this phrase arises in several provisions of the Bill. Your Lordships will recollect that the Renton Committee urged the importance of putting interpretation clauses, which is what Clause 11 is, at the end of Bills. With great respect, I do not feel that any harm has been done, nor that there would be any clarification if it were put before the first reference to "deals as consumer "instead of where one would normally look for a definition clause, which is towards the end of a Bill.
Lord DRUMALBYN: If it is there.
Baroness SEEAR: At the end seems to be the most illogical place of all to put it.
The LORD CHANCELLOR: It comes at the end of the England and Wales provisions. Then in Part II we move to the amendment of law for Scotland. If there is great feeling about this point we

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will certainly have a look at it. I do not want to go to the stake upon its order in the Bill, but I think that it is all right where it is.
Lord AIREDALE: I am very glad that this point will be looked at. It is fairly common practice in an Act of Parliament to see such words as "as defined in Section" so and so "of this Act". If somebody starts to read the Bill, my concern is that when they get to Clause 3 and the expression "deals as consumer" they will wonder what it means. It may or may not occur to them that its definition may appear in an interpretation clause which may or may not be at the end of the Bill. By putting in the words "within the meaning of section 11(1) of this Act" right from the start, everybody is alerted to the fact that those words, which are going to appear a great many times, are defined and that one does not have to wonder what they mean. However, the point is going to be looked at, so I beg leave to withdraw the Amendment for the time being.
Amendment, by leave, withdrawn.
Lord LYELL Lord LYELL moved Amendment No. 8:
Page 2, line 34, at end insert ("as defined in section 13 of this Act.").
The noble Lord said: I wonder whether it would be for the convenience of the Committee if in speaking to Amendment No. 8 I spoke to Amendments Nos. 42 and 43, which relate to Clause 13, and also to Amendment No. 56, which relates to Clause 16 and deals with the Scottish law, since all of these Amendments stand in my name. I hope the Committee will agree that it is convenient that I should speak to these four Amendments. The first Amendment is a paving Amendment for the second and the third Amendments. I am very grateful for the support that I have received in this matter of principle from the noble Lord, Lord Airedale.
The later Amendments seek to provide a definition of the words "standard terms of business". The last Amendment seeks to provide a similar definition in Part II of the Bill which is apposite to Scottish law. The Committee will be aware that the Law Commissioners put forward several different reasons for not attempting to define, "standard terms of business". I wonder whether this opinion of the
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Law Commissioners should deter draftsmen in your Lordships' House from providing or attempting to provide their own definition.
This clause gives to the courts a new power of supervision over what we call standard form contracts. We believe that it confers new benefits on businesses, in particular small businesses which tend to contract and carry on business according to the standard terms of business drawn up by the other party. Whenever and where-ever new rights and liabilities are created, it seems to be in the interests of certainty that all relevant terms in these standard forms should be defined.
We do not believe it is enough to rely on the ability of the courts to recognise standard form contracts when they see them. There could be—indeed, we believe there will be—difficulties in obtaining the necessary proof that a particular contract was a contract which was covered by this clause. We believe that this itself could lead to some lengthy and difficult litigation. Equally, it is important for both parties to be able to ascertain with some degree of certainty whether their contract falls or does not fall within the clause.
This Amendment seeks to clarify the clause with a view to making its application easier, wherever that is possible, for all interested parties. The definition we have put forward may not be satisfactory, but we hope that it will go some way towards providing some kind of workable criteria. Therefore we should be very grateful to hear the Government's view and, indeed, what the noble Lord, Lord Jacques, has to say. I beg to move Amendment No. 8.
5.20 p.m.
The LORD CHANCELLOR: This group of Amendments, the first of which has been moved, seeks to supply a definition for written standard terms of business. The Bill, it is true, does not provide a definition and in so omitting to do it follows the Law Commissions' recommendation. The conclusion of the part of the Law Commissions' report dealing with this, at paragraph 157 says this—and I agree with their conclusion:
"We think that the courts are well able to recognise standard terms used by persons in the course of their business, and that any attempt

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to lay down a precise definition of 'standard form contract' would leave open the possibility that terms that were clearly contained in a standard form might fall outside the definition. In our view this would be unfortunate. We have not, therefore, attempted to formulate a statutory description of a standard form of contract".
I respectfully agree that if a statutory definition was formulated the danger would arise that controls could be evaded relatively easily by means of a technicality. In the draft definition the words "fixed in advance" appear and, as a matter of interest, those words were specifically considered by the Law Commissions and it may be a matter of interest that, according to paragraph 155 of the Law Commissions' report, they appear in the law of Israel on this matter. I hasten to say that that does not make it any better or worse so far as I am concerned, and the view the Commissions come to is that they did not think that the idea of terms fixed in advance would be a useful element for the purposes of the Bill.
In a sense every writing forming—or incorporated into—a contract necessarily comes to existence in advance of the making of the contract and from the words used in the definition it is not clear what earlier stage than the actual making of a contract might be chosen as the time in advance of which the terms are fixed. Accordingly, I think it is better to leave the phrase that is well known to the courts and well known to business undefined, in the same situation as drunkenness is in the relevant legislation relating to that. It has been said that that is like an elephant, easy to recognise but hard to define.
Lord DENNING: I quite agree that we always know standard terms and conditions when we see them and if they had to be fixed in advance they would have to be printed in advance. There are all sorts of ways of getting round this definition and if it is left as standard terms and conditions we will see that we get hold of them every time. If they are unreasonable we shall hold them to be unreasonable.
Lord DRUMALBYN: I should like to make one point that may have some value. A trader may have several standard terms of business related to the several different products in which he deals.
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I do not know whether this would have any effect upon the drafting here or whether possibly some words should be added relating to the product or service provided in the circumstances. I do not know whether I have made my meaning clear to the noble and learned Lord: there may be several standard terms of business employed by the same trader and some legal doubt might arise in a particular case as to which terms of business were concerned.
The LORD CHANCELLOR: I am sure the courts could look at that point but I will examine it and if it calls for some consideration in the Bill we will look at it but I should have thought the courts would look at each transaction and the form of the contract and would be able to arrive at a conclusion on it. However, I take the point and we will look at it.
Lord LYELL: I am deeply grateful to the noble and learned Lord the Lord Chancellor when he says that he will look at this group of Amendments, and particularly the standard terms, because I think my noble friend Lord Drumalbyn has found a clear example of what could be a difficulty in these particular standard terms. Indeed, one trader may deal in a number of commodities. We are grateful for the reception that this has received from the noble and learned Lords opposite and we are grateful to them for saying that they will look into these standard terms.
The LORD CHANCELLOR: I do not want to encourage the feeling that I am not happy about what the Law Commission and I said earlier, but if there is substance in the suggestion that there would be difficulties because a company trades in various commodities, each involving a standard form of contract that would give rise to difficulty, I will look at it. But at the moment I cannot see that it ought to cause any difficulty at all. I am afraid that that is as far as I can go.
Lord LYELL: Given the shortness of time that the noble and learned Lords have had with the information in their hands and the fact that they have given a clear indication that these points will be looked at, that would certainly clarify the minds of non-lawyers such as myself

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and other noble Lords. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord LYELL Lord LYELL moved Amendment No. 9:
Page 2, line 41, leave out ("was reasonably") and insert ("could reasonably have been").
The noble Lord said: Perhaps I may speak to Amendment No. 10 at the same time. These two Amendments are in relation to Clause 3(2)(b)(i). This appears to have been intended to make the same provisions as subsection (2)(b) of the Bill which was appended to the Law Commissions' report. It seemed that the Law Commissions considered that the rules construction which are ordinarily applied to interpret exclusion clauses do not satisfactorily cover the type of clause which we have under consideration. These are frequently inserted into contracts for travel and indeed for holiday arrangements, and of course there is a continuing danger that a person to whom goods are to be sold or supplied or for whom services are to be performed may have exceptionally high expectations or unreasonable demands as to what to expect from the other party. The qualification "reasonably" in the clause as drafted implies what we hope is an element of objectivity, and the two Amendments emphasise that aspect of objectivity. I beg to move Amendment No. 9.
Lord JACQUES: These Amendments, when taken together, make Clause 3(2)(b) less objective and specific. Surely what matters is what the particular customer reasonably expected and not what customers in general might reasonably expect, which is the interpretation opened up by the Amendments. After all, if the particular customer expected very little because he understood that for various reasons explained to him complete fulfilment of the contract was unlikely, is it fair that he should later be able to have the term struck out on the grounds that the performance was not what could reasonably have been expected, even if not by him?
Lord LYELL: I am grateful to the noble Lord, Lord Jacques, for explaining this. I followed him for 90 per cent. of his explanation but I must admit that he added a sting to the tail of it. When we come to "fair and reasonable" I
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think we may have more to discuss at a later stage. I hope the noble Lord, Lord Jacques, will accept this, but I should like to read what he has said and to reserve my judgment because I think he may have gone some way towards meeting my problem. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 3 agreed to.
Clause 4 [Unreasonable indemnity clauses]:
5.30 p.m.
Lord LYELL Lord LYELL moved Amendment No. 11:
Page 3, line 9, after ("liability") insert ("(whether to the consumer or otherwise)").
The noble Lord said: Perhaps I might speak to Amendments Nos. 11 and 13. The purpose of these two small Amendments is that we hope to improve the drafting of Clause 4. At present Clause 4(2) is not necessarily easy to interpret by itself, and we hope that the insertion of the words in Amendment No. 11 will clarify the entire clause. For that reason I beg to move.
Lord JACQUES: These Amendments delete subsection (2) of Clause 4 and introduce words to cover its substance in subsection (1). The meaning is not changed in any way, but subsection (1), which is already a long complicated sentence, becomes even longer. The original wording, though not perfect, is, in our opinion, to be preferred. It is clearer.
Lord LYELL: I am very grateful for the noble Lord's reply. I think these two Amendments are not important enough to warrant further major argument at this stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord JACQUES Lord JACQUES moved Amendment No. 12:
Page 3, line 10, leave out ("his own").
The noble Lord said: It has been suggested that, because of the words "his own" in Clause 4, a term requiring an indemnity in respect of a businessman's

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vicarious liability might not be included. Since negligence is a breach of duty, the point is probably covered by Clause 1(4), but as the words serve no purpose other than that of emphasis they might as well be omitted for the avoidance of doubt. I might say that a similar Amendment, No. 57, in relation to Scottish law, has the same effect as the one I am moving. I beg to move.
Lord HAILSHAM of SAINT MARYLEBONE: I want to put this to the noble Lord, Lord Jacques. I am not asking the noble Lord to answer straight away. I am not quite sure that he is right in saying that if these words are omitted they do not change the sense. I quite see that he is intending, and I would accept rightly intending, to cater for cases of vicarious liability. But is it not possible that he ought none the less—while accepting his main contention—to make it plain that the negligence which is referred to in subsection (1) is negligence for which the person in question is himself responsible, whether himself or vicariously, and only such negligence? Would it not be wise to alter the drafting at Report stage so as to make that plain?
Lord JACQUES: If the Committee will be kind enough to accept this Amendment, I will have the point raised by the noble and learned Lord examined with a view to further amendment, if need be.
On Question, Amendment agreed to.
Clause 4, as amended, agreed to.
Clause 5 ["Guarantee" of consumer goods]:
Lord LYELL Lord LYELL moved Amendment No. 14:
Page 3, line 22, leave out ("for") and insert ("with regard to").
The noble Lord said: Perhaps I might speak briefly to this Amendment, No. 14, and also Amendments Nos. 59, 77 and 83. These four small Amendments seek to redraft the Bill in a very small and minor aspect. We believe it is not necessarily accurate to refer to liability "for" loss or damage. Is it true that a person is liable for his breach of duty or obligation which may result in loss or damage? We would
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wonder if the four Amendments do not clarify the Bill beyond all doubt—or peradventure I think is the legal term. I beg to move.
Lord AIREDALE: I would not have thought it a helpful Amendment at all. I would always tend to prefer one word to three, and I should have thought "liability for" loss or damage was much more crystal clear than "liability with regard to", which I should have thought was a rather woolly phrase. I hope this Amendment will not be accepted.
The LORD CHANCELLOR: I am delighted to get support from the noble Lord, Lord Airedale, on this; I entirely agree with what he has said. Liability "for" loss or damage is well known, simple, clear and much more specific than "with regard to". I venture to submit that these four Amendments are not only unnecessary but, with great respect, quite pointless.
Lord LYELL: I will face those remarks from the noble and learned Lord. I will not seek to delay the Committee any further. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord LYELL Lord LYELL moved Amendment No. 15:
Page 3, line 23, after ("term") insert ("operating by reference to a guarantee of the goods").
The noble Lord said: This Amendment, standing on its own, is in the nature of a probing Amendment. We wonder whether the clause is not somewhat equivocal as at present drafted. It is not clear to those of us who are not lawyers whether the controls over the guarantees which are created by Clause 5 continue to extend to any contract terms which seek to exclude or restrict the liability described in subsection (1) or only to those contract terms which operate by reference to a guarantee of the goods. This is indicated in the marginal note. I am seeking to elicit some information, if that is possible and reasonable, from the noble Lord, Lord Jacques. I beg to move.
Lord JACQUES: This Amendment would have the effect of preventing Clause 5 from affecting exclusions or

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restrictions of liability contained in a guarantee where the guarantee took effect contractually. The clause as drafted follows the Law Commissions' recommendation. They recommended that the control should apply whether the exclusion or restriction took effect by contract or by notice or whether it was contained in the guarantee or operated by reference to the guarantee. This can be seen from Clause 10(2) of the English Bill and Clause 4(2)(a) of the Scottish Bill, which are annexed to the report. I can see no reason to depart from this recommendation. Whether Clause 5 applies should not depend on matters of form; that is, on whether the exemption clause was contained in a guarantee or whether it merely operated by reference to a guarantee.
Lord LYELL: I thank the noble Lord, Lord Jacques, for his explanation. I do not think I obtained a very favourable answer. I pointed out that I sought to probe, test out, the opinion of the Government, and indeed of the noble Lord, Lord Jacques. It seems that their opinion is not very favourable at this stage. I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Lord LYELL Lord LYELL moved Amendment No. 16:
Page 3, line 28, leave out ("exclusively") and insert ("wholly or mainly").
The noble Lord said: This is a slightly more substantive Amendment. We propose it for two reasons. First, the word "exclusively" seems to be one which appears fairly frequently in taxation Statutes. So far as we can gather, it is not used in Section 55 of the Sale of Goods Act 1893. We wondered if the words "wholly or mainly" would not fit more easily into this context. Secondly, this particular phrase is designed to cover the cases in which goods are supplied for mixed purposes, and that we would seek to define as being for both business and for private or consumer purposes. A very common example of this would be the business or company car used by an employee on occasions for his own private purposes.
Whether goods are supplied wholly or mainly for the purposes of a business is indeed a question of degree, but to the extent that the goods are so used for a
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business we believe that the provisions of the 1893 Act, which preserve the freedom of contract between businesses, and which were indeed retained by the 1973 Act, should, if possible, be allowed to remain. For that purpose I beg to move this Amendment.
Lord JACQUES: This Amendment, if accepted, would seriously reduce the number of contracts protected by this provision and would create what, in the opinion of many, would be unfair situations. The word, "wholly" being a synonym for "exclusively" is not so important; but the word, "mainly" alters the meaning of the provision. Under the original wording, the doctor's car, for example, unless used exclusively for business—that is, unless he never uses it for visiting friends, et cetera—would be considered as being in consumer use. Under the amended wording, if the doctor used the car predominantly for visiting patients, it could not be regarded as being in consumer use. That would be difficult to determine in many cases and could lead to contracts being regarded as outside the scope of the provisions which both Law Commissions recommend should be covered by the provisions. I hope, with that explanation, that the noble Lord may see fit to withdraw his Amendment.
Lord DAVIES of LEEK: As a layman, I should like to add to that. As I am interested in linguistics and semantics, I sincerely believe that the noble Lord is merely playing semantic roulette; if his phraseology is used it would be much less definite than the word, "exclusively", and would blur the edges. Lawyers would complain wonderfully about the phraseology contained in the noble Lord's Amendment. I hope that he will stick to the original phraseology of the Bill.
Lord LYELL: I am, indeed, deeply grateful for the comments made by the noble Lord, Lord Davies of Leek, I would all but say to him, with the greatest respect, "Join the club, my Lord" because certainly this afternoon we shall deal a great deal with semantics. I hope that I am not playing a mere game of linguistic and semantic roulette. Indeed, the noble Lord, Lord Davies of Leek, may believe that "wholly or mainly", and "exclusively" are blurred, but at the beginning of my remarks I said that such words

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occur in the taxation statutes and, indeed, many pitched battles are fought out in the law courts over these differences. In no way are they blurred. I am certainly grateful for the remarks made by the noble Lord, Lord Jacques. I appreciate that there could be disputes and difficulties over doctors' and other people's cars. However, I did not necessarily agree with his views that the difficulties would be irreparable or irreconcilable. Nevertheless, I should like to study some of his comments. For that reason I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.43 p.m.
Lord LYELL Lord LYELL moved Amendment No. 17:
Page 3, line 31, leave out ("purports to contain") and insert ("seeks to import").
The noble Lord said: This Amendment is indeed semantic and I believe that the noble Lord, Lord Davies of Leek, may appreciate this. We wondered whether it was possible to ascertain the meaning of the words, "purports to contain" and whether the phrase, "seeks to import" was not preferable. However, it is a matter of taste. I beg to move.
Lord JACQUES: This is the most astonishing Amendment of all. It adds nothing to either the elegance or the clarity of the Bill.
Lord LYELL: I should be grateful if the noble Lord, Lord Jacques, could explain the meaning of the word, "purporting". I take his comment that he thinks it is astonishing, but it certainly provides fertile ground for dispute in my mind. I am not a lawyer; nor is the noble Lord, Lord Jacques. We do not think that the meaning is entirely clear. I shall withdraw the Amendment, but I should like to study the case further. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord LYELL Lord LYELL moved Amendment No. 18:
Page 3, line 37, at end insert ("nor does it apply where the loss or damage occurs more than two years after the contract was made").
The noble Lord said: We propose this Amendment because is it not the case
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that the Bill, as drafted, leaves the period completely unlimited, except by prescription for compensation or for claiming, after discovery of the loss or damage. We believe that something which might be called a guarantee, which would last for, say, two years, should be allowed as it would go some way towards limiting a manufacturer's liability thereafter. We had better not get into the case of reasonableness, but I think that this would be a reasonable provision. I beg to move.
Lord AIREDALE: I do not quite understand this. As I see it, this clause sets its face against phoney guarantees. Surely the effect of this Amendment would be to say that if one is lucky enough to have one's washing machine, or whatever it may be, break down within two years, this clause against phoney guarantees would come to one's aid. However, if one is unlucky enough not to have the breakdown until two years have elapsed, the clause is not available to help one. Perhaps I have misunderstood it, but if that is what it means it does not seem to help.
The LORD CHANCELLOR: With respect, the noble Lord has it absolutely right. I submit that what is proposed in this Amendment is quite unacceptable. Not only does it run contrary to the whole principle and philosophy behind the Bill, but it is inconsistent with the framework of the law relating to limitation of actions in English law. The implication of the Amendment is that it is somehow more acceptable for manufacturers to exclude or restrict liability for their negligence where the loss or damage occurs more than two years after the date when the guarantee was given. Clearly, it may be more convenient for manufacturers to know that, once the two years have passed since the giving of the guarantee, they will be under no liability for negligence. What about the victim who suffers loss or damage? As matters stand, the longer the time between his obtaining the goods and the accident, the more difficult it will be for him to prove that the loss or damage was caused by the negligence of the manufacturer. It is undesirable to make that position even more difficult.
Our law of limitation of actions requires a person to bring an action within a

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specified time after the cause of action arises. In the case of negligence, that cause of action arises when the victim suffers loss or damage. This Amendment implies that the time should begin to run against the plaintiff as soon as he enters into a contract with a manufacturer, even though the manufacturer's liability does not arise until later when the plaintiff suffers injury as a result of the manufacturer's negligence. I submit that this Amendment is quite ill-conceived and it is a little hard that the noble Lord, Lord Lyell, should have to support it.
Lord DENNING: May I rise in order to resist the Amendment. I can quote a leading case where a machine tool was supplied which, negligently, had a latent defect. Seven years later when a man was using it, it broke, a piece flew into his eye and he lost that eye. He had his cause of action even though seven years had elapsed. This Amendment would enable manufacturers to get out of liability up to two years after the contract had been made. I do not think that we should accept it.
Lord LYELL: I am grateful for the vast amount of very concise and excellent advice that has come from noble and learned Lords on all sides and, indeed, from the noble Lord, Lord Airedale. I certainly take their point. Perhaps I could vicariously, or impudently, ask the noble and learned Lord who normally sits on the Woolsack and the noble and learned Lord, Lord Denning, not to mention the noble Lord, Lord Airedale, whether any of them use wheeled transport. So far as I am aware, many manufacturers of motor cycles and/or motor cars limit specific items of the motor cycle and motor car as regards replacement, free warranty, labour or parts to two years or 24,000 miles, whichever is the less. I am not sure how these particular warranties or implied warranties are applied, particularly in view of the 1973 Act. However, certainly from my studies around the retail world I see limitations, and two years is a very common one in the wheeled transport industry, if I can so describe it.
Lord HAILSHAM of SAINT MARYLEBONE: I think that the noble and learned Lord the Master of the Rolls has perhaps been a little hasty in citing his leading case, because that would be saved
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by Clause 2 of this Bill and we are now talking about Clause 6.
Baroness PHILLIPS: May I just intervene as a consumer activist rather than as a noble and learned Lord. I would say that one of the greatest hazards presented in dealing with cases of people who are in some distress is the fact that there is a limitation of liability. This applies so frequently that I would be very sad to see it written yet again into this Bill. What we have to seek to do is to eliminate periods of time written into Acts of Parliament rather than add more.
Lord LYELL: I think that we have proceeded with the many arguments on this particular Amendment for long enough. I have taken the points raised by noble and learned Lords all round the Committee. I would seek leave to withdraw the Amendment at this stage.
Amendment, by leave, withdrawn.
Clause 5 agreed to.
Clause 6 agreed to.
Clause 7 [Miscellaneous contracts under which goods pass]:
5.52 p.m.
Lord LYELL Lord LYELL moved Amendment No. 19:
Page 4, line 30, at end insert ("but liability with regard to—

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

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

can be excluded or restricted by reference to such a term in so far as the term satisfies the requirement of reasonableness.").
The noble Lord said: It might be for the convenience of the Committee if I were to speak to Amendments Nos. 19, 20. and 21 together. We have put forward these Amendments to clarify the drafting of subsections (2) and (3). It seems that as at present drafted subsection (2) refers to the liabilities to consumers in relation to the quality of the goods, whereas subsection (3) deals with the liability to persons other than consumers in connection with the quality of goods. This subsection also deals with liability to both consumers and non-consumers in relation to the question of title and of quiet

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possession. We hope that these Amendments would tidy up the subsections so that subsection (2) can deal exclusively with liability to consumers, and subsection (3) would deal exclusively with liability to persons who deal otherwise than as consumers. I beg to move.
Lord JACQUES: This is a gallant attempt to simplify, but I regret that it fails to do so. It renders the meaning of subsection (3) even less clear than it is now. By this Amendment subsection (2) deals with both of the two groups of liability, but yet after amending subsection (3) the words remain: "neither the liability mentioned in that subsection nor.…" Which liability is subject to subsection (2)? The second group of liabilities has been incorporated by the Amendment in subsection (2), so that there are now two there. Therefore, subsection (3) becomes very unclear.
Lord LYELL: I was mightily encouraged by the preliminary remarks of the noble Lord, Lord Jacques. If the clause, and indeed these two subsections, are not necessarily clear, they are becoming less and less clear in my mind, and I am grateful for the effort that the noble Lord, Lord Jacques, made to explain them to me. I took on board some of what he said. When he comes to two separate forms of liability, I should like to call it a day so far as this Amendment is concerned and study what the noble Lord said and indeed what he intended to do. In that category, however, I can scarcely believe that my Amendments make the subsection less clear than it is at the moment. Perhaps we can return to this at a later stage, possibly in a different form, to see whether we can clarify the clause. I beg leave to withdraw the Amendment.
Lord JACQUES: Before the Amendment is withdrawn, may I say that the Bill as it stands is quite tidy. Subsection (2) deals with those clauses that are void. Subsection (3) deals with those clauses to which the reasonableness test will be applied. The Bill is drawn up quite rationally and fairly.
Lord LYELL: Quite rationally, but we shall be discussing the question of its fairness probably at a later stage. There are other criteria and issues and not solely
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the two which the noble Lord, Lord Jacques, expressed with such clarity. I take his last point. Certainly at this time we should withdraw the Amendment, and I beg leave to do so.
Amendment, by leave, withdrawn.
On Question, Whether Clause 7 shall stand part of the Bill?
5.57 p.m.
Lord LYELL: Perhaps I may say a word on Clause 7. The noble Lord, Lord Jacques, may be a trifle displeased at my raising this point here, but I should like to get it into the report so that we can study it at a later stage. I must apologise to him and to the Committee, with the usual disclaimer that this case was only drawn to my attention earlier this morning. It concerns a fairly common occurrence that we see now; the question of the security industry, and indeed of burglar alarms and similar devices which are often installed in private premises, and indeed in private houses, and very often at the behest of insurance companies, or indeed as a mere measure of prudence.
I understand that most of the contracts for the installation of these devices concern rental or indeed hire, and it seems that Clause 7 is applicable to most, if not all, of these cases. The question I would seek to put to the Committee—and certainly I would not expect an answer, although possibly it could be a basis for discussion and possibly fairly stern correction from the noble Lord, Lord Jacques, or noble and learned Lords opposite—is whether companies who specialise in installing these types of device are liable, or under the Bill will or should be liable, for a loss which, for them, could be absolutely unlimited.
The liability would arise in this way: a burglary, or a break-in could, indeed would, occur in private premises. It might be found that the alarm which was fitted were to be faulty, or possibly have been inadequately maintained or wrongly installed. But, as I understand would be the case at the moment, the householder, or consumer in this case, or the non-businessman, the person who had the alarm or device installed, would be reimbursed or indemnified by the insurance company.

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I am given to understand that then the insurance company is able to sue the alarm company in the place of the householder. Many of us would be grateful to know where lies the alarm company in this case. Does the law of subrogation apply here or not, and is the householder a consumer for the purposes of the Bill? Does the law of subrogation turn a businessman into a consumer for the purposes of the Bill? This is not clear to me. I am not a lawyer. Doubtless I shall be able to study under and learn greatly from the noble and learned Lord the Master of the Rolls, and indeed the noble and learned Lord opposite. But this is a major point that worries me and many of the industries who install and maintain these devices.
We might think that the reasonableness clauses would be of assistance to the alarm company were it to come under litigation from the insurance company, but would reasonable damages be awarded to the insurance company against the alarm company? We wonder whether there would be any limitation of the liability. Should the householder be warned when installing such a device—which, after all, is designed to deter burglars—that he must disclose the value of the property which he wishes to protect?
All these points are in the forefront of the minds of one group in industry and, as we understand the clause as drafted, their liability is almost unlimited. We therefore hope it is possible to be given an opinion, perhaps at a later stage, as to whether these provisions apply in the circumstances I have described and, if so, what might be done to assist the particular interests concerned.
The LORD CHANCELLOR: The noble Lord, Lord Lyell, said he had not given notice of the point he raised and therefore perhaps the best thing would be for me to read carefully what he said and return to the matter. The advice I have briefly received is that if a contract for hire of the alarm is made and there is a defect in the alarm which would bring the "fitness for purpose" question into issue, Clause 7 will strike down as between customer and firm exclusions relating to fitness for purpose; in litigation between them, with or without subrogation the
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term would be void, as it would be upon sale of the alarm. Whether that covers the matters raised by Lord Lyell I know not, but I promise to look at what he said and at what I have just said in reply and, if the subject needs to be returned to, we will do so at a later stage.
Lord HAILSHAM of SAINT MARYLEBONE: I am grateful to the noble and learned Lord the Lord Chancellor because this is a point which should be considered and perhaps I may add a little in amplification to what my noble friend Lord Lyell said. Broadly speaking—I am of course over-simplifying—this is a Bill for the protection of consumers and not for the protection of insurance companies. Supposing I insure my house and its contents, which is the ordinary thing a prudent householder does. The insurance company goes into considerable detail with me as to what it contains, and it may contain nothing but old boots or it may contain a Rembrandt, and it makes rather a difference which of the two are the true contents of the house. The insurance company will insist that I disclose to them in considerable detail articles which are of value above a certain limit.
Supposing either at the instance of the insurance company or because I am a doubly prudent householder, I then go to Securicor or Group 4 or one of the other firms that specialise in these matters and say, "In addition to my insurance policy, I want to install a device which will tell the police when a burglar breaks in". That is a very sensible thing to do, but of course the security company does not go into the same detail with me as to what the house contains; it simply supplies me with a device which goes off in the police station when a burglary takes place.
A burglar comes in and the event I have been apprehending all along takes place; in my case it has taken place at certain times, so this is not altogether an imaginary instance. Let us suppose that what Lord Lyell has been putting to the noble and learned Lord occurs; the device does not go off. Let us assume that it does not go off because of what would otherwise be a breach of warranty of fitness on the part of the security company. Lord Lyell or I, to whom this mishap has taken place, has lost a Rembrandt, an heirloom

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of considerable value. While we mind that because it is of sentimental value, we get back from the insurance company the full value of the Rembrandt because we have prudently insured it, the insurance company having charged the appropriate premium, so we are none the worse off financially.
However, the insurance company are advised by rather a subtle lawyer—perhaps somebody like Sir Elwyn Jones—and he says to the insurance company, "You have a right of subrogation to Lord Lyell. You are entitled to sue Group 4 or Securicor for the full value of the Rembrandt because you are subrogated to his rights under the normal law of insurance". What has happened at that stage, when the insurance company is so advised, is that the insurance company, for whose benefit the Bill is not being passed, gets the full value of Lord Lye11's rights and the unfortunate indemnity people, who have failed to supply a reliable device, without any of the precautions which the insurance company have taken—that is, they do not charge an additional premium because a Rembrandt is in the house and they do not know whether it contains a collection of old boots or the most valuable Dutch paintings—have to pay £750,000 because something has gone wrong with their device.
I do not think that was the object of the framers of the Bill. I do not believe they designed the Bill to protect insurance companies, yet they would still be doing that because the insurance company, being subrogated to rights—not their own rights but the rights of Lord Lyell —would be entitled to say to Group 4 or Securicor, "The contract which you entered into with Lord Lyell is void to the extent that it purports to limit your liability, and we are entitled to take advantage of it". Perhaps there is something here which should cause us to pause.
Lord DAVIES of LEEK: After that delightful anecdote from the noble and learned Lord, Lord Hailsham of Saint Marylebone, perhaps I might put a simple question, and I have particularly in mind trading stamps, something which has not vet been mentioned. What are the implications of these provisions on
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trading stamps? Personally, I never bother with these terrible things and I cannot understand why people think they are getting value for money when they collect them. However, if my family and I collect trading stamps—if we fill cupboards with them, paper the walls with them—and one day I load up a lorry with books of them and go off to collect my suite of furniture, if that furniture does not meet the necessary standards, are they protected? I will not delay the Committee at this hour by considering further the possible implications of subsection (4), but I hope my noble and learned friend will clarify the point.
Lord LYELL: I thank my noble and learned friend for his valuable contribution and support; he voiced far more eloquently and succinctly than I did some of the qualms which have been expressed, and the most relevant of his points questioned whether the Bill sought to protect insurance companies. Although that is not what it is designed to do, that, inadvertly, is what it does. I am also grateful to the noble Lord, Lord Davies of Leek, for the issue he raised. I had intended to raise it and I had particularly in mind the question of trading stamps in Northern Ireland and whether they should be exempt, but at this stage I will not delay the Committee.
The noble and learned Lord the Lord Chancellor has given a clear undertaking to look into the matter. Following the plethora of legal advice I have had from my noble and learned friend, I look forward with growing expectation to receiving equally excellent advice from noble and learned Lords opposite in due course.
Lord JACQUES: As regards trading stamps, these are not dealt with here because they are already dealt with in existing legislation.
Clause 7 agreed to.
Clause 8 [Misrepresentation]:
6.11 p.m.
Lord LYELL Lord LYELL moved Amendment No. 22:
Page 5, line 13, leave out ("be of no") and insert ("have").
The noble Lord said: It may be for the convenience of the Committee if I speak to Amendments Nos. 22, 23, 24, 30, 31, 64 and 65, which are in my name. I was also given to understand that Amendments Nos. 33 and 63, in the name of my noble friend Lord Selkirk, might conveniently be discussed at this point. I do not know what would he the feeling of my noble friend but, should it he for the convenience of the Committee, I can speak to the Amendments that I have mentioned en bloc.
The LORD CHANCELLOR: They all raise the same point.
Lord LYELL: As the noble and learned Lord has said, all these Amendments relate to the same point. These are probing Amendments, in that the first three Amendments proposed to Clause 8 derive from the fact that, at an earlier stage in another place, the Lord Advocate undertook to carry out further consultations before taking a final and irrevocable decision as to where the burden of proof should lie.
We hope that this Amendment heralds, and is also consistent with, other Amendments that are proposed later. It repeats an Amendment tabled by the proposer of the Bill in another place, the honourable Member for Peterborough, Mr. Ward. With later Amendments to Clauses 10 and 22 as regards the burden of proof, we hope to distinguish between the burden of proof in consumer transactions and the burden of proof in business transactions. Amendments Nos. 30 and 31 deal with the law in England and Wales and Amendments Nos. 64 and 65 refer to the law of Scotland. As we see it, in the case of consumer transactions, the Amendments leave the Bill as drafted unchanged and thus the burden of proof lies upon the person who seeks to rely upon the clause. But, in the case of business transactions, we believe that it is very important that the burden of proof should lie upon the party seeking to vitiate the clause.
Here, we come to three points. To provide otherwise would, first, create considerable difficulties in the commercial world; secondly, to leave the burden of proof as at present construed in the Bill would cause a great deal of uncertainty in relation to insurance. Following what my noble and learned friend has said, I do not believe that we want to enter the world of insurance. Thirdly, it would also
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create difficulty if one party should seek to escape its obligations by alleging that the term was unreasonable. This would force the other party to prove the term to be reasonable.
We hope that these Amendments follow the recommendations of both the Law Commissions. In another place, the Minister of State put forward a strong and convincing argument in favour of this particular incidence of the burden of proof for commercial transactions only. We take a fairly strong view of this and we believe that it is of particular relevance to the Bill. I beg to move.
The Earl of SELKIRK: If my noble friend wants to discuss the onus of proof at this stage, I am happy to take part. In the course of his winding-up speech on Second Reading, the noble and learned Lord the Lord Chancellor said that we would have to look at this, and I believe that there is absolutely no doubt that we must do so. I believe that it is worth looking at what the two Law Commissions said. They were completely united on this point and, if I may, I should like to read what the English Law Commission had to say. The words of the Scottish Law Commission were practically the same.
"The onus of proving that it is not fair or reasonable to rely on the terms or notice should rest on the party challenging the exemption clause".
That is the established procedure in law at the present time, and when the two Commissions drew up their Bill, they made no reference to it. Why should they? However, when it came to the Bill, for some reason which may or may not be divulged, a clause was put in saying that the onus would rest on those challenging the rightness of it. This, not unexpectedly, was too much for the Committee in the other place and it reversed the onus of proof, putting it on the other side. However, when it came to the Scots clauses, the Committee put it in the other way round. So out came the Bill from the Committee with the onus of proof on the one side on the claimant and on the other side on those who were maintaining that it was legal.
I must say that this is very embarrassing to me because at the Report stage the Scottish position was reversed to the English position but no reason was

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advanced. There is no doubt that the Lord Advocate was extremely reluctant to do it. The Scottish Law Commission is perfectly clear on this: it considers that the onus of proof is on those claiming that this is unfair, as is the normal and established practice. To express my own view quite briefly, I believe that if the Bill is not adequately fair to the consumer, clauses in the Bill should make it fair. It should not tinker about with what is the established practice of evidence which has stood the test of time fairly well. Frankly, this has not been supported by any particular evidence.
When one comes to the purely commercial side, this becomes quite impossible. There is no doubt that the commercial side puts it on an impossible basis. Let me put it this way. If one signs a contract, the next day one may claim that it is unreasonable. In other words, today, a contract is valid until challenged; henceforth, it will be invalid until it is upheld. I believe that this is an impossible position for any commercial company to be expected to face.
I should have thought that the united decision of the two Law Commissions, which in the course of discussions are said to have examined this for 10 years—though I do not know whether this is true—and have been into the matter in very great detail, should be accepted. We are entering upon pretty new ground. There is a lot of new stuff coming out and I do not think that anybody is quite certain how this will work out in individual cases. I shall not say that I have not confidence in the court's ability to decide what is reasonable, but I feel that the answers may well vary from time to time. As my noble and learned friend Lord Hailsham said, it is a leap in the dark. To some extent that is so. I should have thought that, on this basic matter of evidence, we should maintain the established method.
It is generally assumed that consumers are nice little innocent people, that they are poor, that they do not know the law and that they know nothing. The consumers include a great many different sorts of people. Some are extremely well informed and some have means behind them and will undoubtedly use the Bill and demonstrate litigious qualities that
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may astonish people. I believe that, if we are not careful, we shall throw ourselves open to an enormous amount of litigation. Indeed, it was even suggested in the other place that that would be a good thing. I should have thought that any Bill that produced a great deal of litigation was probably a bad Bill.
I have no doubt that the Bill could lead, particularly if the onus rests on those who are showing that it is reasonable, to a great deal of harassment—quite deliberate and calculated harassment, even on the consumer basis. That is why I prefer the Amendment in my name to that of my noble friend. He has made provision that contracts can be made valid by reference to the Ministry which deals with fair trading. I realise the difficulty, but this adds greatly to the complication of it, and in trader's dealing the matter should not be more complicated than it need be. I think that this is essential in order to be fair to everybody, and I am quite certain that the balance of fairness could probably be set by the courts themselves. The Law Commission has examined this matter, and I think that in these circumstances, where we are going on to new ground, we would he very well advised to maintain the established rules of evidence. It is for that reason that I have tabled my Amendment which will arise later, but I have been asked to speak, and I have expressed certain views.
6.21 p.m.
Lord DENNING: This is not dealing with contracts in general or terms of contracts in general. It is dealing with exclusion clauses, which are excluding the ordinary liability of a firm or company, or whatever it may be. When those clauses are considered by the courts, the burden is on the person who seeks to take advantage of them in exempting himself from his ordinary liability. Usually he drafts those exclusive clauses himself, and we have a principle, which in Latin we call contra proferentem, whereby it is to be construed against him if he seeks to exclude himself from his ordinary liability. If he seeks to exclude himself, we say that he has to do it in the clearest possible words—not only with consumers, but in all contracts in which a person seeks to exclude himself from the ordinary liability which the common law would

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impose upon him. So in regard to these special clauses, in a way the law already puts the burden on the person who seeks to exclude his ordinary liability. Therefore I would suggest that the Bill in its present form is satisfactory in so far as it puts the burden on the person who seeks to exclude the ordinary liability imposed by law.
6.24 p.m.
The LORD CHANCELLOR: I am grateful that Amendments have been put down by the noble Lord, Lord Lyell, and by the noble Earl, Lord Selkirk, which has enabled us to have a brief look at this question of the burden of proof. I am interested that the noble and learned Lord, Lord Denning, firmly comes down in support of the Bill as it now stands, hut it is true that there is a complicated history of disagreement which has marked this discussion, and I can say at once that my disposition is to examine what has been said by the noble Lords who have supported their Amendments and to consider also what the noble and learned Lord, Lord Denning, has said.
We are discussing the question of the burden of proof, which is raised in Clause 8, and in Clauses 10 and 22 as well; these relate to the Misrepresentation Act 1967, and the corresponding Northern Ireland Act, and to the "reasonableness" test for the Bill in England and Wales, and in Scotland respectively. So it is an important matter. As the noble Earl, Lord Selkirk, said, when the Bill was originally introduced in another place all the three clauses threw the burden of proof upon the party seeking to upset the term. That is how the story started. But Amendments were moved in Committee in another place by the Conservative Front Bench to alter the burden of proof in the "reasonableness" test under the Bill for England and Wales, and those Amendments were carried on a Division. But on Report the sponsors moved Amendments so that the Bill as a whole, including Clause 8, should be consistent on the burden of proof, on the understanding that the Government and the sponsors would give further consideration to this question before the Bill reached its final stages. Now we have the opportunity of looking at this matter again.
I am certainly prepared—and my noble friend Lord Jacques has indicated like-
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wise—to consider further what has been said today, along with representations we have received from other quarters. The Government have been taking further advice from the two Law Commissions, but I am afraid that we have not yet had an opportunity of considering the views that they have expressed. If I may be permitted a personal view on this matter, I should like to say that I have great doubts about how the proposed split burden of proof, which the noble Lord, Lord Lyell, proposes in his Amendments to Clauses 10 and 22, would work. Indeed, he has, I think, himself seen the awkwardness that this entails in the context of the 1967 Misrepresentation Act, which does not contain the concepts of "dealing as consumer" and business liability. I feel that a split burden of proof could discriminate against the small businessman in the context of Clauses 10 and 22, since he might be put in the position of carrying the burden of proof both in his dealings with consumers and with his own suppliers, and that is a crossfire which could well be unfair to him.
In addition, the so-called split burden would involve introducing into Clause 2, dealing with negligence, and into the equivalent Scottish clause, the concept of dealing as a consumer, which is not at present part of it. This is not fatal, but the difficulty does arise. So my own view at the moment is that the choice may well lie, at the end of the day, between the Bill as it stands and the Bill as it was originally introduced. However, we have an open mind on this matter, and perhaps the best course would be for us to return to this subject on Report, after we have all had an opportunity of considering the matter further.
6.28 p.m.
Lord HAILSHAM of SAINT MARYLEBONE: I am sure that the last piece of advice which we have received from the noble and learned Lord is the right one. This is one of the questions of principle, which in the end we must make up our minds about, and it is not altogether an easy one. Therefore I do not see why we should make up our minds about it today. There is, I think, a division of opinion, probably not corresponding exactly to Party differences, because there is no Party question in it. Probably in the end we shall have to have a Division—

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and a Division which would be a perfectly free vote for anybody who cares to take part in it. I do not think that we are quite ready to make up our minds at the present stage. I should like to put one or two thoughts in the minds of the noble and learned lord and the noble Lord. Lord Jacques, before we part from the question.
First, I think we are all agreed—at least I hope we are all agreed—that there should be no difference here between the law of England and the law of Scotland; in other words, once we have decided which way the burden of proof should lie, it should be the same for both parts of the island. Secondly, I quite see that there may be technical points of the kind that the noble and learned Lord has raised. I think that it would he more convenient—though I am open to conviction— either to decide that those who challenge an exemption clause should have to discharge some kind of burden, or that those who defend an exemption clause ought to discharge some kind of burden. I think the more complicated we make the Bill the less good it will be; and, therefore, let us have a perfectly straight decision as between the two burdens, and let it apply to all parts of the United Kingdom.
Now I have two criticisms, if he will allow me to say so, of the view at the moment of my noble and learned friend on the Cross-Benches. In the first place, I do not think that the contra proferentem analogy is a good one. The contra proferentem argument applies only where the words are ambiguous: where the words are clear, it has no application. Therefore, I do not think that we should be wise to pursue that ingenious and learned analogy. I think we must make up our minds about it. Assume that a clause has no ambiguity about it at all; that it says what it means and is intended to mean what is says; Are those who challenge the clause to have to discharge a burden before they can upset it, or are those defending the clause to have to discharge a burden before they can sustain it?
There are two more remarks I should like to make in relation to the speech of the noble and learned Lord the Master of the Rolls. Of course, if you visualise this with the small man being the consumer and the big man being the supplier,
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and the big man drafting a clause which is onerous on the consumer, it is easy to see the case for the burden of proof resting where the Commons have left it. But this, of course, is not necessarily the case, as the noble and learned Lord pointed out on Second Reading in relation to this Bill. Take, for instance, the case of professional negligence. Take the case of a solicitor who is advising a very large multinational company on a contract for the sale of land. We will come to this particular dispute a little later when I come to move an Amendment which stands in my name, but such a solicitor cannot insure against his liability. The possibility is that, if he is wrong and is guilty of even the smallest negligence, he may incur personal liability, because he is not a limited company, for £2 million or £3 million.
Is it really the case that he has got to defend a clause which says, "I will be limited to £50,000 to anyone for that piece of advice", as part of his normal terms of doing business? I think it is very hard to say so. You are imposing on the man absolute certainty of ruin unless he can discharge a burden which he has sought to avoid by what, in relation to a very large client, would be a very much more powerful negotiator, because lie has to choose between abandoning, perhaps, the most valuable client in his whole repertoire of clientele or else rendering himself liable, if' he keeps that client, to a form of liability which he could not possibly sustain and against which he cannot insure. So I do not think the case is as simple as the noble and learned Lord puts it.
The other point I should like to make is this. As the Bill is drafted—a fact which I did not spot at the time when I drafted the Amendment which is in my name afterwards—the guidelines do not apply to professional negligence. They do not apply at all, that is to say, to Clause 2, which would cover professional negligence. The result is that there are no guidelines to help the Master of the Rolls in his judicial capacity, to tell him what is reasonable or not. If, in addition to that, you are going to put the burden upon the party seeking to sustain an exclusion clause or a limitation clause, as well as leaving no guidelines at all to the court to help them as to the principles on which they are going to decide the question of reasonableness, you are in fact imposing a

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double burden on people where a single burden might well be thought to be enough in respect of what my noble friend Lord Selkirk referred to, from a speech of mine, as a leap to some extent in the dark.
The other point I want to make is that of course the problem, although it is a very acute one, is perhaps less important and rather more esoteric than might appear at first sight. If a person is charged with a criminal offence—let us say murder—it is perfectly simple to say that the burden of proof rests on the prosecution and the jury have got to acquit unless they feel certain he has done it. This is perfectly sensible and one of the great bastions of our liberty. But what is reasonable is not quite the same kind of question as whether a man is guilty of a criminal offence. It is a matter of opinion, and a matter of opinion is not in the ordinary sense, although it may be in strict law, a question of fact. One is therefore bound to ask the slightly metaphysical question as to what the burden of proof means in relation to something which is of its nature a matter of opinion, assessment and judgment. I doubt myself whether it means very much.
My view, for what it is worth, is that in matters of that kind courts ought to make up their mind one way or another, and that the judge who says, "I am in doubt so I am going to rely on the burden of proof", is probably a bad judge. I think a good judge will make up his mind without regard to the burden of proof, and will come down on one side or the other; because a doubtful judge is not a good one, in my experience. A judge is there to give decisions; and on matters of opinion or discretion my own view is that he should not haver between two opinions, lie should come down ultimately and say "Yes" or "No". My father once gave me advice, when I went to the bar, about writing opinions. He said, "They pay for your opinions and not your doubts", and I think that applies to judges as well as to barristers giving advice.
The LORD CHANCELLOR: Would the noble and learned Lord give way? Of course, the difficulty we have here is the difficulty of the pleadings. Who is to make the relevant submission on the burden of proof? That is a worrying
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feature which we cannot escape, I am afraid, by saying that the judges will find the right answer.
Lord HAILSHAM of SAINT MARYLEBONE: I think that is perfectly true, and my view, for what it is worth, is that, whatever way the evidence lies, it ought to be for the person deciding to rely upon the exclusion clause to plead it and that once it is pleaded it is for the party challenging that exclusion clause to say in his pleading that he is going to challenge it. I think an exclusion clause ought to be pleaded by the party relying on it and that, if not directly challenged in the pleadings, then it ought to be accepted. This is my own feeling about it, but once the issue appears, after issues are joined, it ought to be for the judge to make up his mind.
Of course, in the end we have got to come down marginally on one side or the other on this important question. I would say that the noble and learned Lord is right in asking us to postpone a Division. It is a relatively thin Committee, and this is a very highly technical problem. I do not think anyone who has heard this discussion would think it was altogether an easy one; and, therefore, my advice to my noble friend is to withdraw this Amendment—and, indeed, to my noble friend below the Gangway, not to move his—but for the Committee to recognise that we shall come back to this in some form on Report, when we shall probably have to have a free vote.
6.39 p.m.
Lord MORRIS of BORTH-Y-GEST: I, for my part, should like very much to follow the advice tendered by the noble and learned Lord, the Lord Chancellor, and echoed by the words just used by the noble and learned Lord, Lord Hailsham. I think there are difficult points here. I have a feeling at the moment that I am not disturbed by the proposals in the Bill, but I should like to keep an open mind on it for the time being. I intervene only to make a few observations, and to remind ourselves what the position was in 1973. As I follow it, there was a First Report of the Law Commission and following on that First Report there was passed the Supply of Goods (Implied Terms) Act 1973. One section of that Act modified the original Section 55 of the Sale of Goods Act. What was the result? I

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think I am right in saying that the result was that any exemption clause or any provision exempting from liability under Section 12 of the Sale of Goods Act was just void and there was an end to the matter.
In regard to Sections 13, 14 and 15, I think there was a split, somewhat on the lines proposed by the noble Lord, Lord Lyell, as between someone dealing as consumer and someone not dealing as consumer; for I think that the section provided that any term exempting from liability under Sections 13, 14 and 15, shall be void in the case of a consumer and shall in any other case not be enforceable to the extent that it is shown it would not be fair or reasonable to allow reliance on the term. It is interesting to see those words "to the extent that it is shown". Did Parliament then mean to put the burden on somebody who was relying on the exemption clause or not?
We see in Paragraph 7 of the Explanatory Memorandum of this Bill:
"The existing controls (in the Sale of Goods Act 1893 and the Supply of Goods (Implied Terms) Act 1973) on exclusions and restrictions of liability for breach of the obligations implied by law into contracts for the sale and hire-purchase of goods are, for convenience, restated in the Bill…".
If that is right, Clause 6 of the present Bill means what the provisions in the earlier Bill were intended to mean.
On the question of onus of proof, I agree entirely with what was said. It may be important, often, in deciding who has to begin in litigation; but I think it is useful to remind ourselves that in connection with this Bill there are two kinds of onus of proof. There is the onus of proof in regard to reasonableness and the onus of proof in regard to the question whether somebody was acting as a consumer. In the 1973 Act, the modified Section 55(8) of the principal Act was in these terms:
"The onus of proving that a sale falls to be treated for the purposes of this section as not being a consumer sale shall lie on the party so contending."
That provision, I think, is to he found in Clause 11(3) of the Bill as drafted.
Might it be a little embarrassing or might it be a little difficult to have different stages of onus of proof? Might it be better to have the onus of proof on the
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party relying on the exemption, who will be the party sometimes saying, "Oh, but this was not a consumer sale at all"? Might it be a good thing to have consistency throughout and to have the onus of proof on the party seeking to exempt himself from liability? While promising to keep an open mind, I have to, a large extent, the approach indicated by the noble and learned Lord, Lord Denning, the Master of the Rolls. We are dealing here with situations where liability must first be proved. Then, if there is no liability, well, cadit quastio; there is nothing further to be discussed. But if liability is proved, if there has been negligence, if there has been breach of contract, then it does not seem to me unreasonable if somebody is going to say, "Ah, but I exempt myself from liability". I do not think it is wholly unreasonable for the law to say, "The burden of proving that it was reasonable to impose the exemption lies on you who are seeking to exclude your liability". But I am sure it is good advice to keep an open mind, and I only mention these matters in regard to the 1973 Act in the hope that they throw some light on the questions which ultimately we shall have to decide.
Lord LYELL: We have had a tremendous debate on this particular aspect. I have noted the excellent, indeed noteworthy speeches, which will require study, not just by the various Members of the Committee, but, I believe, by all the advisers. For that reason I beg leave to withdraw the Amendment.
Amendment, by leave withdrawn.
Clause 8 agreed to.
Clause 9 agreed to.
Clause 10 [The "reasonableness" test]:
6.44 p.m.
Lord LYELL Lord LYELL moved Amendment No. 25:
Page 5, line 34, leave out ("and") and insert ("or").
The noble Lord said: In moving this Amendment I should like to speak also to Amendment No. 29. These two small Amendments, we hope, will remove some small inconsistencies between clauses in the Bill and between this Bill and earlier legislation. It seems that the Sale of

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Goods Act 1893, in Section 55(5) (which is amended by the 1973 Act) refers to "fair or reasonable" in Part II which is the Scottish aspect of this Bill. In Clauses 15, 16, 17, 19, 20, 21 and 22 there are references to "fair or reasonable" Clause 24, which applies to the whole of the United Kingdom, appears to refer to "fair or reasonable" as well. Should not Amendment No. 25 together with Amendment No. 29 be accepted? I am seeking guidance from the noble and learned Lord, Lord McCluskey, concerning the difference between "fair or reasonable" under Scottish law and "fair and reasonable" under the English legal rules outside Scotland. I beg to move.
Lord JACQUES: We did not think this Amendment would make any difference. We find if difficult to imagine that a court would find that a term was fair but not reasonable, or that a court would find it reasonable but not fair. We think the correct term is "fair and reasonable"; but there are inconsistencies, as has been pointed out by the noble Lord, and we should like to look at those inconsistencies.
Lord LYELL: If the noble Lord is saying that he will look at these inconsistencies, I am grateful. The noble Lord, Lord Jacques, will see that the term "fair or reasonable" is used entirely in Scottish legislation. I accept what the noble Lord, Lord Jacques, has said regarding a term being "fair or reasonable" or "fair and reasonable", or a combination of both. What concerns me as a non-lawyer is that clearly under the Scottish section of this legislation and under the English, Welsh and Northern Irish part of the Bill there is a distinction. I wondered what it was, and why it is "fair or reasonable" in Scottish legislation and "fair and reasonable" in English legislation. I accept that the noble Lord is going to study it.
Lord JACQUES: In English law it is customary to use "and" in this particular case and in Scottish law it is customary to use "or". As I said earlier, it will make no difference.
Lord MORRIS of BORTH-v-GEST: I rather agree with the noble Lord, Lord Jacques. If this matter is being looked at again, might it be useful then to have in mind the section of the Act of 1973 to
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which I referred? May I read the relevant words? The new subsection (4) of the modified Section 55 of the Sale of Goods Act reads:
"(4) In the case of a contract of sale of goods, any term of that or any other contract exempting from all or any of the provisions of section 13, 14 or 15 of this Act shall be void in the case of consumer sale and shall, in any other case, not be enforceable to the extent that it is shown that it would not be fair or reasonable to allow reliance upon the term".
I found those words difficult to construe. It may be that though they say there: "fair or reasonable", the exemption clause probably has to be both "fair and reasonable". If this matter is being looked at again, it will be useful to have that section in mind.
Lord LYELL: I am grateful for the contribution of the noble and learned Lord, Lord Morris of Borth-y-Gest. I am sure he joins the rest of the Committee in thanking the noble Lord, Lord Jacques, for his comments. We will study what the noble Lord has said. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.51 p.m.
Lord LYELL Lord LYELL moved Amendments Nos. 26 and 27:
Page 5, line 35, after first ("to") insert ("all").
Page 5, line 35, leave out from ("circumstances") to end of line 37 and insert ("of the case").
The noble Lord said: I hope that it will be for the convenience of the Committee if I move Amendments Nos. 26 and 27 together, and couple with them Amendment No. 62. Amendments Nos. 26 and 27 deal with the English and Welsh aspect of the Bill. Amendment No. 62 deals with the Scottish aspect. The Bill as drafted adopts the recommendation of the Scottish Law Commission that the reasonableness of a term which is contained in a contract should be judged by reference to the circumstances at the time of the contract. However, the Law Commission for England and Wales considered that regard should be had to all the circumstances of the case. That appears on page 71 of the English and Welsh Law Commission's Report.
Amendments Nos. 26 and 27, regarding the English legislation, seek to give effect to the recommendations of the Law

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Commission for England and Wales in relation to that particular aspect of the law. The purpose of all the Amendments is to enable the courts to take into account all the circumstances of the case in assessing the reasonableness of the terms. This would include, where appropriate, any factors arising after the contract was made. It might happen that what seems reasonable when a contract is made turns out many years later to be totally unreasonable in the light of changed circumstances or events.
The courts should be allowed sufficient flexibility of approach to prevent any enforcement of such terms in circumstances which could not have been foreseen by the parties. However, the courts may also give effect to a term which at first appeared unreasonable. To take into account matters arising after the date of a contract, we believe is not a new departure in the law. It seems the courts already do so in assessing damages, and also in determining whether a breach has been committed, and finally in determining the nature of the breach, the remedies available and the effectiveness of an exemption clause.
If it is the wish of the Committee that we adopt the test recommended by the Scottish Law Commission, then there is an inconsistency between Clause 10(1) for England and Wales, and Clause 22(1) for Scotland. In the latter category, Clause 22(1), we find:
"…regard shall be had only to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties to the contract at the time the contract was made".
In the English aspect of this legislation, Clause 10(1), the word "only" is missing. We hope that the third of our Amendments cures that inconsistency. This is of necessity somewhat complicated, and for my part I apologise to the Committee. I beg to move.
Lord DENNING: I should like to support this Amendment. It is a matter on which there was a division of opinion between the Law Commission of England and Wales and that of Scotland. It has arisen already for our consideration in the courts in a similar connection: a contract in restraint of trade or, for instance, a servant leaving his imployment being
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restrained afterwards from competition, and so forth. That is only valid if it is reasonable.
In considering whether it is reasonable, we often say: "It is not unreasonable at the time of the contract". Although hypothetical or fanciful situations in which it might operate unreasonably could be suggested, we say that that is not going to strike down the clause as a whole. We are not going to strike it out as being unreasonable. But it happens from time to time that in relying on a clause which appeared reasonable at the time the contract was made, the parties to a case enforce it unreasonably. The English Law Commission have said: "The courts can consider the position as it actually arises at the time when the facts have happened. Does it operate unreasonably or not at that time?"
There may be a difference of opinion about it, but I suggest that the courts can consider it not only at the time when the contract was originally made, but also at the time when it is sought to enforce it unreasonably against an individual. The Law Commission of England have gone through the various reasons in paragraphs 78 to 184. I happen already to have quoted them myself in one or two cases in the courts. Although it is differing from the Scottish Law Commission, I hope that this Amendment will be supported so as to give effect to what the Law Commission of England recommended. Therefore it will be declared wrong if it is not only unreasonable at the time of' making the contract, but if it is sought to be enforced unreasonably in the circumstances of the case.
The LORD CHANCELLOR: These Amendments would, with respect, alter fundamentally the formulation of the reasonableness test, both in the English Part I and, consequentially, in the Scottish Part II of the Bill. We gave great thought to this. It was unfortunate that there was a difference of view between the English and the Scottish Law Commissions. I and the Promoters of the Bill came down in favour of the Scottish version. These Amendments, if accepted, would allow the courts to take into account circumstances which, although existing at the time the contract was made, were neither known nor could have reasonably been known to the parties when entering into

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the contract. I fear that this would go unacceptably wide. It could produce unfair results. It alters the fundamental policy of the Bill, which was accepted by the House on Second Reading and which has been accepted in another place. I therefore urge the Committee to reject these Amendments, in view of a consequence of unfairness and uncertainty in the whole contractual field with which we are concerned, which would be highly unsatisfactory.
Lord LYELL: I am grateful for the reply of the noble and learned Lord opposite. I must say my heartbeat rose when I heard support from the noble and learned Lord, Lord Denning. I accept the argument of the noble and learned Lord opposite. We would not wish to press these Amendments at this stage. We should like to consider what the noble and learned Lord has said. Therefore I beg leave to withdraw these Amendments.
Amendments, by leave, withdrawn.
7 p.m.
Lord LYELL Lord LYELL moved Amendment No. 32:
Page 6, line 7, at end insert:—
("Provided always that if the party so claiming proves that in the case of written standard terms of business, the contract term or contract terms have been approved by the Director-General of Fair Trading, following consultation with the appropriate consumer organisation or consumers organisations or other appropriate organisations acceptable to the Director-General of Fair Trading, then, until such approval is withdrawn, such contract terms so approved shall be deemed to satisfy the requirement of reasonableness").
The noble Lord said: We have reached an Amendment which is concerned with the insertion of quite a lengthy subparagraph. The purpose of this Amendment is to see whether, in particular contracts which are drawn up as between consumers and large organisations, it would be possible for standard terms, or even exemption terms, to he agreed beforehand by reference to an outside, possibly quasi-legal authority. It has been suggested that the Restrictive Practices Court might vet similar standard terms, if one might so describe them. We wondered whether the Director-General of Fair Trading might be a suitable person to consider such contracts where a consumer might be acquiring, buying or taking services. We have
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particularly in mind services in the form of travel and holidays, inclusive tours and the like.
I think that Members of the Committee will see what form this pleading is taking; but certainly it might be for the convenience of the courts, and might obviate a great deal of lengthy and acrimonious litigation between consumers and business organisations, if such standard terms were readily available to the consumer and could be vetted, as I have said, beforehand by a quasi-legal authority such as the Restrictive Practices Court. In this case, as I said, we believe it would be more apposite to bring in the Director-General of Fair Trading.
This is an Amendment of more substance than many of the others standing in my name. I should like to apologise to the noble Lord, Lord Jacques, and to the noble and learned Lord for the brevity of notice concerning this Amendment, but we look forward to hearing the view of the Government on this aspect of goods and services supplied to a consumer. I beg to move.
Lord AIREDALE: I expect it may already have occurred to the noble Lord, Lord, Lyell, or at any rate it will perhaps he a comfort to him, that even if this Amendment were not agreed to it would be open to the plaintiff mentioned in this Amendment to call as a witness in this case the Director-General of Fair Trading, or one of his assistants, to say they have given their blessing to the terms of the contract; and on the strength of that he would probably win his case.
The LORD CHANCELLOR: This is an intriguing suggestion, to take it out of the hands of the courts and give the determination of it to the Director-General of Fair Trading. It is a very remarkable proposition but, of course, what is remarkable is sometimes practicable. However, I fear that this would not be.
What is suggested is a sort of voluntary system of prior validation of contract terms by the Director-General of Fair Trading, in consultation with others. I quite agree with the noble Lord, Lord Airedale, that the Director-General, if he was willing to help, might be called as a witness. However, that is not a practice

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I would seek to encourage by giving it support, because the Director-General would have other things to do. I suppose it might be said that what is proposed is rather similar to the Director-General's present procedure for negotiating codes of practice; but what will work in one area will not, alas! necessarily work in another.
Codes are a compromise between what the Office of Fair Trading believe a consumer ought to have and what the trade feels it can give. That does not matter so much with codes because they merely provide a framework in which business relations can be conducted. They do not prejudge specific issues, nor do they prevent either side going to law, as the Amendment proposes to do. I feel that standard terms of business are a quite different matter. What would be validated would be the terms to be used in specific situations, but all that could be considered at the time of validation would be the fairness or otherwise of the terms in general. One set of terms combined with another could be grossly unfair, yet reasonable if placed in another factual context. One set of terms could be fair and reasonable in certain circumstances, but the contrary in others.
The Law Commission in their Second Report considered prior validation and decided against it, I think rightly. They took the view that it would be cumbersome and costly to administer, and that it could give rise to injustice because it would be confined to generalities, whereas of course the court would look at the facts and the specific circumstances of each case that came before it. My advice to the Committee is: Let us give the Bill a chance first. The disadvantages of a system of validation seem to me to outweigh its advantages, and I cannot really think of a situation where one would willingly introduce it. Accordingly, while the idea is an interesting one, I hope it will not be pressed to a Division.
Lord LYELL: I am very grateful to the noble and learned Lord. I think even he believes in miracles if he thinks that we would press this to a Division at this stage in the evening, and indeed after the excellent explanation which he has given. I have a great deal more "backing" literature with this brief, but I
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certainly would not attempt to burden the Committee with it at this stage. I would seek to read what the noble and learned Lord has said, and also to note the comments of the noble Lord, Lord Airedale. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 10 agreed to.
Clause 11 agreed to.
Clause 12 [Varieties of exemption clause]:
7.7 p.m.
Lord LYELL Lord LYELL moved Amendment No. 35:
Page 6, line 24, leave out ("prevents") and insert ("affects").
The noble Lord said: I shall be very brief here. I should like to speak to Amendments Nos. 35, 36 and 38. With regard to all those Amendments, we wonder whether the word "prevents" is strictly accurate in this particular context and we wonder whether the word "affects" would not cover both types of control mentioned in this clause.
Lord JACQUES: We have had a look at these Amendments, but we feel that in each case it does "prevent"; and if it prevents, why say "affect"?
Lord LYELL: I thank the noble Lord, Lord Jacques. We wondered whether the word "prevent" was apposite or accurate here. I certainly do not want to go into semantics now. I hope that the noble Lord, Lord Jacques, will allow me to study this, to obtain far better semantic advice and to come back at a later stage, particularly in view of the number of detailed Amendments of this nature that I have put down. I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Lord LYELL Lord LYELL moved Amendment No. 37:
Page 6, line 26, at end insert ("unduly").
The noble Lord said: This Amendment is one of slightly more substance and, with the leave of the Committee, I should like to speak to Amendment No. 70 at the same time. It seems that in business and

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sometimes in consumer transactions, we find that a term in the contract allows the supplier of goods or services not to accept liability for loss or damage unless he is notified of that loss or damage and the claim is substantiated in writing within a specific period. The purpose of these clauses is to encourage a claimant to pursue his claim with diligence. It is beyond reasonable doubt that a claimant must indeed adopt all possible speed in pursuing his claim; otherwise, the passage of time will create major difficulties of proof one way or the other. Further, if a supplier wishes to be able at some point to regard a transaction as completed, he is not able to do so. We believe that this is a matter of business efficiency.
In some cases, limitation is placed upon the amount to which a supplier w ill accept liability for insurance purposes. But this is a matter concerning insurance companies, and we had a powerful reminder from my noble and learned friend Lord Hailsham that we should not delve too deeply tonight into matters pertaining to insurance companies, although what he said was particularly relevant. Such clauses, which purport to exclude some liability in business transactions, are not necessarily by themselves, unreasonable, but some may be framed with conditions which are unnecessarily or unduly harsh. The purpose of these two Amendments is to make it absolutely clear that the Bill applies solely to unreasonable conditions of this type, and not to all restrictive conditions. Noble Lords will see that Amendment No. 37 applies to English and Welsh law, and Amendment No. 70 applies to Scottish law. I beg to move.
Lord JACQUES: Many of the clauses subject to control in the Bill, as excluding or restricting liability, are subject to the test of reasonableness. This Amendment would impose what is, in effect, a preliminary test of reasonableness for exemption clauses which take the form of imposing restrictive conditions on enforcement of liability. The court would have to determine whether or not they were unduly restrictive or onerous, and, if they were, the test of reasonableness would apply. This is obviously unnecessary, as well as being undesirable. In the case of those terms which are made void, any restriction on the rights of the party suffering loss or injury is ipso facto unduly restrictive.
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If it is considered that restrictions on the right of the injured person can be reasonable, surely the appropriate control would not be to render them void.
Lord LYELL: I thank the noble Lord, Lord Jacques, for his reply. Many of us believe that the Amendment would provide a first hurdle to be cleared in this question of reasonableness. However, there is considerable merit in the noble Lord's reply and I should like to read what he has said. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 12 shall stand part of the Bill?
7.14 p.m.
The LORD CHANCELLOR: May I make a brief observation on Clause 12 stand part, in order to mention arbitration clauses? As the Committee will be aware, during the Report stage of the Bill in another place the Minister of State for the Department of Prices and Consumer Protection announced that, subject to consultation with any interested bodies, consideration would be given to amending the Bill in order to provide that an agreement requiring a consumer to submit any future difference to arbitration should be voidable at the instance of the consumer. Strong support for such an Amendment has been received from the National Consumer Council and the Consumers' Association.
The only opposition which we have heard about has come from the Association of Consulting Engineers, whose model contract recommended for use by its members contains a clause which, if it is accepted by the client, binds him to accept arbitration in the event of a future dispute. The Association argues that the present arrangements work well and are quicker and cheaper than recourse to the courts, in a situation which almost invariably involves the technical advice of expert witnesses. But of course the client, if he is persuaded of this, is always free to accept arbitration to a dispute after it has arisen. The Government are therefore still considering whether an Amendment as proposed would cause any real difficulty, and it may be that I shall he able to table an appropriate Amendment

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on Report. But, in the meantime, I would certainly consider any further representations which may be made before a final decision is reached.
Lord HAILSHAM of SAINT MARYLEBONE: I should be sorry if this clause were altered. Arbitration is a very valuable alternative to litigation, and it has been the policy of Parliament for a very long time, since 1889, to give arbitration clauses increasing effect. It is the case that we, almost alone of European countries, limit the right of arbitration to an extent which in European countries is quite exceptionally severe. Our European partners, on the whole, give much greater effect to arbitration clauses than we do, and exclude the jurisdiction of the courts to a much greater extent. I do not think that our enthusiasm for consumer rights and protection ought to lead us to take a retrogressive line as regards arbitration as an alternative to litigation. It might go a very long way in the wrong direction.
In small cases, I suppose that it would not matter very much one way or the other. But only the other day, we were being pressed—certainly, during my Lord Chancellorship—to have what was called a special court, but was in effect a statutory arbitration, in respect of small consumer claims. These various pressure groups, who purport to act on behalf of the consumer, are usually very vulnerable to arguments which apply only to a particular section of consumers, and in a Bill of this sort, which covers every kind of service for which there may be liability for negligence, liability for breach of statutory duty or liability for breach of warranty, to seek to interfere with the process of arbitration as an alternative to litigation would be a much more serious matter than some people realise.
Lord DENNING: I should like to say a word to the same effect, because arbitration has proved a most valuable way of resolving disputes. We interfere far more than other countries with arbitration awards, and in that respect other countries think that we are retrograde. In those circumstances, I hope that the clause will be retained as it is.
The LORD CHANCELLOR: I will, of course, take on board what has been
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said. I know the expertise of the noble and learned Lord, Lord Hailsham, in the field of arbitration, and of course the experience and expertise of the noble and learned Lord, Lord Denning. I will bear these in mind before we come back to this matter on Report.
Clause 12 agreed to.
Clause 13 [Interpretation of Part I]:
7.19 p.m.
Lord AIREDALE Lord AIREDALE moved Amendment No. 39A:
Page 6, line 40, after ("the") insert ("business").
The noble Lord said: I apologise for this being a manuscript Amendment. It is identical to Amendment No. 67 to Clause 23. I am afraid that I failed to observe that Clause 23 is the interpretation clause which applies to the Scottish part of the Bill, and what I intended was to introduce this Amendment into this clause, which is the general interpretation clause. It is a probing Amendment to try to resolve what appears to be an ambiguity in the clause as drafted.
The clause states:
"'business' includes … the activities of any … public authority".
The question is whether that means the business activities of any public authority or all the activities. While public authorities carry out many quite normal business transactions—as, for example, when the local authority empties your cesspool and charges for the service—many of the activities of public authorities have nothing to do with business of any kind. Therefore it seems to me that we ought to say either "business activities" or "all the activities", and that we ought not to leave it ambiguous. I have plumped for the intention being to restrict it to business activities. I may have backed the wrong horse—I usually do —but I feel that we should resolve the question by writing this into the Bill. If we leave it to the courts to decide what those words mean, with the best will in the world the courts may get the answer wrong. I beg to move.
Lord JACQUES: I take it that the purpose of the Amendment is to exclude from the scope of the Bill the non-trading activities of Government Depart-

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ments, both local and national, although the Amendment deals only with the definition of "business" for the purposes of Part II of the Bill, the part dealing with Scottish law, subject, of course, to the manuscript Amendment which we now have dealing with English law.
The application of the Bill to the terms and conditions used by Government Departments and local and public authorities in the course of non-trading activities follows the recommendations of the Law Commissioners in paragraph 203 of the report. They give their reasons in paragraph 201. First, persons dealing with these bodies will usually not be of sufficient bargaining strength to negotiate reasonable terms and conditions. Secondly, unlike purely private transactions, which are generally exempt from control under the Bill, there is no social relationship between a public authority and an individual which provides an incentive to protect the interests of the recipient of the service. Finally, public bodies are set up to serve the public and it must have been intended that they should carry out their functions properly. The law imposes on them a duty to take reasonable care and it does not seem appropriate that they should be able to exclude their liability without any control. It might be argued that where public bodies provide services free of charge they should be entitled to exclude their liability for negligence, but I do not think that to draw a distinction between the voluntary activities of a businessman and those of a public body would be justified. In both cases the law imposes a duty to take reasonable care, and in both cases an attempt to exempt from liability for breach of that duty should be subject to control—that is, subject to the Bill.
Lord HAILSHAM of SAINT MARYLEBONE: I rather agree with what the noble Lord, Lord Jacques, has said. I take the broad view that what is sauce for the goose is sauce for the gander. If we are going to apply to private bodies medicine of the kind administered by this Bill, public bodies must be prepared to accept their own share of the dose. I can reinforce what the noble Lord, Lord Jacques, has said only by reference to one of the cases in which this House has had to make a determination in its judicial capacity. A very large number
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of bodies are included in the phrase "public bodies"—not only local authorities and Government Departments but railway companies, now that they are nationalised, gas, electricity and coal boards and, I have no doubt, the air authority (the name of which I have for the moment forgotten) which the noble Lord, Lord Beswick, ornaments. I am glad to see him here. I do not think that these bodies should be exempt from liability if the ordinary businessman, or professional man or the owner of a small sweets and tobacco shop is not exempted, too.
Lord AIREDALE: The arguments prove that I did back the wrong horse, and that does not surprise me at all. I was not advocating that this should be limited to the business activities of public authorities. I was merely drawing attention to an apparent ambiguity and probing the matter. May I urge the noble Lord, Lord Jacques, to consider the point that if we do not put into the definition all the activities of a public authority, and what was meant by this definition of the word "business" has to be decided by the court, there is a danger that the court may say that in their definition of the word "business" Parliament must have been referring to business activities. So at the next stage do let us resolve this ambiguity by inserting the words "all the activities", and then we shall not have to leave it to the courts to try to find out what we intended.
Lord JACQUES: The point raised by the noble Lord will be looked at.
Lord AIREDALE: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.26 p.m.
Lord LYELL Lord LYELL moved Amendment No. 40:
Page 6, line 41, at end insert ("or statutory undertaker").
The noble Lord said: In speaking to this Amendment perhaps I may also speak very briefly to Amendment No. 68 and to Amendments Nos. 97 and 98, all of which stand in my name. All four are very simple, brief and, I hope, swift Amendments in which we seek from the noble Lord, Lord Jacques, an explanation of

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why the phrase "statutory undertaker" is not going to be used in this Bill and why, indeed, it is to be removed from earlier legislation. I wonder whether the noble Lord, Lord Jacques, can give us guidance on this point. I beg to move.
Lord JACQUES: In this Bill we have used the term "any public authority" which includes the statutory undertaker and avoids ambiguity. In consequence, the Amendment is unnecessary.
Lord LYELL: I am grateful for the noble Lord's reply, which I shall study. Certainly it was kind of the noble Lord to reply so quickly tonight. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord LYELL Lord LYELL moved Amendment No. 41:
Page 7, line 7, leave out ("or pretended communication").
The noble Lord said: Could the noble Lord give me some indication of what is a "pretended communication"? This is not vicarious or mischievous; it is akin to the charge which was often levelled against me as a young soldier, of attempting to deceive an officer when, indeed, I had. Could the noble Lord explain what is the relevance of a "pretended communication"? I beg to move.
Lord JACQUES: I have great sympathy with the noble Lord—I feel exactly the same as he does about it; so I will read to the Committee the brief which has been prepared by my legal advisers.
A person may exclude or restrict his liability by giving notice, and the exclusion or restriction of liability may be affective, even though the injured person was not actually aware of its exact terms, as long as the person seeking to exclude or restrict his liability took reasonable steps to draw the exemption to his attention. Thus it is necessary for the definition to include a reference to something rather less than an actual communication. I am advised that these are apt words to achieve the right result. I hope that with this explanation the noble Lord will withdraw his Amendment.
Lord LYELL: I am grateful for the very full explanation which the noble Lord,
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Lord Jacques, has given. I shall have to study the Bill considerably further to discover whether the noble Lord's explanation covers a consumer. I hope that his explanation does not affect the consumer, otherwise we shall be in all sorts of deep, not to mention hot water. I am grateful to the noble Lord, Lord Jacques, and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 13 agreed to.
Clause 14 [Scope of Part II]:
7.30 p.m.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey)The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey) moved Amendment No. 44:
Page 7, line 14, leave out from beginning to ("sections") and insert—
("is subject to Part III of this Act.
( ) Subject to subsection (2) below,").
The noble and learned Lord said: This Amendment is required because Part III of the Bill contains various provisions exempting contracts from the controls in Parts I and II. For this reason the provisions of Part II require to be qualified by a general reference to Part III and that is what this Amendment does. The reference to Clause 26 in the present draft of the Bill should be absorbed into that wider reference. There is no English Amendment corresponding to this one. I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 45:
Page 7, line 17, leave out ("provides for") and insert ("relates to").
The noble and learned Lord said: In moving Amendment No. 45 I should like to mention at the same time Amendments Nos. 48 and 60, which are to the same effect. These are all drafting Amendments. At present it is provided that Clauses 15 to 17 apply to any contract only to the extent that the contract
"provides for the transfer of ownership or possession of goods"
et cetera or
"provides for services".
To use the shorthand term, an exemption clause in a contract (which is, in general, the type of contractual term which is subject to controls in Clauses 15 to 17)

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cannot happily be said to "provide for" these matters and it is thought that the expression "relates to" expresses the relationship rather better. I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 46:
Page 7, line 20, leave out from ("them);") to end of line 23.
The noble and learned Lord said: I can take this Amendment very briefly. It is simply a drafting Amendment which is intended to remove words which we now consider to be unnecessary. The whole substance of Clause 14 (1) (a) (ii) seems to be covered either by what is now Clause 14(1)(a)(i) or Clause 14(1)(c). Accordingly it is unnecessary to continue to have this phrase in the Bill. We simplify the Bill by removing the phrase. I beg to move.
On Question, Amendment agreed to.
Lord LYELL Lord LYELL moved Amendment No. 47:
Page 7, line 24, leave out paragraph (b).
The noble Lord said: I hope it may be for the convenience of the Committee if I speak also to Amendments Nos. 86 and 90. I have a list from the usual channels which seems to me to convey various other points somewhat apart from those to which I wish to speak. I do not know whether the noble Lord, Lord Jacques, or the noble and learned Lord, Lord McCluskey, would mind if I were to take the first three Amendments independently because it seeems to me they are concerned with contracts of service. My Amendments Nos. 87 and 90 and Amendment No. 86 tabled by the noble Lord, Lord Jacques, seem to be fairly long and fairly substantial so I am wondering whether it would be for the convenience of the Committee if I were to speak to Amendment No. 47 and also Amendments Nos. 87 and 90. I will attempt briefly to cover these three Amendments which seem to be relevant to the one particular point. We wonder whether it is appropriate for a Bill such as this, dealing mainly with contracts for the sale and supply of goods and services, to contain provisions relating to contracts of employment. We wonder whether this would not create some difficulties, not only for those who seek to
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rely upon this small provision but also for those who are responsible for applying it. We think it is preferable for all legislation dealing with employment contracts to be contained in legislation which would be identifiable as emanating from the Department of Employment and not as a reference in this Bill, which could deal with a question of services. We believe that contracts of employment should be taken from the Department of Employment. I hope this is not too semantic a point. I beg to move.
Lord JACQUES: The Scottish Law Commission in paragraph 327 of the report recommended that the scope of the proposed control over negligence should apply to contracts of service and apprenticeship. Similarly in the case of the other two Amendments the English Law Commission did the same as their Scottish colleagues specifically in relation to the liability of an employer to his employee—see paragraph 329 a of the report. It is clearly right that this should be so since an employee should be as much entitled to the protection afforded by the Bill in the case of negligence as any other person. For example, he should be in the same position as a consumer or another businessman so far as his employer is concerned. These Amendments would make serious inroads into the social policy underlying the Bill if they were accepted. We hope that with this explanation the Amendment will be withdrawn.
Lord LYELL: It is a certainty that the Amendment will be withdrawn but I should like to study what the noble Lord has said. I found it a little difficult to follow the entire argument, but I think probably the noble Lord had merit in his points and I now seek leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 48:
Page 7, line 25, leave out ("provides for") and insert ("relates to").
The noble and learned Lord said: I spoke to this Amendment when I moved Amendment No. 45, so I now formally move Amendment No. 48.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 49:
Page 7, leave out lines 34 and 35 and insert ("(i) relates to the creation, transfer or termination of any estate or interest in or right in or over land;").
The noble and learned Lord said: I think this is simply a provision in the Scottish part of the Bill corresponding to Amendments and provisions in the English part of the Bill. The only separate Scottish points are two short ones. At present there is no reference in Clause 14(2)(a)(i) to the termination, as distinct from the creation or transfer, of any right or interest in land; for example, the discharge of a standard security, the renunciation of a lease or—although it may not be a contract—theconsolidation of two separate heritable estates resulting in the extinction of the doininium utile. For completeness, the Amendment includes a reference to such a termination.
The other small point is that as at present drafted Clause 14(2)(a)(i) refers only to a "right or interest" in land. As there may be some doubt whether a separate heritable estate, such as a superiority in the Scottish land law or salmon fishings, would be included, a reference has been made in the Amendment to an "estate … in land". This is precedented; one finds a similar reference in Section 20(1) of the Offshore Petroleum Development (Scotland) Act 1975. I beg to move.
The Earl of SELKIRK: I take it these are purely drafting points?
Lord McCLUSKEY: The points to which I have spoken are purely drafting.
On Question, Amendment agreed to.
7.39 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 50:
Page 7, leave out lines 38 to 40 and insert ("(iii) relates to the formation, constitution or dissolution of any body corporate or unincorporated association or partnership").
The noble and learned Lord said: Again, this is related to a matter which I think will be more fully discussed when we come to Amendment No. 86. The Amendment is required to keep Clause 14 in line with the Amendment tabled by my noble friend Lord Jacques to Schedule 1, applying to England, Wales and Northern Ireland. At present Clause 14(2)(a)(iii) refers to a
496
contract which provides for "the formation or dissolution of a company" or relates to its management or constitution. The main effects of the revised wording are to bring within the terms of the exceptions provided for in the Bill unincorporated associations and partnerships and to remove the exemption of contracts relating to the management of a company. I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendments Nos. 51 to 53:
Page 8, line 3, leave out second ("or").
Page 8, line 5, at end insert—
("or,
a contract to which subsection (3) below relates,").
Page 8, line 13, at end insert—
("(3) This subsection relates to a contract in pursuance of which goods are carried by ship or hovercraft and which either—

(a) specifies ship or hovercraft as the means of carriage over part of the journey to be covered; or

(b) makes no provision as to the means of carriage and does not exclude ship or hovercraft as that means,

in so far as the contract operates for and in relation to the carriage of the goods by that means").
The noble and learned Lord said: With the leave of the Committee, I will take Amendments Nos. 51, 52 and 53 together. They are all in the same category. They correspond in Part II, the Scottish Part, to changes made in Schedule 1 by Amendment No. 86, to be moved in due course by the noble Lord, Lord Jacques. I beg to move Amendments Nos. 51 to 53 en bloc.
On Question, Amendments agreed to.
Clause 14, as amended, agreed to.
Clause 15 [Liability for breach of duty]:
7.42 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 54:
Page 8, line 17, after ("purposes") insert ("of the occupier").
The noble and learned Lord said: This Amendment again is formal. It is the same Amendment as was made to Clause 1, which I believe was No. 5. I would in due course make the same Motion in respect of No. 58, where the

497
point is exactly the same. For the moment I beg to move Amendment No. 54.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 55:
Page 8, line 21, at end insert ("(1A) Subsection (1)(a) above does not affect the validity of any discharge and indemnity given by a person, on or in connection with an award to him of compensation for pneumoconiosis attributable to employment in the coal industry, in respect of any further claim arising from his contracting that disease").
The noble and learned Lord said: This again is one of the Amendments to the Scottish Part of the Bill which corresponds to an Amendment yet to be spoken to in Schedule 1; namely, No. 86. Perhaps I should briefly say, however, that the Amendment is required to avoid bringing within the control of Clause 15(1) the existing arrangement whereby a miner who fulfils the qualifying conditions and who has contracted pneumoconiosis is entitled to claim compensation without having to prove negligence by his employers; and in return, under a scheme which has been agreed between the National Coal Board and the unions, he relinquishes any common law rights against the National Coal Board which he may have then or in the future in respect of the pneumoconiosis. The Amendment snakes it clear that the Bill is not to affect the validity of any discharge given by a claimant so far as regards future claims under and in terms of such a scheme. I beg to move.
On Question, Amendment agreed to.
Clause 15, as amended, agreed to.
Clause 16 agreed to.
Clause 17 [Unreasonable indemnity clauses in consumer contracts]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 57:
Page 9, line 5, leave out ("his own").
The noble and learned Lord said: This follows exactly the terms of Amendment No. 12, which has already been spoken to, which was an Amendment to Clause 4. I can content myself with moving it formally. I beg to move.
Lord DRUMALBYN: I take it that the noble and learned Lord moves it for
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acceptance on the same terms as Lord Jacques moved his Amendment; namely, that the resulting status of the words will be considered before the next stage?
Lord McCLUSKEY: Yes, I should have made that clear. I am much obliged to the noble Lord.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 58:
Page 9, line 10, at end insert ("of the occupier").
The noble and learned Lord said: I mentioned this Amendment when I moved Amendment No. 54. I beg to move.
On Question, Amendment agreed to.
Clause 17, as amended, agreed to.
Clauses 18 and 19 agreed to.
Clause 20 [Obligations implied by law in other contracts for the supply of goods]:
The DEPUTY CHAIRMAN of COMMITTEES (Earl Cathcart): Amendment No. 60. There is a mistake on the Marshalled List. It should be line 28, not line 38.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 60 (as amended):
Page 10, line 28, leave out ("makes provision such") and insert ("relates to any such matter").
The noble and learned Lord said: This Amendment is consequential upon Amendments Nos. 45 and 48. It is purely drafting at this stage. I beg to move.
On Question, Amendment agreed to.
Clause 20, as amended, agreed to.
Clause 21 [Consequences of breach]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 61:
Leave out Clause 21 and insert the following new clause:
Consequence of breach.
("21. For the avoidance of doubt, where any provision of this Part of this Act requires that the incorporation of a term in a contract must be fair or reasonable for that term to have effect—

(a) if that requirement is satisfied, the term may be given effect to notwithstanding that the contract has been terminated in consequence of breach of that contract;

499

(b) for the term to be given effect to, that requirement must be satisfied even where a party who is entitled to rescind the contract elects not to rescind it").

The noble and learned Lord said: This is a slightly more substantial matter. Clause 21 was intended to give guidance on the application of the reasonable test in two sets of circumstances. The circumstances are, first, where a contract is terminated in consequence of a fundamental breach; and, second, where it could have been so terminated had not the party entitled to do so chosen not to exercise his right. In the first case the termination of the contract is not to affect the application of an exemption clause where that satisfies the requirement of reasonableness.
In the second case the decision not to terminate the contract is not of itself to be taken as declaring the inclusion of the clause to have been fair and reasonable. This must be subject to the normal test. Paragraph (a) of the new Clause 21 is intended to clarify the wording of the first part of the clause as it stands in the Bill. Paragraph (b) covers the contingency met by Clause 9(2) in Part I. The second part of the existing Clause 21 appears now to contain wholly unnecessary provisions and accordingly that may be dropped. I beg to move.
Lord HAILS HAM of SAINT MARYLEBONE: May I ask whether this is a provision which applies solely to Scotland, or in what way does it relate to the law of England as it will be when the Bill becomes law?—because I should not like the two laws to diverge.
Lord McCLUSKEY: I venture with considerable trepidation into an answer to that question, because it involves saying something about English law. As I understand the position, under English law there is some uncertainty as to whether when a contract is terminated in consequence of a breach of contract an exemption clause contained in the contract is thereby automatically rendered invalid. In Scotland there have been very few cases dealing with this subject, and where there may be uncertainty in English law there is perhaps even greater uncertainty in Scots law. In these circumstances, the Scottish Law Commission, in Paragraph 210, recommended
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that for Scotland the matter should be put beyond doubt. That is why the new Clause 21 begins with the words "For the avoidance of doubt". Perhaps for completeness I should mention that it is Clause 9 in the present Bill which deals with the matter in relation to England.
Lord HAILSHAM of SAINT MARYLEBONE: Yes, I think it does. As long as the noble and learned Lord and the noble and learned Lord the Lord Chancellor get together before the Report stage and are then in a position to tell me that the two laws are now going to be the same, although expressed in slightly different language, I shall be perfectly content.
Lord McCLUSKEY: I hope to be able to do that with great certainty at that stage, so far as I can in advance of a court decision. But that is the intention, and the differences in language derive from differences in the legal systems.
On Question, Amendment agreed to.
Clause 22 [The "reasonableness" test]:
The DEPUTY CHAIRMAN of COMMITTEES: In calling Amendment No. 63 I should inform your Lordships that if it is agreed I cannot call Amendments Nos. 64 or 65.
7.51 p.m.
The Earl of SELKIRK The Earl of SELKIRK had given notice of his intention to move Amendment No. 63:
Page 11, line 23, leave out subsection (3).
The noble Earl said: I wish to speak to this Amendment and to say that I fully agree with what has been discussed between the noble and learned Lord the Lord Chancellor and the noble and learned Lord, Lord Hailsham of Saint Marylebone. I must make one caveat on this. The noble and learned Lord, Lord Hailsham, said that it is fundamental that England and Scotland agree. I think that it is highly desirable. I shall not say that it is an absolutely fundamental law of the covenant, because so far as I am aware the whole of the Scottish Law Commission and the great body of the law profession in Scotland—so I am informed—are wholly agreed on what the burden of proof should be.
There are two grounds for their agreement. One is that contracts would be left uncertain. That would have an extremely adverse effect on the general freedom of contract and trade. It is all very well for the noble and learned Lord the Master of the Rolls to give examples of where people have gone astray, but there are hundreds, thousands and perhaps millions of contracts which go nowhere near it. The second reason that they are strongly in favour of this rule is that they fear the Bill may be used for mischievous purposes—that is to say, in order to achieve some other objective than that contained in the Bill.
I make those observations because I very much hope that in the course of time—and I hope that there will be reasonable time for discussion between now and the next stage—we shall reach an agreement which is wholly satisfactory to both sides. Having said that I do not wish to move the Amendment.
Clause 22 agreed to.
Clause 23 [Interpretation of Part II]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 66:
Page 11, line 26, leave out ("(whether intentional or not)").
The noble and learned Lord said: I believe that this Amendment to some extent traverses ground that we have already covered. I think that Amendment No. 66 can be related to Amendment No. 69, which I shall move in due course. These Amendments clarify the scope of Part II by making it explicit that a breach of duty or obligation is subject to the terms of Part II of the Bill, whether that breach was inadvertent or deliberate, and that liability for such breach may arise directly or vicariously. At present it is only provided in the definition of breach of duty that the breach may be intentional or not.
We now take the view that this provision is rather too limited because it does not cover breach of obligation, and as it would he rendered unnecessary by the new subsection (1)(a), it is being deleted. I should say, however, that we are still looking at this wording because we are not 100 per cent. satisfied that it is yet right. But at this stage I believe it would
502
help matters if both Amendments were allowed. I formally move Amendment No. 66.
Lord DRUMALBYN: I hope that these words will be retained if the decision is to have similar words in England. I do not think that they need be the same. These are far clearer words than those in the English version.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 69:
Page 12, line 20, at end insert—
("(1A) In relation to any breach of duty or obligation, it is immaterial for any purpose of this Part of this Act whether the breach was inadvertent or intentional, or whether liability for it arises directly or vicariously.")
The noble and learned Lord said: I mentioned this Amendment when speaking to Amendment No. 66. Perhaps I could reply to the remarks made by the noble Lord, Lord Drumalbyn. The point that he has made will be borne in mind when this whole matter is being examined. I beg to move Amendment No. 69.
On Question, Amendment agreed to.
Clause 23, as amended, agreed to.
Clause 24 [International supply contracts]:
7.57 p.m.
Lord LYELL Lord LYELL moved Amendment No. 71:
Page 13, line 7, leave out ("subsection (3) below") and insert ("this section").
The noble Lord said: I should like to speak to this Amendment together with the next four Amendments in my name —Amendments Nos. 73, 74, 75 and 76, skipping Amendment No. 72 which is in the name of the noble Lord, Lord Jacques. Those Amendments are all relevant to the same point and concern the definition of a business in Clauses 13 and 23. As we understand it, in both those clauses the definition of a business includes that of a profession. Therefore it would seem that the Bill extends to the providers of professional services. Clause 24 specifically excludes from the scope of the Bill international contracts for the sale and supply of goods. Yet it does not specifically—nor indeed generally—exclude international contracts for the supply of

503
services. These are frequently made by all types of professional groups—for example, to take two or three, consulting engineers, management consultants and indeed scientists who are employed both by private and governmental agencies.
In their second report the Law Commissions did not refer to such contracts but only to those relating to the supply of goods. We believe that that could have been an oversight. Consequently, these Amendments are seeking to include the express exclusion for international service contracts, which would satisfy the conditions which are set out in the clause. I beg to move.
Lord JACQUES: The present exemptions to international contracts for the supply of goods implement the recommendation of the Law Commissions made in paragraph 228 of their report. They gave reasons for those exemptions in paragraph 213. But in paragraph 229 they express the opinion that the reasons were not valid in relation to other international contracts. I would point out that the result of accepting the Amendments would be to impose a serious limitation on the protection which the Bill gives to consumers.
Part of the definition of a contract for the supply of services which the noble Lord proposes for this purpose in the last of his Amendments is that the contract is one which provides for the services to be supplied in the territory of a State other than that in whose territory the offer and acceptance was carried out. That would mean that ordinary people who make contracts in this country for their holidays abroad would be unprotected against the exemption clauses which I believe are commonly used in this field. I need hardly stress how important it is that this should not be so, especially as regards the protection given by Clause 2 in relation to negligence. With that explanation, I hope that the noble Lord may feel that he can withdraw his Amendment.
Lord LYELL: I am grateful for the explanation that the noble Lord has given. When he mentioned services, I had in mind the type of services that I had made an example of. For instance, engineers, management consultants, and others. I had not necessarily thought of services
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rendered as tour operators or something of that type, to which the noble Lord, Lord Jacques, referred. Nevertheless, after this stage is over I should like to study what the noble Lord has said. For that reason I certainly see fit to withdraw the Amendment at this stage.
Amendment, by leave, withdrawn.
8.1 p.m.
Lord JACQUES Lord JACQUES moved Amendment No. 72:
Page 13, line 7, leave out from "below") to end of line 9.
The noble Lord said: The purpose of this Amendment is to remove the last few words of Clause 24(1) which we now believe unnecessarily and undesirably limit the clause. Clause 24 excludes from the Bill's effect international supply contracts as defined in subsection (3) of the clause. Unless the Amendment is accepted, the Bill could bite on certain contract terms which ought to be outside the scope of the Bill. These are terms which, although not contained in a contract for international sale or other supply of goods, exclude or restrict liabilities arising under such a contract. I beg to move.
Lord LYELL: I should like to put on record that I should like to study Lord Jacques' comments, particularly in view of the reply he gave to me on my last series of Amendments. I find it difficult in this brief period of time to detect much divergence between his answer to my Amendment and the Amendment that he is seeking to put forward. Doubtless a period of study might enlighten me, but I should probably like to come back to him on this point, among many others, at a later stage.
Lord JACQUES: In both cases we are dealing with supply contracts: that is, contracts for the supply of goods. When replying to the last Amendment I was justifying the exemption being given only in that case. With this Amendment I am now saying that sometimes the restriction is outside the contract, but nevertheless there is a restriction on international supply. What this Amendment does is to treat the restriction which is outside the contract in exactly the same way as it treats the restriction which is inside the contract.
Lord LYELL: I thank the noble Lord, but this becomes curiouser and curiouser. I should like to study it and indeed the entire clause. The noble Lord said that these conditions are outside the contracts. Certainly in my title on the right-hand side of page 13, it says, "International supply contracts", but doubtless more study by myself and perhaps by the noble Lord, Lord Jacques, could solve our query.
On Question, Amendment agreed to.
On Question, Whether Clause 24, as amended, shall stand part of the Bill?
Lord HAILSHAM of SAINT MARYLEBONE: I do not wish to initiate a debate, but as the noble and learned Lord the Lord Chancellor has come back perhaps he would consider between now and the Report stage the position of a supplier of services rather than goods—for instance, a consulting engineer who contracts for the supply of services, say, in New Zealand, under a contract which he concludes here. We do not want our exporters of services to suffer competitive disadvantages compared with comparable suppliers of services from other countries, and we do not want the consumer in New Zealand necessarily to be in a better position to sue a British consulting engineer than to sue, say, a German consulting engineer. Would the noble and learned Lord just consider this and take it on board?
The LORD CHANCELLOR: Of course, I should be happy to do so.
Clause 24, as amended, agreed to.
Clause 25 agreed to.
Clause 26 [Effect of Athens Convention]:
Lord JACQUES Lord JACQUES moved Amendment No. 78:
Leave out Clause 26 and insert the following new clause—
"Temporary provision for sea carriage of passengers
(.—(1) This section applies to a contract for carriage by sea of a passenger or of a passenger and his luggage where the provisions of the Athens Convention (with or without modification) do not have, in relation to the contract, the force of law in the United Kingdom.
(2) In a case where—

(a) the contract is not made in the United Kingdom, and

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(b) neither the place of departure nor the place of destination under it is in the United Kingdom,

a person is not precluded by this Act from excluding or restricting liability for loss or damage, being loss or damage for which the provisions of the Convention would, if they had the force of law in relation to the contract, impose liability on him.
(3) In any other case, a person is not precluded by this Act from excluding or restricting liability for that loss or damage—

(a) in so far as the exclusion or restriction would have been effective in that case had the provisions of the Convention had the force of law in relation to the contract; or

(b) in such circumstances and to such extent as may be prescribed, by reference to a prescribed term of the contract.

(4) For the purposes of subsection (3)(a), the values which shall be taken to be the official values in the United Kingdom of the amounts (expressed in gold francs) by reference to which liability under the provisions of the Convention is limited shall be such amounts in sterling as the Secretary of State may from time to time by order made by statutory instrument specify.
(5) In this section,—

(a) the references to excluding or restricting liability include doing any of those things in relation to the liability which are mentioned in section 12 or section 23(2) and (4); and

(b) "the Athens Convention" means the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974; and

(c) "prescribed" means prescribed by the Secretary of State by regulations made by statutory instrument;

and a statutory instrument containing the regulations shall be subject to annulment in pursuance of a resolution of either House of Parliament.")
The noble Lord said: I spoke to Amendment No. 78 when I moved Amendment No. 3. I therefore formally move it.
On Question, Amendment agreed to.
Clause 27 [Saving for other relevant legislation]:
8.6 p.m.
Lord JACQUES Lord JACQUES moved Amendment No. 79:
Page 14, line 36, leave out from ("not") to ("contemplated") in line 37 and insert ("operate more restrictively than is").
The noble Lord said: This is a technical Amendment. Clause 27 is concerned with international conventions to which the United Kingdom is a part. At present

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Clause 27(l)(b) refers only to contract terms which exclude or restrict liability, and so does not cover terms which relate to inadequate contract performance. But the relevant convention provisions specifically contemplate the inclusion of both types of term, and both kinds should of course be free from control. The Amendment rectifies this omission by generalising the description of contract term which is not to be subject to control. Instead of referring directly to the particular kind of term which is to be excluded, it achieves the desired result by referring to terms which do not operate more restrictively than is contemplated by the international agreement in question. The effect is that, in so far as the particular contract term is one that is within the scope of the convention, it will automatically be freed from control under any relevant provision in the Bill.
On Question, Amendment agreed to.
8.8 p.m.
Lord LYELL Lord LYELL moved Amendment No. 80:
Page 14, line 37, at end insert—
("; or
(c) if any service is to be provided wholly or substantially outside the United Kingdom, restricts liability for breach of duty in respect of death or personal injury and is authorized or required by the express terms or necessary implication of the law of the country in which the service or the relevant part of the service is to be performed.").
The noble Lord said: This Amendment arises from the more special cases covering international obligations which we discussed earlier at Clause 24. However, it is not necessarily relevant at Clause 24. We believe it is more relevant here at Clause 27. I wonder whether the noble Lord, Lord Jacques, or perhaps one of the noble and learned Lords on the Front Bench, would be able to give some indication as to the liability which might arise in the case of a consumer; albeit in this particular example someone who might suffer personal injury or indeed death when abroad, and the consumer might be abroad as a member of a party or as a result of a contract with a holiday or tour operator.
We could think of examples of someone killed or injured on a lake or river steamer I or, as happens regrettably very often,
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on a ski lift or funicular railway where there is quite often death or injury to tourists. In many of these cases in different foreign countries the law of that particular country has some limitation of liability, and in particular in these cases of death or personal injury. If a British tour operator were found liable in respect of the death or personal injury of somebody who had booked a holiday or tour with him, then, if the damages which he would have to pay under the terms of the contract exceeded those which he could recover from the owner of the steamer ski-lift or funicular railway, what would be the position of the tour operator?
Lord JACQUES: The effect of the Amendment would be that if a service was to be performed in a foreign country, a contract term or notice exempting the operator from liability would not be subject to control if it was to be authorised or required by the law of that country. The Bill follows the general principles of private international law. Generally, the controls will apply where the law most closely connected with the contract is the law of the United Kingdom; I see no reason why exemption clauses in tour operators' or travel agents' contracts should be governed in any respect by a foreign law where the law most closely connected with the contract is the law of England or Scotland.
An example of the effect of the Amendment is this: suppose a British tour operator owns and runs a hotel in Greece and includes a term in his contract with holidaymakers exempting him from liability to them and a British holidaymaker, who will usually have made the contract with the operator in Britain, is killed through the negligence of the hotel staff. If the Greek law authorised terms excluding the liability of a hotel owner, the tour operator could rely on the exemption clause if the Amendment were approved. We consider that is completely unacceptable; the contract is made in England by a member of the public who cannot be expected to know the foreign law.
Lord LYELL: The noble Lord, Lord Jacques, described my Amendment as totally unacceptable. He presented an example but I submit that he has not met my case in any way. He mentioned the case of a hotel or premises abroad

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owned by a British company. I know of the possibility of one funicular railway or ski-lift in the French Alps being owned by a British company, but in most of the cases I have in mind—indeed, that most aspects of business and commerce have in mind—there is no question of the site or situation of the accident giving rise to such liability (death or personal injury) being owned by a Briton. I accept what the noble Lord said in general—that it might be unreasonable that a British tourist who would not know about foreign liability should be placed in a worse position than if he had an accident, say, on a British lake. But what about the case I cited where the situation of the death or accident occurs in a place or on premises not owned by a British company?
Lord JACQUES: The noble Lord is asking me to decide an issue on which he has not presented all the facts; he will appreciate that it will all depend on the facts of the particular case. For example, one must ask whether, in respect of the other party to the contract, there was any negligence. Is there to be a test of reasonableness? We do not know any of these things. His case is not sufficiently specific.
Lord LYELL: I accept what the noble Lord says about our not knowing all the facts, but neither does the provider of the services. However, we are in danger of livening up the debate at this hour. I will read his reply in Hansard and, meanwhile, beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.16 p.m.
Lord JACQUES Lord JACQUES moved Amendment No. 81:
Page 14, line 38, leave out subsection (2) and insert—
("(2) A contract term is to be taken—

(a) for the purposes of Part I of this Act, as satisfying the requirement of reasonableness; and

(b) for those of Part II, to have been fair and reasonable to incorporate,

if it is incorporated or approved by, or incorporated pursuant to a decision or ruling of, a competent authority acting in the exercise of any statutory jurisdiction or function.
(3) In this section—
"competent authority" means any court, arbitrator or arbiter, government department or public authority;
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"enactment" means any legislation (including subordinate legislation) of the United Kingdom or Northern Ireland and any instrument having effect by virtue of such legislation; and
"statutory" means conferred by an enactment.").
The noble Lord said: There is a mistake in the Marshalled List in that my name, rather than that of the noble Lord, Lord Lyell, should have appeared above the Amendment. Clause 27 at present provides for the exclusion from all the controls under the Bill those contract terms which in general are authorised by existing legislation or are included in pursuance of international agreements. This Amendment extends Clause 27 by making provision for the exclusion from the controls of contract terms which, in the exercise of a statutory jurisdiction or function, have been incorporated or approved by, or incorporated pursuant to a decision or ruling of, a court or arbitrator or a Government Department or public authority, but only in so far as they apply the test of reasonableness.
On Question, Amendment agreed to.
8.17 p.m.
On Question, Whether Clause 27, as amended, shall stand part of the Bill?
Lord HAILSHAM of SAINT MARYLEBONE: I do not want to detain the Committee at this late hour, but I wish to refer to the exchange a moment ago between my noble friend Lord Lyell and the noble Lord, Lord Jacques. I wonder whether the noble and learned Lord the Lord Chancellor would look at the whole question of private international law in relation to the Bill rather more closely than we have been able to do at this late stage of the debate. Obviously a great number of contracts for the provision of services or the supply of goods are governed by foreign law. Some of them will be undertaken by British contractors and some by foreign contractors, and there will of course be cases where foreign contractors expressly undertake to be governed by English or Scottish law. Sometimes these present complicated issues.
We are at the moment limiting exclusion or exemption clauses, and I am not absolutely clear that what the law will be will necessarily be as plain as it seemed to be when Lord Jacques was expounding the matter. Obviously in the case which

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Lord Lyell was postulating—of a foreign company operating a ski-lift, say, in Yugoslavia—it is fairly clear that Yugoslav law applies to the exclusion of English or Scottish law, but there may be more complicated cases than that and I hope that, before the next stage, the noble and learned Lord will look into the matter to see whether there are problems.
The LORD CHANCELLOR: We will certainly do that. We have done our best to cover these kind of problems and situations, but we will have another look at the matter in the light of the caution that has been addressed by the noble and learned Lord.
Clause 27, as amended, agreed to.
Clause 28 agreed to.
Clause 29 [Commencement; amendment; Repeals]:
8.20 p.m.
Lord AIREDALE Lord AIREDALE moved Amendment No. 82:
Page 15, line 11, leave out subsection (1) and insert—
("29.—(1) This Act shall come into force on such day as the Secretary of State may by order in a statutory instrument appoint.").
The noble Lord said: The reason for this Amendment is that this is not the only Bill which will affect what may be contained in the documents of traders and finance houses: there are two other measures which are to come into force shortly and which will have the same effect. There is the Restriction on Statements Order which will come into effect on 1st November, and the documentation regulations which are to be made under the Consumer Credit Act, which it is thought will come into force at about the end of the year. If the Secretary of State can be given elbow room to co-ordinate matters so that the requirements of these three measures, in so far as they affect the documents of traders and finance houses, can be co-ordinated so that a fresh set of documents complying with all the regulations can come into use on the same day, that would be an advantage. However, it is certainly not intended that the Secretary of State should, if this co-ordination cannot be arranged, hold up the coming into force of the Bill. I beg to move.
Lord HAILSHAM of SAINT MARYLEBONE: There is a point which is closely connected with this Amendment and which has been disturbing me. As the Bill is drafted, it will come into force three months from the date on which it is passed. Nobody knows when the Bill will be passed because we do not know what will be the fate of our various Amendments when they reach another place. However, the best estimate that I can give is that it will pass somewhere about the end of July. From the point of view of a very large number of business and professional people, August and September are practically menses non for the purposes of advice and of changing their habits. That means that, effectively, a great number of people will have a month in which to alter their arrangements for the purposes of the Bill. I believe that three months is a very short time and it may very well be that, on reflection, the noble Lord, Lord Jacques, or the noble and learned Lord the Lord Chancellor, may think so too, especially having regard to the time of year when this Bill is likely to pass into law. I should like to hear the observations of those responsible for the Bill upon this point.
Lord JACQUES: The Amendment raises two issues; first, whether the date should be in the Bill or should be by statutory order; secondly, if the date is in the Bill, whether three months is the right period. We believe that the date should be in the Bill because this is not one of those cases where an indefinite time is needed because there are to be consultations and we do not know how long those consultations will take. In practice, any reasons for delay here would be reasons which would make it better for traders to know the date towards which they were working. For example, the most important kind of representation that has been made to us relates to the trader who insures his liabilities but finds that when the Bill becomes law he will have to increase the amount of his coverage. Consequently, he will want to know well in advance the date from which he will have to do this.
Therefore, we are quite firmly of the opinion that the date should be in the Bill. However, we appreciate the concern that has been expressed about the period of three months and T can tell the Com-

513
mittee that this is being examined with a view to bringing in an Amendment at Report stage.
Lord AIREDALE: That is very encouraging. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 29 agreed to.
Clause 30 [Citation and extent]:
The DEPUTY CHAIRMAN of COMMITTEES: I should say that if Amendment No. 84 is agreed, I cannot call Amendment No. 85.
8.26 p.m.
Lord HAILSHAM of SAINT MARYLEBONE Lord HAILSHAM of SAINT MARYLEBONE moved Amendment No. 84:
Page 15, line 21, leave out from ("the") to end of line and insert ("Contract, Negligence and Breach of Duty (Exemption Clauses)").
The noble and learned Lord said: This is my great moment. It is the first Amendment in my name and I rise to move it realising that it is late and that long debates can take place on the question of what is in a name. I indicated on Second Reading that I was not happy about the amended name of the Bill. When it was introduced it had another name, but the present Title is, as a matter of fact, misleading. There are many clauses in contracts which are unfair but which the Bill does not touch at all, whereas it touches a number of things which, although lawyers would recognise them as contracts, are not normally recognised as contracts by members of the public. It is therefore misleading in two ways.
I frankly admit my proposed alternative Title is a boring one and possibly not so exciting to consumer organisations and Members of another place as that which they have chosen. It does, however, happen to be what the Bill is about, whereas the Title as set down in the present Short Title is misleading and does not describe what the Bill is about. If the choice is between being boring and accurate or exciting and misleading, I choose to be boring and accurate.
I must tell the noble and learned Lord that it would be quite unfair to the Committee for me to attempt, if my
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Amendment is not to be accepted—which I hope it may be, if only in principle—to divide the Committee at this stage, at this hour and with this attendance of excited Peers eager to go into the Division Lobbies. However, I warn noble Lords that there may be a sting in my tail when we come to Report stage and I ask them to take the Amendment extremely seriously. I beg to move.
The LORD CHANCELLOR: Regardless of the sting in the tail that is threatened for the Report stage, I am afraid that I cannot advise the Committee that the words that the noble and learned Lord has rightly defined as extremely dull ought to be accepted, for not only are they dull but they do not include the whole terms of this complex Bill. I feel that the proposed Title is not only dull but unwieldy, and certainly almost unintelligible to the man in the street—not that the man in the street makes reading Acts of Parliament his favourite occupation. The Title also fails to take into account the fact that the Bill, unlike those put forward by the Law Commissions in their second report, covers in Clause 4 certain indemnity clauses which, in many cases, are not exemption clauses. So, if it were sought to be complete in the sense of indicating all the contents of the Bill, there would be a further boring addition to provide for indemnity clauses as well.
Therefore, while I cannot claim that the present Title of the Bill is entirely and wholly satisfactory, I confess that, having looked at all the other alternatives, there is no other that seems better. Certainly, I am afraid that I am not attracted by the present proposal of the noble and learned Lord. I am comforted by the fact that the matter is not to be taken to a Division at this time. Perhaps the noble and learned Lord will think about the matter again, as I promise to think again about the existing Title.
8.30 p.m.
Lord AIREDALE: As I was told that the ground was liable to be swept from under my feet in relation to the next Amendment in my name, perhaps I may say a few words at this stage on this Amendment. It is a little long. I think that we shall wrestle forever if we try to explain all of the Bill in a Title of two or

515
three words. We shall never do it. I think that I would plump for the Title "Exemption Clauses Bill"—three words; but if the Government and the noble Lord, Lord Jacques, are so strongly wedded to the expression "contract terms", the reason that I put down my Amendment to leave out "Unfair", was that I took to heart the words on Second Reading of the noble and learned Lord, Lord Hailsham of Saint Marylebone, who pointed out that there are all kinds of unfair contract terms not covered by the Bill, like the estate agent who tells you that his commission will be payable if you put your house in his hands, even if he does no work and you sell your house privately without his help. This Bill is about contract terms, and it might be helpful, if noble Lords are wedded to that expression, simply to leave out the word "Unfair". That might console to some degree the noble and learned Lord, Lord Hailsham. But I should have thought "Exemption Clauses Bill" were three words which, more closely than any other three words, describe what the Bill is about.
Lord HAILSHAM of SAINT MARYLEBONE: I am very disappointed by the Lord Chancellor in this respect. On Second Reading, I was supported by no less a legal luminary than the Master of the Rolls, and now I have what is virtual support in principle from the Liberal Benches in a splendidly constructive speech by the noble Lord, Lord Airedale. I do not mind being boring, dull, or even unwieldy; nor are my withers in the least wrung by the fact that Clause 4 deals with indemnity clauses, because, as the noble Lord, Lord Airedale, rightly points out, it is the Long Title and not the Short Title which determines the scope of a Bill. The present Title of the Bill is simply a catchpenny Title which is almost deliberately misleading.
As the noble Lord, Lord Airedale, reminded us, I pointed out on Second Reading that there are a very large number of unfair terms in a whole range of contracts with which the Bill makes absolutely no attempt to deal at all. Some of them are dealt with in other branches of the law; some of them are not. But to sell these goods under the false label is contrary to the whole spirit of consumer
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protection. Therefore, I must tell the noble and learned Lord that he will find another Amendment in my name. I may take a leaf out of Lord Airedale's splendid book and reduce the cumbersomeness of my own alternative Title. But the noble and learned Lord is not going to get away with such a non-possumus attitude another time and I shall, if I can think of a good Title, divide the House against him.
The LORD CHANCELLOR: I am not surprised to hear that from the noble and learned Lord, but as the noble Lord, Lord Airedale, said, the Bill does not deal with all unfair contract terms; least of all does it deal with all contract terms, which is the alternative that he suggests—unless we get rid of the Title altogether, and opt for his. So I think that his attempted rescue operation, in that respect at any rate, is even more unsatisfactory than the present Title of Unfair Contract Terms Bill, if unsatisfactory it is. But we will look at this matter again. It is useful if the short Title of the Bill can give an indication of the essence of the matter. There is no great certainty about any of these judgments on words, and I hope that in the light of that we shall not have this unwieldy et cetera Title, proposed by the noble and learned Lord, pressed tonight.
Lord HAILSHAM of SAINT MARYLEBONE: I will yield to the blandishments extended to me from the Front Bench opposite. But I must point out to the Lord Chancellor that the real life-line offered me by the noble Lord, Lord Airedale, was "Exemption Clauses Bill", and it seemed to me that this was a very nice Title. The noble and learned Lord would, I think, do well to ponder the sage advice of the noble Lord, Lord Airedale, as indeed I shall do before the Report stage. With those words, at this stage I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.36 p.m.
Lord AIREDALE Lord AIREDALE had given Notice of his intention to move Amendment No. 85:
Page 15, line 21, leave out ("Unfair").
The noble Lord said: I succeeded with an Amendment which turned the Trade Descriptions Bill from something else

517
into the Trade Descriptions Bill, so I am full of hope, and am not going to move this Amendment.
Clause 30 agreed to.
Schedule 1 [Scope of sections 2 to 4]:
Lord JACQUES Lord JACQUES moved Amendment No. 86:
Leave out Schedule 1 and insert the following new Schedule:
("SCOPE OF SECTIONS 2 TO 4 AND 7
1. Sections 2 to 4 of this Act do not extend to—

(a) any contract of insurance (including a contract to pay an annuity on human life);

(b) any contract so far as it relates to the creation or transfer of an interest in land, or to the termination of such an interest, whether by extinction, merger, surrender, forfeiture or otherwise;

(c) any contract so far as it relates to the creation or transfer of a right or interest in any patent, trade mark, copyright, registered design, technical or commercial information or other intellectual property, or relates to the termination of any such right or interest;

(d) any contract so far as it relates—

(i) to the formation or dissolution of a company (which means any body corporate or unincorporated association and includes a partnership), or

(ii) to its constitution or the rights or obligations of its corporators or members;

(e) any contract so far as it relates to the creation or transfer of securities or of any right or interest in securities.

2. Section 2(1) extends to—

(a) any contract of marine salvage or towage;

(b) any charterparty of a ship or hovercraft; and

(c) any contract for the carriage of goods by ship or hovercraft;

but subject to this sections 2 to 4 and 7 do not extend to any such contract except in favour of a person dealing as consumer.
3. Where goods are carried by ship or hovercraft in pursuance of a contract which either—

(a) specifies that as the means of carriage over part of the journey to be covered, or

(b) makes no provision as to the means of carriage and does not exclude that means then sections 2(2), 3 and 4 do not, except in favour of a person dealing as consumer, extend to the contract as it operates for and in relation to the carriage of the goods by that means.

4. Section 2(1) and (2) do not extend to a contract of employment, except in favour of the employee.
5. Section 2(1) does not affect the validity of any discharge and indemnity given by a person, on or in connection with an award to him of compensation for pneumoconiosis attributable to employment in the coal industry, in respect of any further claim arising from his contracting that disease.")
The noble Lord said: This Amendment redrafts Schedule 1. It introduces two new exceptions from the provisions of the Bill. The first of the new exceptions is in paragraph 3. This extends the exclusion (in paragraph 2(c)) for contracts for carriage of goods by sea to those terms of a contract for carriage by more than one means of transport which relate to carriage by sea. For example, if goods are being taken partly by sea and partly by rail, then the exception will apply to that part of the carriage which is by sea, in the same way as it would have done had the carriage been wholly by sea.
The second exception is that which was explained in relation to Scottish law by my noble and learned friend Lord McCluskey, and it relates to the agreement between the National Coal Board and the NUM. They have an agreement whereby compensation was paid on a very generous scale, taking into consideration future cases of pneumoconiosis, and this Bill provides that the recipients will not get the benefit of this Bill. There are other technical differences, but they are of much less importance. I beg to move.
The DEPUTY CHAIRMAN of COMMITTEES: I think that it would be for the convenience of the Committee if I were to call Amendment No. 87 as an Amendment to Amendment No. 86.
Lord LYELL Lord LYELL had given Notice of his intention to move Amendment No. 87:
In paragraph 1, after head (e) insert ("(f) any contract of employment.")
The noble Lord said: I think that it would be for the convenience of the Committee if I do not seek to move, nor indeed speak to, Amendments Nos. 87 and 90, which are all in the same category, as was pointed out by the Chairman of the Committee. But it might be convenient if I were to say a few words on Amendments Nos. 88 and 89. I do not propose to say anything about Amendments Nos. 87 and 90.
Lord LYELL Lord LYELL moved, as an Amendment to the Amendment, Amendment No. 88:
In paragraph 2, after head (c) insert—
("(d) any contract or other arrangement for the provision by a harbour authority of services or facilities for the handling or storage of goods in a harbour or on harbour land.")
The noble Lord said: Noble Lords will see that Amendments Nos. 88 and 89, in my name, cover one particular aspect of international trade, when the goods pass through harbours. We are concerned here with the process of documentation of goods passing from one hand to another, as part of the intercontinental journey, as the noble Lord, Lord Jacques, pointed out. He pointed out very clearly in paragraph 3 of his new Schedule where there would be multi-use; the goods would, at some stage, be continuing their journey by sea, and at some stage by rail, or road or some other means.
But I am now given to understand that the practicalities of the cases where goods pass through harbour land is such that in many cases in which damage or loss is incurred there is considerable litigation between the harbour authorities and relative insurance companies as well as between the insurance companies in respect of these goods on their journey from the factory gate to the ultimate consumer and the road haulier or the rail haulier. Certainly it has been presented to us that the harbours are the scene of much litigation, and it is believed that if these two small Amendments were made to the Bill the opportunity for a great deal of litigation which is carried on at the moment would be obviated. That is the small point I would seek to raise on Amendments Nos. 88 and 89, and I hope it is to the convenience of the Committee to discuss them at this stage. I beg to move Amendment No. 88.
Lord JACQUES: These Amendments are seeking to accord certain contracts made by harbour authorities the same treatment as that granted to certain categories of maritime contracts. Maritime contracts have been treated in a special way under the Bill in order to allow the maintenance of existing arrangements in the commercial maritime field. Maritime business is essentially international by nature, and it is therefore important for business convenience, for easy trading and
520
for competition reasons that the same rules and conditions are observed around the world. As I am sure your Lordships are aware, over the centuries continuous efforts have been made to harmonise international maritime law because it has been recognised that this would be in the best interests of all countries. This trend has been very successful. Indeed, contracts for charter parties, bills of lading and towage in general in worldwide use are, I am told, all based upon the British contract form. If we were now to move out of line with other countries, United Kingdom companies would be put at a serious competitive disadvantage. This would be very damaging to the United Kingdom's interests, particularly since London is the world centre for maritime business.
I am sure your Lordships will agree that these are very powerful reasons for according maritime contracts special treatment under the Bill. However, I fail to see that any such considerations apply in the case of harbours and harbour authorities. There is, it seems to me, little or no element of international competition so far as dock facilities are concerned. Where goods are carried by sea, they enter or leave Britain. There is no alternative to using a British port. With respect to the noble Lord, I would submit that there is no good reason why port authorities should be given any special treatment. Where their notices or contract terms excluding or restricting liability are fair and reasonable, I am sure they will be upheld by the courts; but where they are otherwise there is no reason why they should be upheld by the courts. I therefore ask the noble Lord to consider what I have said and to withdraw his Amendment.
Lord LYELL: Thanks to the noble Lord, Lord Jacques, and his kind reply, I certainly will accept his invitation to consider all that he has said. He gave me a very fair and substantial reply. I thank him, and beg leave to withdraw my Amendment.
Amendment to the Amendment, by leave, withdrawn.
On Question, Amendment agreed to.
Schedule 2 ["Guidelines" for application of reasonableness test]:
Lord HAILSHAM of SAINT MARYLEBONE Lord HAILSHAM of SAINT MARYLEBONE moved Amendment No. 95:
Page 16, line 47, at end insert—
("( ) in cases where the party seeking to exclude or limit liability is not a limited company, the extent to which insurance is available to protect that party against the risk of liability, and the extent to which without such insurance that party might be expected to meet that liability from his own resources.").
The noble and learned Lord said: It is very unfortunate that these two Amendments, this and the next one, have come on so late, because I think they involve quite serious discussion which I should have liked to have taken at a much earlier hour of the day. I think that probably the best course is for us to have a short discussion on each of them separately at this stage now, and we may (I think almost certainly we will) have to revert to them on Report, when I hope we shall reach them at a more rational hour.
This Amendment, No. 95, is intended to give effect to a point which I sought to raise on Second Reading; and, again, I had the support in doing so of the Master of the Rolls, who, quite independently of me, was disturbed by the same question. In this Bill we are dealing with very different sorts of character. There is, as the Master of the Rolls pointed out, the unfortunate man with unlimited liability. He is not able to take advantage of the limited company procedure, and, therefore, his liability goes to his last and ultimate possessions except, I think, the tools of his trade, which in the case of a professional man may involve a protractor and a fountain pen and perhaps his bedding and two or three of the more intimate articles of furniture. Otherwise, the bailiffs can come in and chase him. His liabilities may be almost unlimited, because they may go up, on occasion, to millions of pounds. As the Master of the Rolls pointed out, the obvious thing is to ask how far he can guard himself against the liabilities which he may incur under this Bill by insurance, which is profitable for him because he will be able to deduct it from his income tax if he can, profitable for the potential victim because instead of a very doubtful payer he will have the backing of a reputable insurance company, and profitable for the insurance company which gives him the
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protection which he will very badly need if this Bill is passed.
I said earlier in this discussion that I did not look carefully enough at the Bill, and there will be an important class of person—those affected by Clause 2, for instance, and not by Clause 6 and some of the other clauses—who will not be affected by my Amendment as it is drafted at the moment because the guidelines do not apply to Clause 2. I think the guidelines ought to apply more generally, and perhaps the noble and learned Lord, the Lord Chancellor, may take on board that suggestion, that on Report I may put down an Amendment to provide an extension of the application of the guidelines to cases outside the supply of goods, and so forth, to which they are limited at the moment. But, in the meantime, I think that in our zeal for consumer protection we should not in fact impose on an individual terms of trade which are altogether unreasonably onerous. I think, therefore, that the principle underlying my Amendment is a sound one.
I should also like to say this to the noble arid learned Lord the Lord Chancellor about it. In our zeal for consumer protection, we must not forget, I think, the interest of the general body of consumers as distinct from the potential victim of a particular mishap. We must remember that the interest of the general body of consumers is the provision of services and goods at a reasonable cost, and that, if in fact we impose on the provider of goods and services terms which are unreasonably onerous, either those services will be withdrawn from the market altogether or they will be supplied at a cost which people are not prepared to accept. Therefore, I seriously put forward this Amendment, regretting that it is at such a late hour, intending that the noble and learned Lord should tell me what, in his view, is the best way to deal with a problem which I believe to be a very real one. I beg to move.
8.50 p.m.
The LORD CHANCELLOR: I agree that Amendment No. 95 is a very important Amendment and it may be fitting that it should be moved by a gallant rifleman of the 95th of Foot whose musical entertainment, which, I understand, was heard in certain quarters, is not, unhappily, available for this Committee to hear.

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It is an important matter. I have given a great deal of sympathy to the point of substance since it was first raised at Second Reading. The Amendment, as it now stands, seeks to add another guideline to help the courts in applying the reasonableness test to cases involving liability for loss or property damage. My first reaction is to wonder whether it is really necessary to spell this out since, having regard to the wording of Clause 10 (which requires the court to have regard to the circumstances of the case) and Clause 22 (which is the Scottish equivalent of those words) the ability of the defendant to obtain insurance cover would surely, in any case, be a relevant circumstance which the courts would be bound to take into account when considering whether any particular limitation of liability was reasonable or not; provided that the plaintiff could reasonably be expected to know of the defendant's difficulties in obtaining cover at the time of the contract.
The Law Commissions in their report specifically stressed that the guidelines now in Schedule 2, which as the noble and learned Lord pointed out, incidentally are not at present altogether appropriate for the purpose which he intends, since they apply only to exemption clauses relating to liability for breach of certain implied terms in contracts for the sale et cetera of goods, should not be regarded as exhaustive.
I recognise the concern expressed about the matter, which I share; and, if the noble and learned Lord would agree to withdraw his Amendment, I undertake to table on Report at the appropriate time a suitably worded Amendment since it seems to me, with respect, that the Amendment—and I think he will agree with this—should refer only to a limitation of liability rather than to an exclusion of liability and should also avoid the difficulty that the guidelines in Schedule 2 are at present only of limited application.
It may be of interest if I were to draw the Committee's attention to paragraphs 184 to 191 of the Law Commissions' Report and, in particular, to the guidelines set out in paragraph 188. Those guidelines were not put forward for use in cases not covered by the present guidelines, and although the Law Commissions suggested
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that they should not be incorporated in the Bill, I think it is certainly very proper for the Committee to look at them when considering this difficult problem of insurability. In particular, guideline (g) in paragraph 188, provides that the court would be obliged to take into account in appropriate cases the fact that:
"the clause did not exclude liability but only imposed an upper limit".
In this passage the Law Commissions were clearly conscious of the problem about insurability which we are now discussing. If, therefore, it is generally felt that an Amendment is required to bring to the surface the point about insurability and part of the issue of the reasonableness test then, I think, we should have regard to the proposals of the Law Commissions.
I would anticipate that any Amendment would follow the thinking of the noble and learned Lord in basing itself on restrictions to an upper limit rather than on all kinds of exclusions which I rather suspect he has in mind. I imagine that this is the significance of his reference to parties which are not limited companies. That, obviously, is what the noble and learned Lord has in mind; but perhaps he will consider whether we can leave the matter on the basis that the problem about insurability is already in the Bill, and whether the question is one of emphasis rather than of the need for a direct change in effect. I am inclined to take the view that perhaps it is not sufficient that a matter of this importance should be left as it is in the Bill.
Lord HAILSHAM of SAINT MARYLEBONE: I am very grateful to the noble and learned Lord for his very thoughtful and constructive reply. When I have made one or two comments, I shall, of course, accede to his request that at this stage I should withdraw this Amendment. I should very much prefer to see a considered Amendment made by the noble and learned Lord the Lord Chancellor with the advantage of the Parliamentary draftsman behind him. That is obviously very much more satisfactory, and if we can arrive at some kind of considered conclusion, this would be the best thing.
I considered whether it was necessary at all to have this; but this leads us into a debate which, curiously enough, is about the only thing we have not discussed

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in this rather protracted Committee stage. It underlies this Bill to a very considerable extent. There was a difference at one time between the Scotsmen and the Englishmen on this Bill. The Scotsmen, for some reason, thought it best to have no guidelines at all; the Englishmen, on the whole, thought it better to have guidelines.
I can understand the Presbyterian purity of the Scots in this respect but I come down wholly on the side of the English. If you are going to leave "reasonableness" and "all relevant circumstances" to the judges to decide what is reasonable and what circumstances are relevant, I think you are really substituting the banyan tree for any rational system of jurisprudence. Although I know that there are very well-known judges on the Bench who are constantly attracted by the nostalgia of the banyan tree, this is not my approach to modern jurisprudence. I like to know something more definite. I think that the judges are very reliable provided they are given something which is justiciable. The question of reasonableness and what is relevant are, at best, on the fringes of what is justiciable and, at worst, allow the eccentric judge to provide a jurisprudence which is just as long as his own foot I am not in favour of that.
The noble and learned Lord has suggested therefore that he will consider seriously a compromise clause with the benefit of the Parliamentary draftsman. I should like him to consider seriously the application of guidelines to Clause 2 (or in some form to Clause 2) and if he will do that between now and Report and put down something which embodies, at any rate, some of my thinking, I should be happy to think that I have done a good job of work, certainly at this stage, and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.59 p.m.
Lord HAILSHAM of SAINT MARYLEBONE Lord HAILSHAM of SAINT MARYLEBONE moved Amendment No. 96:
Page 16, line 47, at end insert—
("( )whether the customer had requested the other party to the contract to purchase the goods.").
The noble and learned Lord said: This, again, is an important subject. It is an Amendment for which I have
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less enthusaism than the last but which, I think, does none the less merit discussion; although it may be that we shall have to revert to it, as in other cases, on Report.
This reflects a problem which I have had to deal with before when we were dealing with the Supply of Goods (Implied Terms) Act 1973. There was considerable discussion inside Government about it at the time which I should like now to ventilate in public. The point is this. In the way in which modern business transactions have developed, one can understand, of course, that in the simple case where a supplier of goods or services supplies those goods or services, the law has implied, and rightly implied, terms as to quality, fitness and merchantability and so on, which Parliament is increasingly reluctant to exclude by any of these exemption clauses.
But this is based upon the fact that, if you go into a shop and buy a kipper, you are entitled to rely on the skill and judgment of the fishmonger that the kipper, which is designed for human consumption, shall in fact be suitable for human consumption. This is perfectly sensible as an ordinary business transaction. But when you embark upon the more elaborate form of consumer durable, you often find that the way in which finance is provided is that a bank or somebody who is not in the position of supplying the goods, and knows nothing whatever about their nature or quality, goes through the motion of buying the goods from the original supplier who does know, and either hiring them, supplying them or providing them in some form to the ultimate consumer.
The effect of this legislation which we are discussing protects the consumer against his supplier; but if the supplier is only a finance house and the real party, whose skill and judgment ought to be the subject of the implied term, is the third party and not the finance house, it seems a little hard to saddle the finance house with responsibility for its quality. I know it was said when we were discussing this matter inside the Government that the finance house has to deal only with reputable suppliers. But this is not always the case; they very often deal with a supplier who has been found by the ultimate customer. Very often it is found that it is the customer who is pressing for credit and not the finance house

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which is forcing the credit on the customer. So this presents a real problem in the field of consumer protection.
At this late hour I can do no more than ventilate the subject and provoke the noble and learned Lord the Lord Chancellor into one of his thoughtful utterances in response. I do not want to do more than tell the noble and learned Lord the Lord Chancellor what the purpose of this Amendment is and to ask him to make his comments upon it. With only that view in mind, I beg to move.
9.2 p.m.
Lord AIREDALE: We ought to be careful about this situation. This Amendment does not refer to cases where the financial third party comes into it. Under this Amendment, as at present drafted, if a customer went into a shop and asked the proprietor to get a commodity which had been skilfully advertised in some Sunday paper, and the supplier obtained it and sold it to the customer, the supplier would then be able to rely to some extent on the fact that the customer had requested him to get it. My experience is that good wine needs no bush; some of the nastiest and cheapest commodities only sell succesfully because they are skilfully advertised in the Sunday papers, and so on. I am sure that the Sunday papers take great care to try to see that their advertisers do everything that they should.
It is the business of the shop to know something about mowing machines, or whatever it is, to guide the customer against a cheap and nasty model which has been skilfully advertised, and to try to persuade the customer to buy a better and reliable model. This Amendment will not achieve good consumer protection unless its scope is rather more limited to the finance houses, and so on, to which the noble and learned Lord referred.
The LORD CHANCELLOR: I have listened with care to what the noble and learned Lord, Lord Hailsham of Saint Marylebone, said in his fascinating explanation ranging from the kipper designed for human consumption—which is an interesting conception in itself—to finance houses. I wondered at times whether the finance house problem was covered,
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if the Committee accepted the Amendment, by the specific context in which this addition to the guidelines will go. I share the anxieties and questions of the noble Lord, Lord Airedale, about that.
We can all think of any number of cases with particular facts which should be taken into consideration in the application of the test of reasonableness. The list of guidelines which we now have is not to be taken to be exhaustive, but only to be in the sense illustrative as matters which appear to be relevant. However, if the customer had asked the retailer to obtain specific goods for him, that fact would be taken into consideration, even though the present list does not include it. I am inclined to agree with the noble Lord, Lord Airedale, that it ought not to be a complete answer on the supplier's part, depending again on the facts of the case and the kind of commodity that is indicated. I confess I am not wholly clear what the noble and learned Lord is after in so far as the draft seeks to give effect to what he wants to do, but I am willing to look at it.
Lord HAILSHAM of SAINT MARYLEBONE: The truth is that this Amendment had to he put down at rather short notice. I took the actual drafting from the people who put the point to me, as my noble friend Lord Lyell did in a great many cases. Something rather unfortunate has happened in this Bill for the proper performance of our Parliamentary duties. This Bill, for some reason, slipped through the House of Commons without anybody noticing that it was there. Exactly why this happened, I do not rightly know. There have been two Law Commission reports and immense consultation with all reputable bodies. The Bill seemed to have almost universal approval. But for some reason the Second Reading debate in this House attracted considerable attention. The result was that those of us who have to operate an Opposition line almost without assistance—although we are very grateful for the assistance we get—became inundated with something like 150 or 200 Amendments from various responsible bodies, including the CBI, all of which they wanted us to ventilate in this House.
It so happened that this Amendment fell to my lot because I understood what

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it was about and my noble friend Lord Lyell did not, because I had had the previous experience of discussing the matter internally in the Government four years ago. It does not surprise me that my noble friend Lord Lyell did not follow this because I do not think that the noble and learned Lord the Lord Chancellor followed it until I explained it to him. However, he does know now—he "kens the noo" as they say in the famous apocalyptic story—and I hope he will take this on board. In a Bill which resembles "banyan tree justice" rather more than the more sophisticated type of jurisprudence, it is true to say that this is a very common feature of current commercial life, that is, the situation I sought to explain in my speech, attached to an Amendment which I am bound to say was fed to us, and which I did not bother to improve because I knew what would happen anyway. We would hope to get a little more sense out of it either on Report stage or on Third Reading. Now that the noble and learned Lord knows what it is about, I hope he will think about it, because, although I do not expect that he will find unanimity inside his Government any more than I did in the Government of which I was a member, it is a more important question than is generally recognised.
I therefore hope the noble and learned Lord will bring to bear the resources of his Department and of his own enormous intellect and give us a lucid account of his
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conclusions when we reach a later stage. Therefore, with some enthusiasm, I now beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Schedule 2 agreed to.
Schedule 3 [Amendment of enactments]:
Lord LYELL Lord LYELL had given Notice of his intention to move Amendment No. 97:
Page 17, leave out lines 7 to 9.
The noble Lord said: In view of what my noble and learned friend has said, I may say that I do not necessarily understand Amendments Nos. 97 and 98 any further. I have in fact spoken to them and I withdrew Amendments Nos. 40 and 68 earlier. I shall not move Amendment No. 97.
Schedule 3 agreed to.
Remaining Schedule agreed to.
Title agreed to.
House resumed: Bill reported with the Amendments.

LONDON TRANSPORT BILL
Reported with Amendments.
House adjourned at twelve minutes past nine o'clock.