Sitting of 13 July 1978

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

  GREATER LONDON COUNCIL (GENERAL POWERS) BILL
  Order for consideration of Lords amendments read.
  To be considered upon Tuesday next.

  KING'S COLLEGE LONDON BILL
  Lords amendments agreed to.
ORAL ANSWERS TO QUESTIONS
  NORTHERN IRELAND

    Trade Unions
    Mr. Loydenasked the Secretary of State for Northern Ireland when he last met the Northern Ireland trade unions.
    The Secretary of State for Northern Ireland (Mr. Roy Mason): Northern Ireland Ministers are in constant touch with representatives of the trade unions in Northern Ireland in the course of our ministerial duties and departmental responsibilities. In the past 12 months, we have had more than 50 meetings with trade unions and trade union leaders. I also spoke at the economic conference organised by the Northern Ireland committee of the Irish Congress of Trade Unions on 8th March 1978.
    Mr. Loyden: I am grateful to my right hon. Friend for that reply, and, of course, I accept that in his day-to-day work as a Minister he is in constant touch with the trade unions on matters affecting himself and the trade unions. But does he not agree that sectarianism is probably at
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    its lowest level at the point of production and, therefore, that workers, through their trade unions, could play a more positive role in Northern Ireland in seeking the solutions which right hon. and hon. Members in all parts of the House seek? Does he not agree, further, that opportunity should be taken to develop the role of the trade unions in Northern Ireland?
    Mr. Mason: My hon. Friend is quite right. The Northern Ireland committee of the Irish Congress of Trade Unions is playing an important part in crossing the sectarian divide in the Province. None of the trade unions has a sectarian base. They do not involve themselves in sectarianism in Northern Ireland. Neither do they become involved in the political wrangles in Northern Ireland. As such, they are a credit to the Province, and we have a good working relationship with them.
    Mr. Kilfedder: Is not the right hon. Gentleman aware of the widespread discontent amongst many full-time trade union officials in Northern Ireland about the fact that, although some of their members are appointed to statutory boards—indeed, one has been appointed to no fewer than 20 statutory boards—many other trade unionists never receive any appointment? What is the reason for this discrimination which gives £3,000 to £4,000 a year to a select few trade unionists?
    Mr. Mason: For nominations to these special boards the trade unions themselves are approached, and they make their nominations. But I must remind the hon. Member that at least 40 trade union leaders in Northern Ireland are serving the Province in various other professional and semi-professional capacities.
    Mr. Fitt: As the trade unions are such a credit to Northern Ireland, why has my right hon. Friend so far resisted the request made by them, especially by Terry Carlin, the Northern Ireland officer of the ICTU, to have the Quigley report debated and its conclusions confirmed or rejected by this House?
    Mr. Mason: My hon. Friend will recognise that the new economic concept for Northern Ireland has moved on from the Quigley report. Using that as a base, the Economic Council, with its fair share

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    of trade union representation, is dealing with it now on a more forward-looking plane. The trade unions themselves are playing a positive part in that role.
    Mr. Bradford: When the Secretary of State met the trade unions, did they raise the issue of the high cost of electricity and gas in the Province? If so, will the right hon. Gentleman endeavour as soon as possible to reduce the cost, especially that of gas, which is three times that in any other part of the United Kingdom?
    Mr. Mason: Yes. The Economic Council has been working on that. It has prepared a paper on the future of energy requirements in the Province, and gas is one of the topics that is touched upon.
    Mr. Biggs-Davison: Is the Secretary of State aware that we on the Opposition Benches yield to no one in our admiration of the trade unions and trade unionists in Northern Ireland for the part they have played in maintaining production and industrial harmony through years of terror and difficulty?
    Mr. Mason: I am obliged to the hon. Member. He is quite correct. In spite of the troubles, the trade unions, allied with the management of industry, have managed to achieve a higher manufacturing output, higher productivity and a better industrial relations record than Great Britain as a whole. That is in spite of seven years of trouble.
    Mr. Litterick: On a point of order, Mr. Speaker. The Question on the Order Paper in my name—No. 17—is identical to Question No. 1.
    Mr. Speaker: I noticed that. That is why I did not call the hon. Member. His Question will be reached.

    Criminal Offences (Sentences)
    Mr. Wm. Rossasked the Secretary of State for Northern Ireland what consideration he has given to the length of sentences currently provided for serious criminal offences in Northern Ireland: and if he will make a statement.
    The Minister of State, Northern Ireland Office (Mr. J. D. Concannon): The length of sentences in particular cases is for the courts to decide within whatever maxima are laid down in the relevant
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    statutes. However, criminal legislation in Northern Ireland is kept under constant review and as recently as last year Parliament approved substantial increases in penalties for offences provided under both the ordinary criminal law and emergency provisions legislation.
    Mr. Ross: Since it is clear that the terrorists have not responded to the very generous remission of sentences that the Minister introduced a couple of years ago, will he now consider returning to the formal level of remission of sentences so that there is no possibility of criminals in Northern Ireland being treated as a group apart?
    Mr. Concannon: As the hon. Member knows, there was no probation service in Northern Ireland. As the House passed this provision three years ago, it is up to the House to look at it and put forward any amendment to it. If people keep their noses clean in prison, it will still have an effect. Those who do not do so—and there are quite a number who do not—lose out. Up to now, they have lost nearly 300 years of remission. That should please the hon. Member.
    Mr. Molyneaux: I refer to the report of the advisory council on the penal system. Will the Minister confirm that, whatever the Government's eventual decision on this report, they will not apply it to the terrorists or those who commit related crimes in Northern Ireland and elsewhere?
    Mr. Concannon: I have read the report all the way through. I think that it has been misunderstood to some extent. On the point that the hon. Member has raised, the advisory council has made it absolutely clear that offenders who pose the risk of serious harm should be liable to a penalty in excess of the normal maximum. Clearly this would have implications for the people the hon. Gentleman has mentioned. We could increase the length of sentence, even to life imprisonment.

    Industrial Investment
    Mr. James Lamondasked the Secretary of State for Northern Ireland if he is satisfied with the level of industrial investment in Northern Ireland.
    Mr. Concannon: I cannot he satisfied with the level of investment while unemployment in the Province remains so high. None the less, there has been a good response to the greatly enhanced incentives which my right hon. Friend announced last August, and the recent decision by General Motors to set up a £16 million seat-belt factory in Northern Ireland is particularly encouraging. The provisional figure for jobs promoted in the first half of 1978 in companies new to the Province is 1,200, compared with a half-yearly average of 225 between 1972 and 1977, and vigorous efforts will continue to be made to publicise Northern Ireland's considerable advantages as a location for new investment.
    Mr. Lamond: Can my right hon. Friend confirm that Government expenditure in Northern Ireland is now running at a level of over £1,000 a year for every man, woman and child in the Province? That makes a total of nearly £1,000 million a year. Has he any intention of studying the impact on health, housing, jobs and education in Northern Ireland should the policies of the Leader of the Opposition be carried out and public expenditure be cut throughout the United Kingdom, including Northern Ireland?
    Mr. Concannon: I can confirm that the capital expenditure per head of population in Northern Ireland is just over £1,000. In fact, last year it was £1,122 per head. Expenditure for the other regions was £754 per head in England in 1976–77, £875 per head in Wales and £948 per head in Scotland. I sometimes wish that this Government would get some credit for this.
    Mr. Neave: The whole House will applaud what the right hon. Gentleman has said about the efforts of the Government to increase investment in Northern Ireland. Is he aware that investors need a clearer picture of the overall industrial policy of the Government for Northern Ireland? Is there a general economic plan? I refer here to the Secretary of State's words about the Quigley report, which was mentioned recently by Sir Charles Carter, chairman of the Economic Council. Will the Minister say what the plan is, and will he say whether the Government intend to continue with several job creation agencies or whether they intend to co-ordinate them?
    Mr. Concannon: The whole time that I have been in this Department I have been acting upon the Quigley report. It would be very strange if I did not, because the head of my Department is Dr. Quigley himself. The special agencies in Northern Ireland are tailored to fit the situation in the Province, and I see no reason why we should change them. These agencies are doing a good job in their relative fields, and I do not want to disturb them.
    Sir G. de Freitas: In our discussions about Northern Ireland, is it not very important to remember that there are enormous economic possibilities for development there? Apart from the present investment, is not the forecast investment per capita higher than in England, Scotland or Wales?
    Mr. Concannon: Yes, that is correct. I am expecting investment to be even higher this year. The subvention from the rest of Great Britain to Northern Ireland was £314 million in 1973–74. In 1977–78, if one includes the one-off payment to the electricity service of £250 million, that subvention will have reached £950 million.
    Mr. Michael McNair-Wilson: Is there not a case to be made for a single corporation to co-ordinate industrial development and ensure that that development goes into areas of particularly high unemployment?
    Mr. Concannon: There is a single agency, and that is my Department, with the Secretary of State and myself as Minister working on this. We have agencies working for us. We give high incentives to industry to locate in the areas of high unemployment. However, I stress that in my travels around the world I have found that there are certain areas which, no matter how much I talk or how much money I offer for them, are their own worst enemies. Until they improve their image, there is very little that one can do.

    Prisons (Deputation of Members)
    Miss Maynardasked the Secretary of State for Northern Ireland if he will now agree to a deputation of hon. Members going to Northern Ireland to visit the prisons there, including H block, in the light of recent events.
    Mr. Concannon: Since the beginning of the year, 12 hon. Members have made general interest visits to Her Majesty's Prison, Maze. Such visits, however, inevitably create a certain tension in the prisons and place a considerable burden on prison staff. In the present circumstances of an intensified protest over the special category issue at Her Majesty's Prison, Maze, I have concluded that there should be no further general interest visits by hon. Members for the time being. I hope that it will be possible to allow a resumption of these after a period of calm. Visits to constituents will, of course, be unaffected.
    Miss Maynard: I find that reply as disappointing as the one I received when I asked the same Question some weeks ago. Does not the Minister feel that, if a deputation of MPs was allowed to go, it would help to allay disquiet in many quarters about the situation in the Maze? Does not this kind of answer give the impression that we have something to hide? Does my right hon. Friend agree that the situation in Northern Ireland and the problems there can be solved only by a political answer and not by force of arms or violence from any quarter?
    Mr. Concannon: I wish that my hon. Friend would at times accord me the same generosity when I tell her things as she seems to accord to just about everyone else. What is happening in these prisons has been brought on by the inmates themselves. They are deliberately fouling and messing up one of the best prisons in Europe. If I announced that a deputation of Members was going to visit Her Majesty's Prison, Maze, I would certainly find that there was an intensification of the efforts of the people inside. Hon. Members must understand that their efforts are aimed at securing special category status. This House has on more than one occasion stated quite clearly that it wishes to see the ending of the special category. I am doing all I can to pursue this aim, and I wish that everyone in this House would back me to the hilt.
    Mr. Carson: Is the right hon. Gentleman aware that it is impossible to integrate children in schools in Northern Ireland? Is he also aware that even
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    the Minister responsible for housing in Northern Ireland is talking about keeping Protestants and Catholics apart by putting them in separate factories'? Does he not agree that we should at present segregate Protestant and Catholic prisoners, some of whom have been sentenced for the foulest crimes? Will he also tell us how many Protestants are taking part in the prison protests at present?
    Mr. Concannon: First, when looking for jobs in the Province I certainly do not look for Protestant or Catholic jobs. I am looking for jobs for the Province as a whole and at where one can put them for the Province as a whole. There is nothing in the suggestion of job segregation, because after the legislation of last year it would be illegal anyway. As regards how many Protestants are envisaged to be involved in the present protests in the Maze, though I do not like to use the words "Protestant" or "Catholic" with regard to prisoners, as the hon. Gentleman has asked me a straight question I will give him a straight answer. The answer is "No."
    Mr. Litterick: Does the Minister recognise, however, that the Question asked by my hon. Friend the Member for Sheffield, Brightside (Miss Maynard) was not about the possibility of what the Minister called a general interest visit but about the possibility of what I consider would more accurately be called a specific interest visit to this prison?
    It would be a specific visit to examine at first hand—by talking to the people involved, the staff of the prison and the inmates—the circumstances in which the present situation has arisen there.
    Mr. Concannon: The reason why this situation has arisen in that prison is that it is a straight protest by those concerned because they wish to have special category status given to these prisoners. This House, two and a half years ago, said that this had to end, and there was general agreement to that effect in this House. I am trying to end this situation, and it is working. If hon. Members want to help those people, I can assure them that if they intend to press for a visit to Her Majesty's prison now, they will be adding succour and help to those who are involved. These prisoners are doing some

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    terrible things, such as fouling their own cells, which I find disgusting. The only thing I impress upon hon. Members is that the prisoners' own actions are keeping them in prison that much longer. They have lost nearly 300 years of remission of sentence. When I consider some of the heinous crimes that some of these people have committed, I am not sorry that we are keeping them in prison a little longer.
    Mr. Farr: Does the right hon. Gentleman recognise that many of us on the Opposition Benches are full of admiration for the prison officers in Northern Ireland and the excellent way in which they are doing a very difficult job at the moment? Does he further recognise that many of us also feel that at this particular time a visit by Members of Parliament—bearing in mind the composition of such a party—could indeed do much more harm than good?
    Mr. Concannon: I thank the hon. Member for seeing it in that way, because that is exactly my position at this moment. However, constituency Members and Members who represent prisoners will not be affected. I believe that most of the hon. Members have visited the prisons fairly recently.
    Mr. Flannery: Will my right hon. Friend accept from me that he is unduly touchy about this particular question in the way that he imputed a wrong motive to my hon. Friend the Member for Sheffield, Brightside (Miss Maynard)? Does he further accept from me that there is not unanimity in this House, no matter how much the United Ulster Unionists cheer him every time he speaks? Finally, does he accept from me that, in the light of the Amnesty International report, if he does not allow Members of Parliament from this House to visit that gaol there will be a feeling among the members of the general public that we have something to hide, and that we should be doing the democratic cause justice by allowing Members of Parliament to go and look at that prison?
    Mr. Concannon: I completely refute just about everything my hon. Friend has said.
    Mr. Flannery: I know that my right hon. Friend will do that.
    Mr. Concannon: I do not know what the Amnesty International report has to do with the Northern Ireland prison service at this moment in time. Anyone who has visited this prison in normal circumstances will know full well that it is a new prison and one of the best in Europe with the best facilities. What is happening is due to only a certain minority—and it is a minority; just two of the H blocks out of eight. If my hon. Friend wishes to exacerbate the trouble that I already have in these prisons, he should carry on with what he is doing, because these people will hinge on every word that is said in this House today and will escalate their protests, thereby making the job of settling these prisoners down and ending the special categories that much more difficult.
    Mr. Molyneaux: Does the Minister agree that the presence of such a deputation would, in fact, play into the hands of the terrorist propaganda machine and that it would inhibit very severely the efforts of himself, the prison authorities and all who are engaged in the welfare of the prisoners from restoring normal discipline to the prison, including the abolition of the special category?
    Mr. Concannon: I think that the hon. Gentleman, along with other Members, paid a visit to the prisons not so long ago, and I thank him for those remarks. I believe he understands the situation and the propaganda value that such a visit would have at present.

    Political Talks
    Mr. Ron Thomasasked the Secretary of State for Northern Ireland what plans he has to have further talks with the various political groupings in Northern Ireland.
    Mr. Biggs-Davisonasked the Secretary of State for Northern Ireland whether he will make a statement about the talks between his Department and representatives of political parties.
    Mr. Mason: As I told the House on 30th June, I have periodic meetings with local political leaders to exchange views on security policy and on economic problems, as well as to discuss possible constitutional advances.
    Mr. Thomas: Does not my right hon. Friend agree that the appalling tragedy of the death of the young boy on Tuesday and the soldier killed by a bomb yesterday are clear indications that these senseless killings will go on until we get a political settlement based on equal human rights? I urge the Minister—because the initiative can come only from him—to do whatever he can to bring about political talks. That is the only way that there is any glimmer of a settlement in this terrible situation.
    Mr. Mason: I agree with my hon. Friend. If he follows matters in the Province closely, he will know that I have laid before the political parties in Northern Ireland a five-point plan which indicates how best we can move towards devolved administration based on the principles laid down by this House. That is, that it should be based on partnership and participation. I have taken the initiative and laid the proposals before the political parties. I can only hope that they will now seize upon those proposals, even if it necessitates changing them according to how they would like to see the Province evolve with its regional tier of administration. It is not a hard and fast blueprint that I have laid before them.
    Mr. Biggs-Davison: Whatever the truth of the report in The Guardian that a proposal before the national executive committee of the Labour Party for an upper tier of local government had been suppressed, are not the Government and the Opposition now agreed in supporting the enlargement of the responsibilities of local government which, indeed, is a feature of some of our current Northern Ireland legislation? Is not the best line of advance in the sphere of local government?
    Mr. Mason: It depends on one's definition of local government. If it is British-style local government being imposed upon the Province of Northern Ireland based on majority rule, I fear that the minority in the Province would reject that sort of approach. Indeed, they might even make sure that it did not work. Therefore, one has to be careful about the definition. If one feels that filling the Macrory gap between district councils and Westminster is a form of local government based on the principles of partner-
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    ship and participation, that sort of regional authority is worth examining.
    Mr. Powell: Is the right hon. Gentleman aware that all political groups in the Province which enjoy any substantial electoral support are represented in this House and are, therefore, at all times available for consultation?
    Mr. Mason: I suppose that the right hon. Gentleman is placing himself as one of the leaders of one of the parties and he himself would like to have the consultations here as distinct from in the Province. But I try to keep his party as well as the other Ulster parties aware and abreast of my thinking on the future of the Province.
    Mr. Fitt: Taking up the statement of my right hon. Friend the Secretary of State that he has had discussions with Northern Ireland political parties on the question of security, may I ask him to make it quite clear to the House that in the discussions with, at least, the SDLP, that party has had no say in security? If it was having discussions on security, it would completely disagree with some aspects of security, particularly that which is contained in the yellow card instructions at present. Is my right hon. Friend aware—[HON. MEMBERS: "Too long.")—that regulation no. 2 on that card states:
    "Never use more force than the minimum necessary to enable you to carry out your duties, and always try to handle the security position by other means rather than using firearms"?
    In this connection—[HON. MEMBERS: "Too long."]—can my right hon. Friend indicate now what is his opinion of the tragic killing of young John Boyle in Northern Ireland on Tuesday? Does he believe that it is necessary to have an inquiry when the whole community—[Interruption.]
    Mr. Speaker: Order. I hope that it will be possible for the hon. Member to raise that matter under another Question. This is a Question relating to the political groupings in Northern Ireland.
    Mr. Fitt: I was taking up my right hon. Friend on the question of the security discussions that he has had, Mr. Speaker. I am asking him to make it quite clear that the SDLP does not agree with the yellow card instructions, and it

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    certainly disagrees with the way that these have been interpreted by certain members of the security forces.
    Mr. Mason: I am sorry to hear what my hon. Friend says. His question relates more directly to security than to political groupings. However, the yellow card really holds back any member of the security forces from being either impulsive or too hasty in his action—
    Mr. Fitt: It did not do so on Tuesday.
    Mr. Mason:—but on occasions when a person has a bomb in his hand, or an Armalite rifle, the yellow card will still allow the security forces to shoot. We know that a number have already been killed or seriously maimed because they hesitated for too long.

    Planning Applications
    Mr. Powellasked the Secretary of State for Northern Ireland whether he is satisfied that there is adequate use of public inquiry in connection with departmental decisions on planning applications involving the general public interest in a neighbourhood.
    The Under-Secretary of State for Northern Ireland (Mr. Ray Carter): Yes, Sir.
    Mr. Powell: Is the hon. Gentleman aware that it will be greatly advantageous if he errs in the direction of holding more rather than fewer public inquiries, whether they are on large schemes such as the Kinnahalla dam or smaller planning matters such as caravan sites, since this method brings public opinion into play and gives all the impression that they have been consulted?
    Mr. Carter: I could not necessarily accept everything that the right hon. Gentleman has said. It is normally the case that we would try to resolve disputes about planning applications without resorting to the lengthy and costly business of a public inquiry. But it certainly is our intention to consult, and in the last case that the right hon. Gentleman mentioned—the caravan site in his constituency—we consulted, just about everyone, including the local authority, before coming to a decision.

    Policing and Administration (Community Participation)
    Mr. Michael McNair-Wilsonasked the Secretary of State for Northern Ireland what steps he is taking to improve the community's participation in the policing and administration of the Province.
    The Under-Secretary of State for Northern Ireland (Mr. James A. Dunn): We are anxious to give locally elected representatives extensive responsibilities for the administration of the Province. That is the purpose of the five-point plan. In the meantime, we shall continue to involve the people of Northern Ireland as far as possible through the various arrangements for consultation that have been developed and extended over the past few years. As regards policing, my right hon. Friend the Secretary of State seeks to ensure that the membership of the Police Authority is, so far as practicable, representative of the whole community.
    Mr. McNair-Wilson: Does not the Minister agree that one of the weakest parts of the Government's policy in Northern Ireland has been the creation of any cross-community co-operation? Have the Government any initiatives in this direction? Has there been any increased recruiting from the minority community into the security forces, the police and the UDR?
    Mr. Dunn: On the last question, I really could not give clear indications, although there are some suggestions that there are increased numbers of recruits from the minority community. However, as the hon. Gentleman will know, no records are kept on the basis of the first application, so it is hard to give the answer that he seeks.
    On the other broad front, every endeavour is made through consultative processes, and, indeed, by local committees, to encourage people to participate and to create relationships with the security forces in the areas in which they live, work and enjoy life.
    Mr. Goodhart: What hope does the Minister have of persuading members of the SDLP to participate more fully in the work of local security committees?
    Mr. Dunn: The same as I would have of persuading the Conservative Party not to keep on asking the same question, to which they know the answer.
    Mr. Fitt: Does my hon. Friend agree that it will be difficult to persuade the SDLP or any other responsible party in Northern Ireland to participate in policing Northern Ireland through the agency of the Police Authority when two very distinguished persons have resigned from that body on the ground that they were kept in the dark and that the Minister ran it in the way he wanted to run it and did not want their views?
    Mr. Dunn: I can understand my hon. Friend's anxiety, but he is not quite informing the House of the facts. Those two people have given notice that they intend to withdraw. These matters are now being considered. It would be wrong of me to pre-empt what answers will come from the consultations and considerations. But it is also true that it is very difficult for those in my hon. Friend's circumstances to persuade people of his own political party to join in endeavours towards security when there is so much reluctance, and there are difficulties which have to be overcome. But we are trying as hard as we possibly can to dissipate that fear and anxiety. We hope that we have my hon. Friend's help in this matter.

    Secondary Schools
    Mr. Freudasked the Secretary of State for Northern Ireland how many schools in the secondary sector are integrated; and what proportion of the secondary school population this represents.
    Mr. Carter: It is known that several schools are attended by pupils of both the main religious denominations, but the Department of Education for Northern Ireland does not collect statistics of the numbers of pupils enrolled at schools according to their religious denominations. No schools have yet applied for controlled integrated status under the Education (Northern Ireland) Act 1978, but it is really too early to expect this to have happened. The Department of Education only recently issued a circular to schools, school authorities and other interested bodies drawing attention to the Act's provisions.
    Mr. Freud: Until there is an increase in integrated schools, will the Minister seek to encourage the pupils of sectarian schools to join together in certain academic classes, as is the case in neighbouring schools in this country? Will he bear in mind that, until there are integrated schools, there is little hope of ending the ghetto development in the communities?
    Mr. Carter: We shall certainly not attempt any artificial integration, in the academic levels or elsewhere. This is an education matter and it has nothing to do with questions of sectarianism or integration. On the general question of integration, we have made it quite clear as a Government, and my noble Friend has made it quite clear, that this is a matter for the community itself to decide.
    Mr. Lee: Is not the whole miserable business of segregated education in Northern Ireland about the best argument that one could ever produce for the total abolition of religious education?
    Mr. Craig: Does the Minister agree that segregated education tends to make people live in separate areas, and that this is not good enough for the community spirit?
    Mr. Carter: That is so obviously true that I do not really know how I can reply to it.

    Police Vehicles (Protection)
    Mr. Farrasked the Secretary of State for Northern Ireland what consideration he is giving to the special protection of the occupants of both marked and unmarked police vehicles in Northern Ireland.
    Mr. Dunn: I know that the protection of occupants of police vehicles from terrorist attack is very much in the minds of the Chief Constable and Police Authority. Steel-protected Land Rovers continue to come into service and protection is available for other vehicles as appropriate. The hon. Member will understand, however, that it would not be in the interests of security to go into details.
    Mr. Farr: Can the hon. Gentleman assure the House that, so far as is possible, patrolling is of a haphazard nature and not to any conformed routine? Also,

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    what consideration has been given to introducing new, very lightweight armoured-type materials, which have been pioneered very successfully for, for instance, the Chieftain tank in Britain?
    Mr. Dunn: On the first question, I would not pretend to intervene on operational day-to-day requirements. They are a matter for the Chief Constable. On the second part of the hon. Gentleman's supplementary question, if the Chief Constable wishes such provision to be made and that equipment should be purchased manufactured from the materials that the hon. Gentleman brings to the attention of the House, we shall await his request.

    Security
    Mr. Craigasked the Secretary of State for Northern Ireland if he will make a further statement on the security situation in Northern Ireland.
    Mr. Mason: Since I answered a similar Question on 15th June, the general level of violence has remained relatively low. Terrorist attacks continue, however, particularly against members of the security forces. The murder yesterday of Private Fisher brings to 19 the number of security force personnel killed this year. In the same period last year there were 30 such deaths.
    The police and Army remain alert to the terrorists' capability and are maintaining their drive to bring to justice those responsible for violence. So far this year 497 people have been charged with serious terrorist offences, including 43 with murder and 55 with attempted murder.
    Finally, I must tell the House how deeply I regret the tragic combination of circumstances which led to the death of John Boyle in Dunloy on 11th July. The police are conducting a full investigation, and it would not be right for me to prejudge that.
    Mr. Craig: Is the right hon. Gentleman aware that most people in Northern Ireland appreciate the progress made by the security forces? Is he also aware that people feel that a hard core of terrorism is not being adequately tackled? Many people, such as Martin Meehan, have been called in for questioning, but the questioning never seems to lead anywhere. Does the right hon. Gentleman agree that there is a growing campaign
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    to denigrate the work of the security forces? I hope he will bear in mind the enormous difficulties and dangers under which the security forces operate, and that when allegations are made he will bear in mind that security forces have shown remarkable restraint in operating in the most difficult circumstances.
    Mr. Mason: I very much appreciate what the right hon. Gentleman says. As somebody who has had some responsibility in the Province and who lives there, the right hon. Gentleman's words are to be respected. It is right that we must continually use the process of the law in Northern Ireland so that when we make an arrest the charge sticks and the matter is processed through a court of law. Secondly, it is true that there is a constant campaign of denigration against the security forces in Northern Ireland. We must we aware of it—and that includes awareness by this House in particular.
    Mr. Bradford: Will the Secretary of State consider proscribing the Provisional Sinn Fein—that group of people who masquerade behind a political label hut who have no policies on housing, education or any other genuine political matter? Will he proscribe that organisation at the earliest possible moment if the numbers of deaths are to be reduced?
    Mr. Mason: I have not in mind proscribing PSF, the political wing of the Provisional IRA. I always bear in mind that if the Provisional IRA wants to prove whether it has any political backing or any following in the community in Northern Ireland, its members will have the opportunity to do so by letting PSF stand in the elections, local or Westminster. The way to prove that is through the ballot box. Let us see what strength that movement possesses.
    Mr. Fitt: Is not my right hon. Friend already aware of all the circumstances relating to the tragic death of John Boyle? Does he agree that this incident has created a deep sense of outrage throughout the whole community in Northern Ireland? In any subsequent inquiry, will the RUC have any power in interpreting the written instructions on a yellow card, or will they continue to be interpreted with such tragic effects as we have already experienced?
    Mr. Mason: The principles have been laid down by this House and not by the RUC. I was personally saddened at the death of this young man. However, a full RUC investigation is taking place. This is the normal course when there is an incident of this kind. There will be a public inquest.

    Secondary Education
    Mr. Gowasked the Secretary of State for Northern Ireland what recent representations he has received about the Government's proposals for the future structure of secondary education in the Province; and if he will make a statement.
    Mr. Carter: The Government continue to receive representations both from those who support the decision to eliminate selection by perceived ability at 11-plus and from those who are opposed to that decision. The most recent representation received, from the Northern Ireland Public Service Alliance, representing 27,000 members in Northern Ireland, urged the Government to proceed with the introduction of comprehensive education as quickly as possible.
    Mr. Gow: Does the Minister agree that under the present law he has no statutory power to impose comprehensive education in Northern Ireland? Will he undertake that there will be no such imposition, save with the full-hearted consent of the parents and teachers concerned?
    Mr. Carter: We are moving on a voluntary basis. It is clear that 27,000 teachers in Northern Ireland are very much in favour of these proposals, as are many other sections of the community in Northern Ireland.
    Mr. Neave: Is the Minister aware that on several occasions we have asked about the cost if all secondary education in Northern Ireland were turned over to the comprehensive system? What is the estimate of that cost?
    Mr. Carter: We have not worked the figure out because we are proceeding on the basis of agreement. If we can proceed on that footing, obviously the cost will be considerably reduced compared with the cost if we were to proceed in another way.

    PRIME MINISTER (ENGAGEMENTS)
    Mr. Christopher Priceasked the Prime Minister if he will list his official engagements for 13th July.
    The Prime Minister (Mr. James Callaghan): This morning I presided at a meeting of the Cabinet. In addition to my duties in this House, I shall be holding further meetings with ministerial colleagues and others.
    Mr. Price: If my right hon. Friend finds a moment to polish up his first draft of the manifesto, will he turn his mind to the problem of the provision of official information to the public? Given the fact that neither the Leader of the Opposition nor her new-found bridegroom from Sidcup has ever taken this problem seriously, to the extent of not even revealing Conservative policies, will my right hon. Friend say what his policy is? Will he publish the serious study as announced in The Times by the Minister who is responsible for the Civil Service, on which doubt has been cast in a letter to that journal today?
    The Prime Minister: Yes, Sir. There will be published within the next 10 days or fortnight the Government's views in a White Paper on official secrets and the reform of section 2, which was the original cause of the setting up of the Franks Committee.
    That White Paper will also contain a section on the provision of information unconnected with section 2. I am glad to say that, since I originally asked Departments to examine this matter, there has been a great improvement in the amount of material issued. Indeed, only this afternoon the Minister for Social Security is issuing a detailed report prepared by officials on supplementary benefit provisions, together with a large number of supporting documents which will appear in the Library. I hope that my hon. Friend and others will read them all.
    Mrs. Thatcher: When the Prime Minister goes to Bonn, will he ask the leaders of the other countries present at the summit how their Governments have done so much better than the Labour Government of the United Kingdom in the past four years in the same world conditions and

    1723
    without the benefit of North Sea oil? How does he explain that the Labour Government are either bottom of the league or next to the bottom in the matter of jobs, prices, output and growth?
    The Prime Minister: I am always ready to learn from anybody in these matters and to try to improve the position in this country. I am sorry that the right hon. Lady feels it necessary to denigrate the efforts of this country when there has been so much improvement in the past four years in so many of the factors to which she has referred. Although we should all be ready to learn lessons from each other, I wish that now and again she would try to speak up and say a good word for Britain.
    Mrs. Thatcher: The Prime Minister has not got the point. I was criticising Britain's Government. Will he explain how in the same world conditions, and with the benefit of North Sea oil, the Labour Government have done so much worse than have the Governments of the other countries who will be present at the Bonn summit?
    The Prime Minister: In the first place, the right hon. Lady is not accurate. Secondly, we took over from an Administration who left us with a three-day working week, the worst industrial confrontation in this country since the early part of the twentieth century, a vast balance of payments deficit which we have now put right, and an ascending retail price index, which is now falling. We have remedied all these things. The right hon. Lady was a member of the previous Administration and a little humility from her would not go amiss.
    Mrs. Thatcher: All the information that I have used has come from Written Answers in Hansard either this month or last. What is inaccurate about the figures?
    The Prime Minister: I shall be glad to look into them all, but I have had occasion before to remark on the way in which the Opposition twist the use of statistics.
    Mr. Hugh Jenkins: When my right hon. Friend is looking at the draft election manifesto, will he make sure that it includes a strong section on the arts and
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    that the undertakings given in earlier manifestos are repeated and will be carried out by the Government that he will head after the next general election?
    The Prime Minister: I am not sure what my hon. Friend is talking about in relation to manifestos.
    Mr. Crawfordasked the Prime Minister if he will list his official engagements for Thursday 13th July.
    The Prime Minister: I refer the hon. Gentleman to the reply that I have just given to my hon. Friend the Member for Lewisham, West (Mr. Price).
    Mr. Crawford: As it is clear that the Labour Government intend to proceed with the closure of the Glengarnock steelworks and to postpone indefinitely the Hunterston steelworks, will the Prime Minister have a word with the Secretary of State for Scotland and tell him that it is not, as the Secretary of State has suggested, the SNP which is misleading the people of Scotland over the future of their jobs, but the Secretary of State himself and the Labour Government? Will the Prime Minister therefore dismiss the Secretary of State for Scotland immediately?
    The Prime Minister: The hon. Gentleman might put these questions to the Secretary of State for Scotland if he wishes detailed replies to them.
    Mr. Henderson: You are the boss.
    The Prime Minister: Yes, but in this House and this country there is a doctrine of ministerial responsibility. When the House decides to elect me as life president, I shall assume all the responsibilities—but not until then. I understand that the major investment at Ravenscraig and the ore terminal and direct reduction plants at Hunterston are to be completed, so I do not know where the hon. Gentleman gets his information.
    Mr. Dalyell: Has the Prime Minister noticed that the chairman of the Scottish Life Offices Association has seen fit to issue a public warning to his policyholders about the dangers of the SNP policy to have a pound Scots and a pound sterling? Will my right Eon. Friend investigate other areas to allow people to understand just what SNP policies are all about?
    The Prime Minister: I should be very glad to learn more about SNP policies, because it seems that the more the Scottish people learn about them, the less is the support for the SNP.
    Mr. Powell: If the Prime Minister is spending any time today in preparation for the meeting in Bonn, will he resolve not to enter into any scheme, whether proposed at Bremen, Bonn or anywhere else beginning with "B", which involves the principle of fixed exchange rates, which over the past 30 years has done more harm than any other single factor to the economy and morale of this country?
    The Prime Minister: I have no intention of entering into any commitments, and nor would one be asked to do so at Bonn, as the right hon. Gentleman knows. There is a great intellectual discussion between the right hon. Gentleman and many others who are similarly profound on the question whether fixed exchange rates have been a problem. I have no doubt that a zone of stability is to be preferred to much of the speculative consequences that flow from the present system. If we could get something between the two, I should be very happy.
    Mrs. Castle: When publishing the White Paper on open government to which he referred earlier, will my right hon. Friend bear in mind his Government's manifesto commitment to introduce a freedom of information Act which will place on public authorities the onus of proving why information should be withheld from the public?
    The Prime Minister: I have borne that in mind very much and I regret that we cannot come to that conclusion at this time, so the White Paper will contain certain reasons why we shall not be introducing such a Bill.
    Mr. Hendersonasked the Prime Minister if he will list his official engagements for Thursday 13th July.
    The Prime Minister: I refer the hon. Member to the reply I gave earlier today to my hon. Friend the Member for Lewisham, West (Mr. Price).
    Mr. Henderson: As it is possible that the Prime Minister's attention may turn
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    sometime today to the question of pay policy, will he take into account what many people in Scotland regard as a gross distortion of pay scales, namely, the provision of London weighting, which is now running at about £9 per week, and suggest either the abandonment of this gross favouritism to people working in London or the introduction of a similar weighting allowance for people in areas of high costs, such as Scotland, to bring a sense of equity and fair dealing into pay negotiations?
    The Prime Minister: I am aware that the problem of London weighting has often caused a great deal of disagreement throughout many parts of the United Kingdom—not only in Scotland—but it is not an issue for the Government to settle. It is a matter for negotiation.
    Mr. Ford: If the Prime Minister, during the course of his engagements today, happens to see the Foreign Secretary, will he congratulate him on the arrangement which has been made in Namibia between the five western Powers and SWAPO and other sections and urge the Foreign Secretary not to brook any interference in the transition to a democratic and peaceful community in Namibia?
    The Prime Minister: I am grateful to my hon. Friend, because I believe that the work that has been done by the five Powers in negotiating with South Africa and with SWAPO may be of very great benefit to the people of South-West Africa. It looks as though the five Powers can go to the Security Council to ask for the appointment of a United Nations administrator to effect a peaceful settlement in this territory. That would be of great significance and importance, not only in itself but perhaps for the effects it would have on the prospects of a settlement in Rhodesia as well.
    Mrs. Knight: In the light of what the Prime Minister said earlier about ministerial responsibility, may I ask whether he has planned to use any part of his day to call in his right hon. Friend the Minister of State for Overseas Development to try to get agreement on whether the Government are or are not in favour of taking over the 500 top companies in Great Britain?
    The Prime Minister: I do not propose to do that today. [HON. MEMBERS: "Answer."] I am sorry that Conservative Members are a little deaf. I said that I do not propose to do that today.

    NATIONALISED INDUSTRIES
    Mr. Terry Walkerasked the Prime Minister when he last met the heads of nationalised industries.
    The Prime Minister: I do not see the heads of nationalised industries collectively, but I meet them individually from time to time, as necessary.
    Mr. Walker: Will my right hon. Friend consider having talks with his noble Friend Lord Beswick, chairman of British Aerospace, because there are problems that need to be ironed out about the future production programme of British Aerospace? Many of us on this side of the House welcome the go-ahead for the HS146, but, as the Prime Minister well knows, decisions have to be made about our future collaborative programme with Europe or the Americans and talks with Lord Beswick would certainly help this decision along.
    The Prime Minister: I can assure my hon. Friend that the Secretary of State for Industry is in close touch with Lord Beswick on these issues. I welcome the debate that my hon. Friend initiated on Monday. I read it with very great interest and thought that there was a great deal of expert information contained in it which was of help to the Government. We shall reach conclusions on these matters, but negotiations are going on with both European and American aircraft companies.
    Mr. Tapsell: Does the Prime Minister's statement made earlier this afternoon that the prices index is going down apply to the products of nationalised industries, or is that statement about to be repudiated, like his earlier assurance to me that the cost of living index would never rise again into double figures?
    The Prime Minister: The hon. Gentleman is misleading once more. He forgets the coda with which I ended—namely, provided that we stick with our existing policies. Why does he not quote me in full if he quotes me at all? As for the
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    retail price index, perhaps the hon. Gentleman will wait until tomorrow to see what figure is published. We shall then know whether the rate of inflation is moving up or down. I have a feeling that, contrary to the national interest but in accordance with their normal prejudices, Opposition Members will be disappointed to find that the rate of inflation is still going down. Whether we can continue to keep it at that level depends upon following the policies that we have enunciated, which I am now struggling to do without any help from the hon. Gentleman.

BUSINESS OF THE HOUSE
Mrs. Thatcher: Will the Leader of the House please state the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): The business for next week will be as follows:
MONDAY 17TH JULY—Second Allotted Day for consideration of Lords amendments to the Scotland Bill.
Motion on the Appropriation (No. 3) (Northern Ireland) Order.
TUESDAY 18m JULY—Remaining allotted day for consideration of Lords amendments to the Scotland Bill.
Motion supplementing the order of the House of 16th November last relating to the Wales Bill.
WEDNESDAY 19TH JULY—Consideration of Lords amendments to the Wales Bill.
Motion on the Rent (Northern Irleand) Order.
THURSDAY 20TH JULY—Completion of consideration of Lords amendments to the Wales Bill.
Motion on the Education (Northern Ireland) Order.
FRIDAY 21ST JULY—Lords Messages on the Inner Urban Areas Bill, the Independent Broadcasting Authority Bill, and the Community Service by Offenders (Scotland) Bill.
Motions on the Cinematograph Films (Collection of Levy) Order, the Protection of Depositors (Accounts) (Amendment) Regulations, the European Space Agency

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Order and the Dominica Termination of Association Order.
Proceedings on the Employment Protection Bill [Lords], and on the Statute Law Repeals Bill [Lords], which are consolidation measures.
MONDAY 24TH JULY—Supply [29th Allotted Day]: The Question will be put on all outstanding Votes.
The subject for debate is to be announced later.
Motion on the dock labour scheme 1978.
Mrs. Thatcher: I put three questions to the right hon. Gentleman. First, on Tuesday's business, I cannot find any precedent for a Government introducing a guillotine motion after midnight, let alone having it apply immediately to business the following day. It is an extremely busy week, to put it mildly. Will the right hon. Gentleman not reconsider the business after midnight on Tuesday so that we may give it our consideration at a more reasonable hour and give it more worthy consideration?
Secondly, there are various indications in the press that there will be a White Paper on pay policy and various other economic matters. Is the right hon. Gentleman able to say when it will be published and when there will be a statement upon it and a debate?
Thirdly, my right hon. and hon. Friends have persistently asked the right hon. Gentleman for a debate on Rhodesia. It is urgent that we have one in Government time before the House rises for the Summer Recess. Will the right hon. Gentleman promise a full day?
Mr. Foot: I do not know whether there is any precedent for a guillotine motion after midnight. However, it is a supplementary motion. It is true that there is a quite extensive amount of business next week. The House has voted that we should carry through some extremely important measures, and we are putting these proposals to the House to ensure that the business is properly concluded.
The right hon. Lady asked about a White Paper on economic affairs. I cannot give her any date, but I expect that such a paper would be published. There would have to be some provision for a debate.
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The right hon. Lady has made representations about a debate on Rhodesia. She did so a week ago, and we shall take that into account and seek to provide a day in Government time before the House moves to recess.
Mr. David Steel: In view of the Prime Minister's rather disappointing answer about a White Paper on the Official Secrets Act and a freedom of information Act, will the right hon. Gentleman tell us when the White Paper will be published and whether it will be accompanied by a ministerial statement setting out the Government's conclusions?
Mr. Foot: The White Paper will be a paper setting out the Government's views on the present situation. I do not think that it would be normal to have an accompanying statement to a White Paper of that character. What the right hon. Gentleman and others should do is await the White Paper, when they will know what comments they wish to make.
Mr. Kinnock: Is my right hon. Friend aware that the Wales Bill needs not so much a guillotine but a karate chop? In view of the news of the business this afternoon, does he accept that the inadequacy of the Bill is exceeded only by the indecency of the haste with which it is being pushed through the House?
Mr. Foot: I never knew that my hon. Friend was such an enthusiast for the operations that are conducted in another place. I hope that when the Bill returns to the House we shall have his full support in implementing the views that have already been expressed by the elected House of Commons.
Mrs. Bain: Despite the machinations of the official Opposition and Labour Back Benchers who are opposed to the concept of devolution both to Scotland and to Wales, the Scotland Bill and the Wales Bill are likely to complete their parliamentary stages next week. May we expect an early announcement from the Government on the date of the referendum, which is now the crucial feature of the whole legislation?
Mr. Foot: Let us complete the business that we have announced. As the right hon. Lady the Leader of the Opposition has suggested, the programme is crowded. Let us proceed to complete

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that business. When that has been done we may consider how we shall proceed to the next step. I am sure that the whole House is now beginning to recognise that the steps that the Government outlined originally are being carried through.
Mr. du Cann: Is the right hon. Gentleman aware that the attention that he has given in recent months and weeks to Members' remuneration, secretarial allowances and other such matters, in reply to representations made to him by the right hon. Member for Anglesey (Mr. Hughes) and others and myself, is very much appreciated, not least the letter that I received from him within the last hour? For the convenience of the House, will he be good enough to say when he expects to be in a position to make an announcement about percentage increases? If we are to have a debate on these matters before the House rises for the Summer Recess, will he be willing within that short time to comment on the specific proposal made to him, which I believe has full support in the House—namely, that the Top Salaries Review Body should be reconstituted to consider these matters with a view to implementation of any recommendations after the next General Election? Is he able to comment on that matter?
Mr. Foot: I am most grateful for the representations that have been made to me by the right hon. Member for Taunton (Mr. du Cann) and by my right hon. Friend the Member for Anglesey (Mr. Hughes). I believe that those representations are helping the House to approach the whole matter in a manner that will be beneficial in dealing with the whole subject properly. We are today tabling motions and resolutions on the Order Paper on these issues. I do not think that it is necessary for any announcement to be made about that in the House. We shall have a debate on the motions and resolutions before we depart for the recess. The House will be able to give its opinion. During the course of the debate, I shall make some response to the requests that have been made to comment on the possibility of the re-establishment of the Top Salaries Review Body and how we might proceed along those lines.
Mr. Spearing: Does my right hon. Friend recall that on 28th November he gave an undertaking to table a motion
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relating to the procedures of the House in controlling the response of Ministers to proposals for Brussels legislation? Is he able to tell the House whether that debate will take place before the Summer Recess? Will he give an indication when he expects to table such a motion on the remaining Orders of the Day?
Mr. Foot: I cannot give my hon. Friend an exact date, but I can assure him and the others who are concerned that I am fully aware of the commitments that I made in November, that arose from earlier commitments that had been made to the House. I am aware of what was said, and I hope that we shall deal with the matter before the House goes into recess.
Mr. Pym: Will the right hon. Gentleman reconsider the arrangements that he has announced for next week? Why cannot he take the timetable motion on Wednesday and take the last day of the Wales Bill on the first day, or on one other day, of the following week? There is not such a degree of urgency in achieving the objective of completing the Bill in the manner that he has described. Why cannot we do it at a more reasonable speed?
Will he give the House some indication of the number and range of statements that he expects to be made between now and the time that we rise? It is a time of the year when there is apt to be many statements. When we contemplate a week such as next week, as the right hon. Gentleman now has arranged, that could be inconvenient to the House. Is he prepared to give some indication of the number and range of statements that are likely to be made?
Mr. Foot: No one has greater experience than the right hon. Gentleman on the difficulty that may arise towards the end of a Session about the numbers of statements that have to be made. Although we seek to ensure as best we can that the debating time of the House is protected, there are bound to be occasions when statements called for by either the Opposition or the rest of the House have to be made. We do our best to try to arrange such matters successfully.
As for rearranging the business for next week, if the Opposition wish to take their Supply Day earlier, we might be able to look at it in that sense. I should have

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thought that what we have proposed was the best way to proceed. Of course, if the right hon. Gentleman would give us an absolute assurance that no other suggestions will be coming from another place—I know how powerful his influence is there—that might help us to arrange the business, too. If he cannot assist us in either of those directions, I think that we should proceed with the arrangements that we have already made.
Mr. Greville Janner: Will there be a debate on human rights before the House rises, as presaged by the Foreign Secretary in his statement to the House earlier this week?
Mr. Foot: I cannot promise a debate, although the importance of the matter is very great. There are other opportunities, as my hon. and learned Friend knows, for individual Members to raise important questions for debate before we depart for the Summer Recess.
Sir David Renton: I remind the right hon. Gentleman that he welcomed my suggestion that, before we reached a conclusion on the timetable motion on the Scotland Bill, the Government should declare their intentions with regard to Lords amendments. That was not done in relation to the Scotland Bill. Will he ensure that it is done in relation to the Wales Bill?
Secondly, does he recollect a time when, even in July and even under this Government, we have been so overloaded with business that we have had to take a timetable motion after midnight?
Mr. Foot: On the first question raised by the right hon. and learned Gentleman, I must say that his response is a little ungenerous because, partly as a result of the question that he put to me, we took steps to indicate to the House the general numbers of amendments or resolutions that the Government intended to accept. I believe that the House generally has been assisted by the way in which we have approached the matter. Certainly that has been the response that I have had from many Opposition Members. I believe that the same procedure can be adopted for dealing with the Wales Bill. In many respects we are going further than has normally been the case with
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any Government when dealing with such a measure.
As for the crowded programme, it is and often has been the case on previous occasions for there to be a great deal of business for the House to get through before the end of July. But the House of Commons decided that these major matters of constitutional importance should be proceeded with in the votes both on Second Reading and on establishing the timetable motions. Therefore, the House itself having urged that we should proceed, I believe that we must bring those great measures to a proper conclusion.
Mr. Skinner: Will the Leader of the House indicate whether there will be a debate before the recess—whether next week or some other time—regarding the Roy Jenkins model for European monetary union? Is he aware that, unlike the Prime Minister, many of us regard this not as an intellectual exercise but as another part of the political hand-over to Brussels? When combined with the Common Market elections next year—if they take place—it may be that before an election in this country we shall be placed in a similar position to that of 1970 when the two sides of the House were not quite clear on the details. The result was that that lot—the Tory Party—got in and we got embedded in Europe. We do not want that to happen again.
Mr. Foot: I agree with my hon. Friend that we must take every precaution to ensure that "that lot" do not get in again. I am sure that we shall all work together to ensure that that is the case.
The other matters raised by my hon. Friend will, of course, be debated in the country and in the House for a considerable number of months ahead—indeed, even longer.
Sir Raymond Gower: As the operation of the two guillotines hampered proper discussion of parts of the two devolution Bills and as the Lords have rightly thrown them back at us so that we may have a second chance to discuss those parts adequately, will the right hon. Gentleman ensure that, at the conclusion of the discussions, we shall have given some attention to the parts that could not be discussed the first time?
Mr. Foot: We are doing everything in our power to ensure that the House shall have the best opportunity in the time available to have the fullest possible discussion, particularly of those aspects of the Bills that were not fully discussed before. There are some aspects of those measures on which the House of Lords has taken a different view from the House of Commons, so clearly further provision must be made for those matters to be debated here. The debate on the Scotland Bill a few days ago showed the spirit in which the Government were approaching the matter, and I believe that every hon. Member present during the debate could see the spirit in which the Government were dealing with it.
Mr. Dalyell: In view of the evidence of Sir Stanley Raymond and Lord Allen as successive chairmen of the Gaming Board to the Royal Commission on gambling to the effect that the devolution of betting and gaming would be "highly dangerous" and in view of the fact that it is unlikely that betting will be reached because of the slotting of the guillotine, is it not important that this subject should be fully discussed before any decision is reached?
Mr. Foot: We may not need to have such a full discussion, because we might possibly agree with the suggestions that have come from those quarters. That might assist the debates on other matters as well. However, as my hon. Friend knows, we have not quite reached that point on the Bill.
Mr. Peter Mills: As British agriculture is totally in the dark as regards what is required in future production, when may we have a statement from the Minister of Agriculture on updating "Food from Our Own Resources"? Surely the Leader of the House realises that that is in the interests of the consumer as well.
Mr. Foot: I think that it is well understood throughout the country—it is certainly understood by most hon. Members—that we have an excellent Minister of Agriculture. On every occasion that he has made a statement to the House, I think that has been acknowledged by everybody, except possibly the Opposition Front Bench. I am not sure whether there should be a further statement on these
1736
matters before the House goes into recess. I shall certainly take the representations into account. I have also to take into account the representations made by the Opposition Front Bench that we should not have too many statements.
Mr. Molloy: In view of the terrible accident in Spain earlier in the week resulting in such tragic deaths, the primary cause being one lorry possibly on the wrong road, ought not the House now to debate all safety measures relating to lorries travelling on our roads so that we can be certain that lorries transporting hazardous consignments are properly managed and maintained and that the routes they take are supervised to ensure the minimum amount of danger in this island? We cannot wait for an accident to happen before having an inquiry. Is it not time that we had a full inquiry to ensure that the terrible tragedy that took place in Spain does not happen in this island?
Mr. Foot: I fully accept what my hon. Friend said about the great importance of this subject. I am not seeking to minimise it in any sense whatsoever. Whether the best thing is to have a debate in the House on the matter is another question. The time available for debates is severely restricted. However, that does not in any way minimise the importance of trying to draw every possible lesson that we can from the appalling tragedy that occurred.
Sir Bernard Braine: Bearing in mind that I wrote to the Prime Minister 17 days ago, after the Health and Safety Commission report had clearly established that Canvey Island was the most endangered community in this country, begging him to intervene, will the Leader of the House arrange for the Prime Minister to make a statement next week or, better still, will he agree to the reasonable plea made by the hon. Member for Ealing, North (Mr. Molloy) for this grave matter here on our own doorstep to be debated before something very serious occurs?
Mr. Foot: I fully accept what the hon. Gentleman said about the seriousness of the matter. I understand that the Secretary of State for Transport has already initiated inquiries and investigations into the matter. But it is not possible to arrange to have statements on

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all the subjects that hon. Members raise. If we did, we would not have any time for the other debates that hon. Members also demand. We have to take that matter into account as well. I repeat, I am not seeking in any sense to minimise the importance of the subject that has been raised.
Dr. M. S. Miller: I pay tribute to my right hon. Friend's interest in the medical surveillance of hon. Members. When will he be in a position to make a statement about this important matter?
Mr. Foot: I hope that there will be a statement soon. The Services Committee has considered the matter. We are all grateful to my hon. Friend the Member for East Kilbride (Dr. Miller) and his associate from the Opposition I or the evidence that they have given us on this matter. I hope that before we depart for the recess it will be possible for Mr. Speaker to make a statement.
Mr. Cormack: Shall we complete all the outstanding business before the recess? If so, when do we expect to rise for the recess?
Mr. Foot: I cannot give the date yet. It depends upon the degree of co-operation. I am glad to see the hon. Member for Staffordshire, South-West (Mr. Cormack) in such a co-operative mood.
Mr. Loyden: Is the Leader of the House aware of the growing concern about the Health Service? Does he agree that the value of the Health Service and the benefit that it has brought to the community proves that the Service is well worth defending? In view of the erosion in certain areas of the Health Service will he arrange for a debate, if not next week, before the recess so that we can hear from the Secretary of State about the measures that he has taken to overcome the difficulties?
Mr. Foot: Once again I must say to my hon. Friend, as I have said to others, that although there is no possibility of a full day's debate on this subject, that does not mean that I think that the subject is not extremely important. There are other opportunities for hon. Members to raise matters before the House departs. A considerable amount of time is allocated to hon. Members and the
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Opposition to choose subjects for debate. I cannot promise a full day's debate in Government time, even though the subject is so important.
Mr. Fairbairn: In view of the obscene inquisitions in Russia in defiance of all the principles of our civilisation, and to challenge our defence of them, will the Leader of the House arrange a foreign affairs debate so that the genuine reaction of all sides of the House can be registered?
Mr. Foot: The views of the Foreign Secretary, the Government and the House have been expressed already in many statements in recent weeks and days. It is not necessary to have a debate for the House to express its views.
Mr. Litterick: Since we have a fair amount of time available to us between now and October, will the Leader of the House take note of the widespread distress now being felt by readers of women's magazines who have discovered that the laws governing the Royal succession are at odds with the Sex Discrimination Act since those laws deprive the female members of the Royal Family of their rightful place in the queue? Will the Government devote their mind to this serious subject?
Mr. Foot: I am prepared to devote my mind to the subject but I cannot promise any legislation.
Mr. Rees-Davies: May we have an assurance that before the House rises for the recess we shall have an opportunity to debate the Royal Commission on gambling, bearing in mind certain aspects of it? There are a number of extremely urgent recommendations for lotteries, competitions and racing. Is the Leader of the House aware that these matters greatly affect many citizens who are anxious that the report should not be put to bed and left to sleep but that we should have an opportunity now of expressing a view before we have a general election? If it were left it might be some time before an opportunity to discuss the matter arose.
Mr. Foot: The Government set up the Royal Commission because they believed that certain matters should be investigated. I cannot promise a debate before the recess, for the reasons that I gave to other questioners. I am afraid that both

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the hon. Member and other hon. Members must recognise that a limited amount of time is available.
Mr. Ron Thomas: I hope that the Health and Safety Commission will issue an urgent report but may I put a different question to the Leader of the House? Does the Leader of the Opposition have some kind of constitutional prerogative which allows her to put as many questions as she likes to the Prime Minister? If that is so—
Mr. Speaker: Order. Was the hon. Member seeking to criticise a ruling that I have made?—[HON. MEMBERS: "Yes."] He knows well enough that that is not the way to do it. There is an established way for him to do that. I shall not sit in this Chair whilst he stands up and makes any charge that he likes.
Mr. Costain: Has the Leader of the House read the letter that I sent to him yesterday pointing out that 64 hon. Members attended the south-east study Committee for a two-and-a-half hour debate? Will he allow an extra day for that debate?
Mr. Foot: I shall look at the matter. I should be prepared to recommend that fresh time be given for that debate.
Mr. Burden: May I draw the right hon. Gentleman's attention to Early-Day Motion No. 445 which is supported by hon. Members of all parties and which is now signed by 223 hon. Members? Is the Leader of the House aware that the motion calls for a debate on the report on the export of live animals for slaughter and further fattening? Is he aware that new regulations are being issued in Europe in August? Does he agree that there should be a debate so that the Minister of Agriculture, Fisheries and Food can come to the House and explain what those regulations are and so that the House can have an opportunity of expressing its view?
[That this House considers that the contents of the report by agriculture departments of the Ministry of Agriculture, Fisheries and Food that was issued in March 1978 under the title, 'The Export Trade in Live Animals for Slaughter or Further Fattening' are of great interest and concern to honourable Members of this House, to animal welfare organisations, the farming industry and
1740
the general public; and asks Her Majesty's Government to set aside time for an early debate.]
Mr. Foot: The Government recognise the strength of feeling in all parts of the House about this trade. That is why my right hon. Friend set up the recent inquiry and decided to publish the report. Discussions have been taking place between representatives of the welfare interests and the producers and exporters. It would be best to await the outcome of those discussions before having a debate.
Several Hon. Members rose—
Mr. Speaker: I propose to call those hon. Members who have been standing so far.
Mr. Bowden: Is the Leader of the House aware that there is considerable anger on both sides of the House about the lack of discussion on the Floor of the House about the problems of London and the south-east? Will the Leader of the House please make time so that we can discuss this region in the House because my constituents are sick and tired of the time that we have wasted on Wales and Scotland?
Mr. Skinner: That is a good reason for voting for the guillotine.
Mr. Foot: My hon. Friend says that that is a good reason for voting for the guillotine. I am pleased to have made such a rapid convert. I understand the desire to discuss these matters in the House. Some of these matters were discussed during the passage of the Inner Urban Areas Bill. Some time has been spent discussing that measure and many of the problems of the south-east were raised during the passage of that Bill.
Mr. Faulds: Does my right hon. Friend think that it might help the House with the problem of the Leader of the Opposition and her three bites at the cherry if, by special dispensation, the fellow who prepares the Questions for her were allowed to sit beside her so that he can explain not only the Answers but the original Question?
Mr. Adley: Does the Lord President recall that on a number of occasions I have made representations to him and his colleagues about the lack of opportunity to discuss the fundamental changes which

1741
the Scotland Bill makes to the constitution of the British Tourist Authority? Is he aware that the Government's proposal will put political placemen in a position of supremacy in dictating policy?
Is he further aware that the recent appointment as the new chairman of the Wales Tourist Board of a thrice-failed Labour candidate—however nice a chap he might be—has not allayed any of the fears? The Leader of the House told us a few weeks ago that he wished to abolish the House of Lords. Is he now saying that he is satisfied that this important matter, which affects the whole of the United Kingdom, should be discussed only in the other place?
Mr. Foot: There could have been a discussion in the House of Commons on the matter if the hon. Gentleman and some of his hon. Friends had wished and had arranged their contributions in a somewhat different manner. I do not think, therefore, that that criticism comes so well from him. I gather that some discussion has taken place on this matter in another place, and that, too, affects the situation.
The House is fully aware that if we were to provide endless time for discussion on the changes made to the Bill in another place, the Bill would never get on to the statute book. I understand that some Conservative right hon. and hon. Members, including the right hon. Member for Cambridgeshire (Mr. Pym) want that, but that is not what we want and it is not what the House of Commons, let alone the House of Lords, has voted for.
Several Hon. Members rose—
Mr. Speaker: May I appeal to hon. Members to help me by putting short questions?
Mr. MacKay: Is it not time that we had a statement from the Edmund-Davies report on police pay, particularly since the Home Secretary, sitting on the Treasury Bench last week, was waving the report over his head with some panache?
Mr. Foot: I hope that there will be a statement on that important subject in the House next week.
Dr. Hampson: Is the Lord President aware of the serious accusation made by
1742
some of the press against the Secretary of State for Education that she ordered the destruction of and engaged in a cover up about the existence of a report by her inspectors of 10 bad schools at a time when she was publishing a report on 10 good schools? Does the right hon. Lady not owe it to the House and to herself to give a clear, open explanation, which we have certainly not had from her Department so far?
Mr. Foot: I do not know in which section of the press that absurd charge was made against my right hon. Friend. I am sure, however, that it will be dismissed by all hon. Members in the proper way.
Mr. David Atkinson: Is the Lord President aware of the continued non-publication of the Official Report for 12th, 13th, 14th, 17th, 18th and 19th April? Is he aware that this includes the record of the first few days of the Budget debate? Can he assure the House that it will be published before the recess?
Mr. Foot: I am hoping to overcome those difficulties. I am extremely sorry that such a trouble should have arisen.
Mr. Budgen: Will the Lord President confirm that there is now no opportunity before October for what might have been only the third general debate on the vital subject of immigration?
Mr. Foot: There is one Supply Day left.
Mr. Gow: Is it possible for the Government to publish, even though they might not be able to find time to debate, the Bill to give effect to the recommendations of the Speaker's Conference for increased representation in Northern Ireland?
Mr. Foot: I have answered hon. Members and others on that subject before. I have nothing to add today to what I have said earlier.
Mr. Arthur Latham: On a point of order, Mr. Speaker. I should be most grateful for some guidance. With a number of my hon. Friends I am a little worried about what happened toward the end of questions on the Business Statement. You will recall that my hon. Friend the Member for Warley, East (Mr.

1743
Faulds) who is both louder and bigger than my hon. Friend the Member for Bristol, North-West (Mr. Thomas)—
Mr. Faulds: And nicer.
Mr. Latham:—referred to a particular matter concerning three bites of the cherry. I am sure that my hon. Friend the Member for Bristol, North-West intended you no discourtesy. Perhaps his language should have been more felicitous. We have been discussing among ourselves which ruling you felt my hon. Friend the Member for Bristol, North-West was in breach of. We were wondering, too, whether there is any way in which we may subsequently address questions to you or to the Lord President when it seems that the Leader of the Opposition is taking a quite disproportionate share of Question Time and is excluding many Back Benchers.
Mr. Speaker: I asked the hon. Member for Bristol, North-West (Mr. Thomas) whether he was challenging the ruling I had made. He did not answer. I then called the next hon. Member to speak. On the question of the Leader of the Opposition being called three times at Question Time, I have had research done. It shows that this is by no means the first Parliament in which the Leader of the Opposition has been treated in that way. If hon. Members look into the records they will see that when both parties have been in Opposition their leaders have exercised, and have been given, the same discretion.
Mr. Adley: Further to that point of order, Mr. Speaker. Last week during Prime Minister's Questions you indicated to Labour Members that it was not the responsibility of the Prime Minister to answer questions about the activities of the Leader of the Opposition or Conservative Members. Will you reconvey those views to the Prime Minister, who seems to utilise the occasion to answer questions from his own Back Benchers if it suits him but to refuse to answer questions put by my right hon. Friend the Leader of the Opposition?
Mr. Speaker: Order. I fear that that is an old custom of this House. No intervention from me can have anything to do with that. It is not for me to direct the content of replies.
Mr. Faulds: Further to the point of order, Mr. Speaker. I accept that you
1744
have done research in this matter and have found that under previous Administrations the Leader of the Opposition has been allowed three bites of the cherry. There seem, however, to be two new factors in this situation. The first concerns the unfortunate continuation of the broadcast time. The second factor—and perhaps you can confirm this, Mr. Speaker—is that under previous Administrations the Leader of the Opposition added supplementary questions that extended the argument. The current Leader of the Opposition merely reiterates the old porridge time and again.
Mr. Speaker: Order. I think that we can leave this matter now and turn to the Standing Order No. 9 application.

SOCIAL SECURITY OFFICES (CLOSURE)
Mr. Lawrence: 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 important matter that should have urgent consideration, namely,
"the continuing closure of the unemployment benefit and Department of Health and Social Security offices in Burton-upon-Trent and elsewhere."
The matter is specific in that it concerns official strike action now being taken by clerical staff members of the Civil and Public Services Association at the unemployment benefit office in Burton-upon-Trent and in 13 other targeted towns and cities in Britain.
The DHSS office clerical staff has come out in sympathy without going through the established union procedures, and that means that no unemployment, sickness or supplementary benefit of any kind has been paid out by these offices in the last four days.
The matter is important both because it raises a matter of vital constitutional significance and because it is causing substantial human distress. The dispute is not about wages or the threat of redundancy. The Minister has made it clear that there will be no redundancies as a result of the scheme that is being discussed. It is about whether the new leadership of a powerful union, a leadership consisting of Left-wing militants—and that is because thousands of moderate

1745
civil servants could not stir themselves from their apathy long enough to vote in the elections—can so lean on a Labour or any Government as to force them to change their policy decisions.
The matter is important to the House because this union, with an utterly callous disregard for the misery it might cause, has chosen as its victims in this struggle tens of thousands of the unemployed, the sick and disabled—the weakest people in our society.
The matter is urgent because 2,000 people in Burton and 30,000 in the rest of the country may not receive enough money to live on this week. Furthermore, there is expected to be some violent reaction at the offices concerned, and I have just heard that the Burton branch has voted unanimously to stay out indefinitely. The likely effect of that, if the Government are not forced to back down to avoid confrontation, is positively frightening.
Mr. Speaker: The hon. Member for Burton (Mr. Lawrence) gave me notice this morning that he would seek, under Standing Order No. 9, to draw attention to a specific and important matter which he thought should have urgent consideration and on which he would seek to move the Adjournment of the House, namely,
"the continuing closure of the unemployment benefit and Department of Health and Social
1746
Security offices in Burton-upon-Trent and elsewhere."
I listened carefully to what the hon. Gentleman said and I have no doubt—nor, I am sure, will the House have any doubt—that he has drawn attention to a serious matter. I have to decide whether the business of the day is to be changed, tonight or on Monday night next. As the House knows, under Standing Order No. 9 I am directed to take into account the several factors set out in the Order but to give no reasons for my decision. I am afraid that I cannot rule that the hon. Member's submission falls within the provisions of the Standing Order and therefore I cannot submit his application to the House.

STATUTORY INSTRUMENTS, &c.
Mr. Speaker: By leave of the House, I will put together the Questions on the three motions relating to Statutory Instruments.
Ordered,
That the draft Shipbuilding (Redundancy Payments Scheme) (Great Britain) Order 1978 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Shipbuilding (Redundancy Payments Scheme) (Northern Ireland) Order 1978 be referred to a Standing Committee on Statutory Instruments, &c.
That the Health and Safety (Genetic Manipulation) Regulations 1978 (S.I., 1978, No. 752) be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Foot.]

ORDERS OF THE DAY
  FINANCE BILL
  As amended (in the Committee and in the Standing Committee), further considered.
  FINANCE BILL
    Clause 30

      CLOSE COMPANIES: RELEVANT INCOME OF TRADING COMPANIES
      4.11 p.m.
      The Minister of State, Treasury (Mr. Denzil Davies): I beg to move amendment no. 12, in page 22, line 8, at end insert—
      '(2) In paragraph 9(4) of that Schedule (associated company to be disregarded for purposes of paragraph 9(3)) for the words "which has not carried on any trade or business at any time in that accounting period" there shall be substituted the words "which was not a trading company, or has not carried on any trade, at any time in that accounting period".
      (3) In paragraph 10(3)(b) of that Schedule (calculation of distributable investment income) for "£500" there shall be substituted "£1,000".'.
      This amendment gives effect to two undertakings given in Committee by my right hon. Friend the Chief Secretary. The new subsection (2) fulfils the purpose of amendment no. 478 moved in Committee by the hon. Member for Gloucestershire, South (Mr. Cope) to exclude the company which is not a trading company from counting as an associated company and therefore from reducing the limits below which the estate or trading income of the trading company with which it is associated is disregarded or abated for apportionment purposes. The new subsection (3) is on the lines of the second half of the same hon. Member's amendment no. 89 also moved in Committee. The figure is £1,000 as my right hon. Friend said it would be.
      Amendment agreed to.

    Clause 31

      CLOSE COMPANIES: ACQUISITION OF TRADES
      Mr. Denzil Davies: I beg to move amendment no. 136, in page 22, line 16, at end insert—
      1748
      'or of an interest in a trading company or in a company which is a member of a trading group'.
      Mr. Speaker: I understand that it will be convenient to discuss at the same time Government amendments nos. 137 to 145 and 148 to 153.
      Mr. Davies: Amendments nos. 146 and 147, which are in this list, come later on the Amendment Paper but they come with this group, as they all relate to schedule 5. Perhaps I might therefore deal with all of them together.
      This group of amendments fulfils three undertakings which Ministers gave in Committee—the first to change and the other two to clarify the intention of the new apportionment rules about acquisition of trades. The amendments to lines 40 and 41 on page 68 restrict those who can count as associates for the purpose of the control tests used in deciding whether companies are associated. As the Bill is drafted, children or "remoter issue" of directors of the company being considered count as associates. Under the amendments, they will count only if they are infants at the relevant time.
      I also said in Committee that I would see whether it was preferable to put into legislation the intention to apply the wording "acquisition of a trade" to the acquisition not of the trade itself but, as so often happens, of control of the company carrying on the trade. The amendments also fulfil that undertaking.
      The amendments also deal with first business loans and with various technical matters relating to paragraph 8 of schedule 16 of the Finance Act 1972.
      Mr. Peter Rees: We welcome the amendments and we are grateful to the Minister of State for having been so open-minded on the question. We are glad that he has adopted the suggestions that we made in Committee.
      Amendment agreed to.
      4.15 p.m.
      Mr. Graham Page: I beg to move amendment no. 190, in page 22, line 19, at end insert
      'irrespective of whether the acquisition takes place before or after that date'.
      Clause 31 introduces new rules for ascertaining the relevant income of close

      1749
      companies—a technical phrase but something of vital importance to small companies, such as family companies, which are small in the number of members that they may have. Part II of schedule 16 of the Finance Act 1972, which is mentioned in the first line of clause 31, lays out the rules for charging to income tax in respect of shortfall and distributions of close companies and the apportionment to participators.
      To put it briefly, if more than half the income can be apportioned between five or fewer participators, it is charged to tax, as it were in the hands of those participators, even though not distributed. Therefore, it is important to ascertain what is the relevant income which must be assumed in that way to be distributed or to be available for distribution.
      In determining the relevant income, the new provisions inserted by clause 31 say that one can take into account the requirements of the company for the acquisition of a trade. That is very welcome as an extension of the relief given to close companies which are expanding and purchasing new businesses.
      One assumes from this that the purchase price of a new business or of equipping the premises of a new business with, for example, plant, or the use of working capital for a new business, will in future be deductible from the income in order to reach the relevant income which may be assumed to be apportioned among the participators.
      Subsection (2) says that this new relief will have effect
      "…with respect to accounting periods end-on or after 11th April 1978."
      There is considerable doubt about the effect of that when is speaks of "accounting periods" and of taking into account
      "…the requirements of a company for the acquisition of a trade."
      The doubt arises on the question whether that refers to the acquisition of a new trade by the close company before 11th April 1978 as well as afterwards.
      An example is the case in which the business has been acquired before the 1977–78 accounting period—perhaps in the period 1976–77—and is being paid for by instalments. One hopes that the clause is clear enough and that those instalments can be brought into account and receive
      1750
      the relief given under clause 31, but it does not seem certain that that is so.
      I therefore seek to make this matter clear with the amendment by adding the words
      "irrespective of whether the acquisition takes place before or after that date"
      at the end of subsection (2).
      Mr. Denzil Davies: The right hon. Gentleman seeks in this amendment to clarify—as he sees it—the present provisions. My brief says "Resist as unnecessary." It is the Inland Revenue's view that the position is clear and that the amendment is not necessary. However, as the right hon. Gentleman puts his points so reasonably and as—as far as I can see—the amendment will do no harm and might make the position clear to those who feel that it is not clear, I am happy to accept it.
      Amendment agreed to.

    Schedule 5

      RELEVANT INCOME OF CLOSE COMPANIES—AMENDMENTS OF FINANCE ACT 1972, SCHEDULE 16, PART II
      Amendments made:
      No. 137, in page 67, leave out lines 26 to 34 and insert—
      (3) In arriving at the relevant income for any accounting period of a company which is a trading company or a member of a trading group, regard shall be had not only to the current requirements of the company's business and to such requirements necessary or advisable for the maintenance or development of that business as fall within sub-paragraph (2)(a) above, but also to any other requirements necessary or advisable for the acquisition of a trade or of a controlling interest in a trading company or in a company which is a member of a trading group by virtue of paragraph 11(2)(a) below; but for this purpose paragraph 12A below shall apply.
      (4) For the purposes of sub-paragraph (3) above, the acquisition of a controlling interest in a company means the acquisition, whether on a single occasion or otherwise, of such ordinary share capital of that company as enables the acquiring company to exercise the greater part of the voting power in that company
      (5) For the purposes of sub-paragraph (3) above the requirements of a company's business which are necessary or advisable for such an acquisition as is mentioned in that subparagraph include such requirements as are necesary or advisable for—

      1751

      (a) the redemption or repayment of any share or loan capital or debt (including any premium thereon) issued or incurred in or towards payment for that acquisition, or issued or incurred for the purpose of raising money to be applied in or towards payment therefor, or

      (b) meeting any obligations of the company in respect of that acquisition,

      so far as any sum so expended or applied, or intended to be expended or applied, does not fall to be treated for the purposes of this Schedule as a distribution by the company.'
      No. 138, in line 35, leave out from beginning to 'above' and insert—
      '2. After paragraph 12 of Schedule 16 to the Finance Act 1972 there shall be inserted the following paragraph—
      "12A.—(1) Paragraph 8(3)".'.
      No. 139, in line 48, leave out 'subparagraph (3)' and insert 'paragraph 8(3)'.
      No. 140, in line 49, at end insert—
      '(2) Paragraph 8(3) above shall not apply to—

      (a) the acquisition of shares which at the date of the acquisition or at any time within one year previously were owned by an associated company of the acquiring company or by a person who then had control of the acquiring company; or

      (b) the intended acquisition of shares which at the end of the accounting period for which the acquiring company's relevant Income is to be ascertained are owned by a company which is then an associated company of the acquiring company or by a person who has control of the acquiring company;

      and where shares were, or are, in part owned as mentioned above, paragraph 8(3) above shall nol apply with respect to that part.
      (3) Paragraph 8(3) above shall not apply to—

      (a) the acquisition of shares in a company which immediately before the acquisition or at any time within one year previously was an associated company of the acquiring company; or

      (b) the intended acquisition of shares in a company which, at the end of the accounting period for which the acquiring company's relevant income is to be ascertained, is an associated company of the acquiring company.'.

      No. 141, in page 68, line 4, leave out sub-paragraph (4)' and insert 'subparagraphs (1), (2) and (3)'.
      No. 142, in line 5, leave out 'that subparagraph' and insert 'each of those subparagraphs'.
      No. 143, in line 8, leave out 'subparagraph (4)' and insert 'sub-paragraphs (1), (2) and (3)'.
      No. 144, in line 19, leave out 'subparagraph' and insert 'sub-paragraphs (2) and'.
      No. 145, in line 21, leave out subparagraph '(4)(b)' and insert
      paragraph (b) of sub-paragraphs (1), (2) and (3)'.
      No. 146, in line 40, at end insert 'any'.
      No. 147, in line 41, after 'issue', insert 'who is an infant'.
      No. 148, in line 48, leave out 'sub-paragraphs (4) and (6) above' and insert 'this paragraph'.
      No. 149, in line 49, leave out 'which is' and insert', or shares'.
      No. 150, in page 69, line 4, leave out from 'asset' to 'conveyed' in line 5 and insert
      'interest or shares is or are'.
      No. 151, in line 6, leave out from beginning to 'above' in line 10 and insert—
      '(8) For the purposes of sub-paragraph (3) of paragraph 8'.
      No. 152, in line 14, leave out 'the acquisition of a trade' and insert
      'such an acquisition as is mentioned in that sub-paragraph'.
      No. 153, in line 16, leave out 'above' and insert
      'of paragraph 12 above; and sub-paragraphs (2) and (3) of that paragraph shall apply for the purposes of this sub-paragraph as they apply for the purposes of that paragraph'.-[Mr. Denzil Davies.]

    Clause 32

      CAPITAL ALLOWANCES: LONG LEASES
      Mr. Graham Page: I beg to move amendment no. 181, in page 22, line 43, leave out from 'within' to 'and' in line 44 and insert:
      'three years after the date upon which the original lessee was first entitled to possession under the lease'.
      The clause deals with capital allowances and particularly their allocation where there are long leases. The basis of the granting of capital allowances for building or structure is that they are granted to the person holding the relevant interest, which is defined in chapter I of part I of the Capital Allowances Act 1968.
      It often occurs—indeed, I know of instances—that the lessee under a proposed long lease carries out some of the

      1753
      work which would attract the capital allowances. It is doubtful in those circumstances whether it is the lessee or the lessor who is entitled to take the grant. This is particularly important, perhaps, if the lessor is not entitled to claim it, because of a particular status of the lessor. Therefore, the clause, which gives an election whether the relevant interest shall be treated as being in the lessor or the lessee, is a very valuable relief to those concerned with the grant of long leases which involve building and structure.
      The matter is set in motion by an election by the two parties concerned as to who shall have the benefit of the allowance. As we have seen time and time again in the provisions of the Bill and in other taxation matters, an election must be made in a certain time. Subsection (3) says:
      "Any election under this section shall be by notice in writing to the inspector given within two years after the date on which the lease takes effect".
      In Committee we briefly discussed the two points which arise in that phrase. The first is the time within which the election is to be made—as it is provided here, a period of two years—and the time at which it is to start to take effect. Here it is said:
      "the date on which the lease takes effect".
      In Committee my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) raised the question as to what is the date when a lease takes effect. There certainly is some doubt about that.
      I should like first to return to the timing. Normally, such transactions are fairly complicated where there may be agreements for building lease and negotiations throughout, perhaps, the commencement of the building between the two parties. A period of two years may go by pretty quickly when large construction is concerned. Therefore, I should have liked to see a full period of six years, but, appreciating that it is important in such cases to get a settlement of the matter as soon as possible and to know who is entitled to these capital allowances, I have suggested in the amendment that a compromise would be three years. I think that that little extra bit from the two years to the three years when construction is going on, when there
      1754
      are negotiations over the terms of a lease and so on, is a reasonable period.
      But from when is the lease to start? I believe that the words:
      "the date on which the lease takes effect"
      have little meaning in law. I do not know when a lease takes effect. I do not know whether it is the date of the lease, although nobody takes possession for perhaps months after that. Sometimes leases are dated back before there is any intention of possession being given and the lessee enjoying the lease, the date being inserted merely in order to fix the term of the lease.
      I should have thought that the reasonable thing here is to identify the date, as I have endeavoured to do in the amendment, by saying that it shall be
      "the date upon which the original lessee was first entitled to possession under the lease".
      Undoubtedly there will be provision within a long lease of this sort for the taking of possession. It may well be on the completion of the building or some such date. That is the point from which time should be given for making the election. Therefore, in place of the words of the subsection which I read out just now I seek to insert as the period for the election:
      "three years after the date upon which the original lessee was first entitled to possession under the lease"
      Mr. Denzil Davies: The right hon. Member for Crosby (Mr. Page) raised this matter in Committee. There are two points in his amendment. First he seeks to extend the time for election from two years to three years. In Committee he sought to extend it to four, but he has now come down to three, no doubt hoping that I would meet him.
      I still stand by what I said in Committee. I think that two years is a reasonable time. We have considered the matter, and I cannot see that there would be any case of hardship. I think that a two-year limit, which I am told is the normal limit in such cases, is reasonable and should stay.
      The right hon. Gentleman's second point concerned the meaning of the words in the clause:
      "the date on which the lease takes effect".
      He sought, as he would argue, to clarify that phrase by changing the wording. The

      1755
      right hon. Gentleman's wording is all right. The difficulty is that I understand that similar words to those in the clause already appear in the Law of Property Act 1925. There is, as I wrote to the right hon. Gentleman, some authority as to the meaning of those words. Therefore, we are dealing with a set of words which is not unknown in law, and I do not think that normally there would be much of a problem as to when a particular lease takes effect.
      The other difficulty is that both subsection (1) and subsection (8) are drafted on the basis of the original wording. Therefore, if we were to accept the right hon. Gentleman's wording for part of the clause it would look very odd, and we should have to recast the clause.
      But my main argument is that the words chosen have been used in law and have been pronounced upon by the courts. In these matters involving property it is probably sensible to stick to hallowed words. New words, however good they might appear, generally tend to create confusion in property matters.
      We shall certainly watch the matter in the course of the year, if that will help the right hon. Gentleman, and if there are difficulties they can be put right. But I cannot accept the amendment.
      4.30 p.m.
      Mr. Graham Page: I am grateful to the Minister for agreeing to look at this matter again. We have already discussed it in Committee. I regret that it is not sufficient for our purposes today for the Minister to undertake to examine the question in the future. The one substantial point which he made was that these
      words are used elsewhere in the clause and that to use them in this subsection might be confusiong. This subsection deals merely with the date for election, the date from which time will run for election. There would, therefore, be no confusion.
      The Minister also said that these words were used in the Law of Property Act. I do not wish them to have the meaning which they have in that Act. I want the time to start from the time when the lessee is entitled to possession. I have come to the conclusion in these debates that it is absolutely necessary to spell out exactly what the Bill seeks to do or what we think it intends to do—what we on the Opposition Benches wish it to do. If we do not spell out exactly what we mean there may be unforeseen results. The Minister has said that he is advised that the words mean this or that.
      The Chancellor of the Exchequer was advised that certain words meant certain things in the case of the scholarships which arose two years ago. He administered the law for two years. Suddenly new advice was given and everything was changed. This is what happens if we do not put a few extra words into the Bill spelling out exactly what is required. In this case we do not need to have the position cleared up. Large sums of money are involved. This is no small matter. On the basis that we ought to spell out in the Bill exactly what we intend I hope that my right hon. and hon. Friends will join me in the Lobby.
      Question put, That the amendment be made:—
      The House divided: Ayes 231, Noes 259.

      Division No. 266]

      AYES

      4.32 p.m.

      Adley, Robert

      Brocklebank-Fowler, C.

      Dean, Paul (N Somerset)

      Amery, Rt Hon Julian

      Brooke, Hon Peter

      Dodsworth, Geoffrey

      Atkins, Rt Hon H. (Spelthorne)

      Brotherton, Michael

      Douglas-Hamilton, Lord James

      Atkinson, David (B'mouth, East)

      Brown, Sir Edward (Bath)

      Drayson, Burnaby

      Baker, Kenneth

      Bryan, Sir Paul

      du Cann, Rt Hon Edward

      Banks, Robert

      Buchanan-Smith, Alick

      Dunlop, John

      Bell, Ronald

      Buck, Antony

      Durant, Tony

      Bendall, Vivian

      Budgen, Nick

      Dykes, Hugh

      Bennett, Sir Frederic (Torbay)

      Bulmer, Esmond

      Edwards, Nicholas (Pembroke)

      Bennett, Dr Reginald (Fareham)

      Burden, F. A.

      Elliott, Sir William

      Benyon, W.

      Butler, Adam (Bosworth)

      Fairbairn, Nicholas

      Berry, Hon Anthony

      Chalker, Mrs Lynda

      Fairgrieve, Russell

      Biffen, John

      Churchill, W. S.

      Farr, John

      Biggs-Davison, John

      Clark, Alan (Plymouth, Sutton)

      Fell, Anthony

      Body, Richard

      Clark, William (Croydon S)

      Finsberg, Geoffrey

      Boscawen, Hon Robert

      Cooke, Robert (Bristol W)

      Fisher, Sir Nigel

      Bottomley, Peter

      Cope, John

      Fletcher, Alex (Edinburgh N)

      Bowden, A. (Brighton, Kemptown)

      Cormack, Patrick

      Fletcher-Cooke, Charles

      Boyson, Dr Rhodes (Brent)

      Costain, A. P.

      Fookes, Miss Janet

      Braine, Sir Bernard

      Craig, Rt Hon W. (Belfast E)

      Forman, Nigel

      Brittan, Leon

      Davies, Rt Hon J. (Knutsford)

      Fox, Marcus

      Gardiner, George (Reigate)

      Lester, Jim (Beeston)

      Rhodes James, R.

      Gardner, Edward (S Fylde)

      Lewis, Kenneth (Rutland)

      Rhys Williams, Sir Brandon

      Gilmour, Rt Hon Sir Ian (Chesham)

      Lloyd, Ian

      Ridley, Hon Nicholas

      Glyn, Dr Alan

      Loveridge, John

      Ridsdale, Julian

      Goodhart, Philip

      Luce, Richard

      Rifklnd, Malcolm

      Goodlad, Alastair

      McCrindle, Robert

      Roberts, Wyn (Conway)

      Gorst, John

      Macfarlane, Neil

      Rodgers, Sir John (Sevenoaks)

      Gow, Ian (Eastbourne)

      MacGregor, John

      Rossi, Hugh (Hornsey)

      Gower, Sir Raymond (Barry)

      MacKay, Andrew (Stechford)

      Rost, Peter (SE Derbyshire)

      Grant, Anthony (Harrow C)

      Macmillan, Rt Hon M. (Farnham)

      Royle, Sir Anthony

      Grieve, Percy

      McNair-Wilson, M. (Newbury)

      Sainsbury, Tim

      Griffiths, Eldon

      McNair-Wilson, P. (New Forest)

      St. John-Stevas, Norman

      Grylls, Michael

      Madel, David

      Scott, Nicholas

      Hamilton, Archibald (Epsom & Ewell)

      Marten, Neil

      Scott-Hopkins, James

      Hamilton, Michael (Salisbury)

      Mates, Michael

      Shaw, Giles (Pudsey)

      Hampson, Dr Keith

      Mather, Carol

      Shaw, Michael (Scarborough)

      Hannam, John

      Maude, Angus

      Shelton, William (Streatham)

      Harrison, Col Sir Harwood (Eye)

      Maudling, Rt Hon Reginald

      Shersby, Michael

      Harvie Anderson, Rt Hon Miss

      Maxwell-Hyslop, Robin

      Sims, Roger

      Haselhurst, Alan

      Mayhew, Patrick

      Sinclair, Sir George

      Hastings, Stephen

      Meyer, Sir Anthony

      Smith, Dudley (Warwick)

      Havers, Rt Hon Sir Michael

      Miller, Hal (Bromsgrove)

      Smith, Timothy John (Ashfield)

      Hawkins, Paul

      Mills, Peter

      Speed, Keith

      Hayhoe, Barney

      Mitchell, David (Basingstoke)

      Spence, John

      Heath, Rt Hon Edward

      Moate, Roger

      Spicer, Jim (W Dorset)

      Higgins, Terence L.

      Moore, John (Croydon C)

      Spicer, Michael (S Worcester)

      Hodgson, Robin

      More, Jasper (Ludlow)

      Sproat, Iain

      Holland, Philip

      Morgan, Geraint

      Stainton, Keith

      Hordern, Peter

      Morgan-Giles, Rear-Admiral

      Stanbrook, Ivor

      Howe, Rt Hon Sir Geoffrey

      Morris, Michael (Northampton S)

      Stanley, John

      Howell, David (Guildford)

      Morrison, Charles (Devizes)

      Steen, Anthony (Wavertree)

      Howell, Ralph (North Norfolk)

      Morrison, Hon Peter (Chester)

      Stewart, Ian (Hitchin)

      Hunt, David (Wirral)

      Neave, Airey

      Stokes, John

      Hunt, John (Ravensbourne)

      Nelson, Anthony

      Stradling Thomas, J.

      Hurd, Douglas

      Neubert, Michael

      Tapsell, Peter

      Hutchison, Michael Clark

      Newton, Tony

      Taylor, Teddy (Cathcart)

      Irving, Charles (Cheltenham)

      Normanton, Tom

      Tebbit, Norman

      James, David

      Nott, John

      Temple-Morris, Peter

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

      Onslow, Cranley

      Thatcher, Rt Hon Margaret

      Jessel, Toby

      Osborn, John

      Thomas, Rt Hon P. (Hendon S)

      Johnson Smith, G. (E. Grinstead)

      Page, John (Harrow West)

      Townsend, Cyril D.

      Jones, Arthur (Daventry)

      Page, Rt Hon R. Graham (Crosby)

      Vaughan, Dr Gerard

      Jopling, Michael

      Page, Richard (Workington)

      Viggers, Peter

      Kaberry, Sir Donald

      Pattie, Geoffrey

      Wakeham, John

      Kellett-Bowman, Mrs Elaine

      Percival, Ian

      Walder, David (Clitheroe)

      Kershaw, Anthony

      Peyton, Rt Hon John

      Walker, Rt Hon P. (Worcester)

      Kilfedder, James

      Pink, R. Bonner

      Walker-Smith, Rt Hon Sir Derek

      Kimball, Marcus

      Prentice, Rt Hon Reg

      Walters, Dennis

      King, Evelyn (South Dorset)

      Price, David (Eastleigh)

      Warren, Kenneth

      King, Tom (Bridgwater)

      Prior, Rt Hon James

      Weatherill, Bernard

      Kitson, Sir Timothy

      Pym, Rt Hon Francis

      Whitney, Raymond

      Knight, Mrs Jill

      Raison, Timothy

      Wiggin, Jerry

      Knox, David

      Rathbone, Tim

      Winterton, Nicholas

      Lamont, Norman

      Rees, Peter (Dover & Deal)

      Langford-Holt, Sir John

      Rees-Davies, W. R.

      TELLERS FOR THE AYES:

      Latham, Michael (Melton)

      Renton, Rt Hon Sir D. (Hunts)

      Sir George Young and

      Lawrence, Ivan

      Renton, Tim (Mid-Sussex)

      Mr. Spencer Le Marchant.

      Lawson, Nigel

      NOES

      Abse, Leo

      Bray, Dr Jeremy

      Crawshaw, Richard

      Allaun, Frank

      Broughton, Sir Alfred

      Cryer, Bob

      Anderson, Donald

      Brown, Hugh D. (Provan)

      Cunningham, G. (Islington S)

      Archer, Rt Hon Peter

      Brown, Robert C. (Newcastle W)

      Cunningham, Dr J. (Whiteh)

      Armstrong, Ernest

      Brown, Ronald (Hackney S)

      Davidson, Arthur

      Ashley, Jack

      Buchan, Norman

      Davies, Bryan (Enfield N)

      Ashton, Joe

      Buchanan, Richard

      Davies, Rt Hon Denzil

      Atkins, Ronald (Preston N)

      Callaghan, Jim (Middleton & P)

      Davies, Ifor (Gower)

      Atkinson, Norman (H'gey, Tott'ham)

      Campbell, Ian

      Davis, Clinton (Hackney C)

      Bagier, Gordon A. T.

      Canavan, Dennis

      Deakins, Eric

      Bain, Mrs Margaret

      Carmichael, Neil

      de Freitas, Rt Hon Sir Geoffrey

      Barnett, Guy (Greenwich)

      Carter, Ray

      Dell, Rt Hon Edmund

      Barnett, Rt Hon Joel (Heywood)

      Carter-Jones, Lewis

      Dempsey, James

      Bates, Alf

      Cartwright, John

      Dewar, Donald

      Bean, R. E.

      Castle, Rt Hon Barbara

      Doig, Peter

      Benn, Rt Hon Anthony Wedgwood

      Clemitson, Ivor

      Dormand, J. D.

      Bldwell, Sydney

      Cocks, Rt Hon Michael (Bristol S)

      Douglas-Mann, Bruce

      Bishop, Rt Hon Edward

      Coleman, Donald

      Dunnett, Jack

      Blenkinsop, Arthur

      Cook, Robin F. (Edin C)

      Dunwoody, Mrs Gwyneth

      Booth, Rt Hon Albert

      Corbett, Robin

      Eadie, Alex

      Boothroyd, Miss Betty

      Cowans, Harry

      Edwards, Robert (Wolv SE)

      Bottomley, Rt Hon Arthur

      Cox, Thomas (Tooting)

      Ellis, John (Brigg & Scun)

      Boyden, James (Bish Auck)

      Craigen, Jim (Maryhill)

      Ellis, Tom (Wrexham)

      Bradley, Tom

      Crawford, Douglas

      English, Michael

      1758

      1759

      Evans, Fred (Caerphilly)

      Leadbitter, Ted

      Sedgemore, Brian

      Evans, Gwynfor (Carmarthen)

      Lestor, Miss John (Eton & Slough)

      Sever, John

      Evans, John (Newton)

      Lewis, Arthur (Newham N)

      Shaw, Arnold (Ilford South)

      Ewing, Harry (Stirling)

      Lewis, Ron (Carlisle)

      Sheldon, Rt Hon Robert

      Faulds, Andrew

      Litterick, Tom

      Shore, Rt Hon Peter

      Fernyhough, Rt Hon E.

      Loyden, Eddie

      Short, Mrs Renée (Wolv NE)

      Fitch, Alan (Wigan)

      Luard, Evan

      Silkin, Rt Hon John (Deptford)

      Flannery, Martin

      Lyon, Alexander (York)

      Silkin, Rt Hon S. C. (Dulwich)

      Fletcher, Ted (Darlington)

      Mabon, Rt Hon Dr J. Dickson

      Silverman, Julius

      Foot, Rt Hon Michael

      McElhone, Frank

      Skinner, Dennis

      Ford, Ben

      MacFarquhar, Roderick

      Smith, Rt. Hon. John (N Lanarkshire)

      Fowler, Gerald (The Wrekin)

      McGuire, Michael (Ince)

      Snape, Peter

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

      MacKenzie, Rt Hon Gregor

      Spearing, Nigel

      Freeson, Rt Hon Reginald

      McNamara, Kevin

      Spriggs, Leslie

      Garrett, John (Norwich S)

      Madden, Max

      Stallard, A. W.

      Garrett, W. E. (Wallsend)

      Magee, Bryan

      Steel, Rt Hon David

      George, Bruce

      Mahon, Simon

      Stewart, Rt Hon Donald

      Gilbert, Rt Hon Dr John

      Mallalieu, J. P. W.

      Stewart, Rt Hon M. (Fulham)

      Ginsburg, David

      Marshall, Dr Edmund (Goole)

      Stoddart, David

      Golding, John

      Marshall, Jim (Leicester S)

      Stott, Roger

      Gould, Bryan

      Mason, Rt Hon Roy

      Summerskill, Hon Dr Shirley

      Gourlay, Harry

      Maynard, Miss Joan

      Swain, Thomas

      Graham, Ted

      Meacher, Michael

      Taylor, Mrs Ann (Bolton W)

      Grant, John (Islington C)

      Millan, Rt Hon Bruce

      Thomas, Dafydd (Merioneth)

      Grimond, Rt Hon J.

      Mitchell, Austin (Grimsby)

      Thomas, Ron (Bristol NW)

      Grocott, Bruce

      Molloy, William

      Thompson, George

      Hamilton, W. W. (Central Fife)

      Moonman, Eric

      Thorne, Stan (Preston South)

      Harrison, Rt Hon Walter

      Morris, Alfred (Wythenshawe)

      Thorpe, Rt Hon Jeremy (N Devon)

      Hart, Rt Hon Judith

      Morris, Rt Hon J. (Aberavon)

      Tierney, Sydney

      Hattersley, Rt Hon Roy

      Mulley, Rt Hon Frederick

      Tilley, John

      Hayman, Mrs Helena

      Newens, Stanley

      Tinn, James

      Healey, Rt Hon Denis

      Noble, Mike

      Tomlinson, John

      Heffer, Eric S.

      Oakes, Gordon

      Tomney, Frank

      Henderson, Douglas

      Ogden, Eric

      Torney, Tom

      Horam, John

      O'Halloran, Michael

      Urwin T. W.

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

      Orme, Rt Hon Stanley

      Varley, Rt Hon Eric G.

      Hoyle, Doug (Nelson)

      Ovenden, John

      Walker, Harold (Doncaster)

      Huckfield, Les

      Owen, Rt Hon Dr David

      Walker, Terry (Kingswood)

      Hughes, Mark (Durham)

      Padley, Walter

      Ward, Michael

      Hughes, Robert (Aberdeen N)

      Pardoe, John

      Watkins, David

      Hughes, Roy (Newport)

      Park, George

      Watkinson, John

      Hunter, Adam

      Parker, John

      Weetch, Ken

      Irvine, Rt Hon Sir A. (Edge Hill)

      Parry, Robert

      Weitzman, David

      Irving, Rt Hon S. (Dartford)

      Pavitt, Laurie

      Wellbeloved, James

      Jackson, Colin (Brighouse)

      Pendry, Tom

      Welsh, Andrew

      Jackson, Miss Margaret (Lincoln)

      Phipps, Dr Colin

      White, Frank R. (Bury)

      Janner, Greville

      Prescott, John

      White, James (Pollok)

      Jay, Rt Hon Douglas

      Price, C. (Lewisham W)

      Whitehead, Phillip

      Jeger, Mrs Lena

      Price, William (Rugby)

      Whitlock, William

      Jenkins, Hugh (Putney)

      Radice, Giles

      Willey, Rt Hon Frederick

      John Brynmor

      Rees, Rt Hon Merlyn (Leeds S)

      Williams, Rt Hon Alan (Swansea W)

      Johnson, James (Hull West)

      Reid, George

      Williams, Rt Hon Shirley (Hertford)

      Johnson, Walter (Derby S)

      Richardson, Miss Jo

      Williams, Sir Thomas (Warrington)

      Johnston, Russell (Inverness)

      Roberts, Albert (Normanton)

      Wilson, Gordon (Dundee E)

      Jones, Alec (Rhondda)

      Roberts, Gwilym (Cannock)

      Wilson, William (Coventry SE)

      Jones, Dan (Burnley)

      Robertson, George (Hamilton)

      Wise, Mrs Audrey

      Judd, Frank

      Roderick, Caerwyn

      Woof, Robert

      Kelley, Richard

      Rodgers, George (Chorley)

      Wrigglesworth, Ian

      Kerr, Russell

      Rodgers, Rt Hon William (Stockton)

      Young, David (Bolton E)

      Kilroy-Silk, Robert

      Rooker, J. W.

      Kinnock, Neil

      Roper, John

      TELLERS FOR THE NOES

      Lambie, David

      Rose, Paul B.

      Mr. James Hamilton and

      Lamond, James

      Ross, Rt Hon W. (Kilmarnock)

      Mr. Joseph Dean.

      Latham, Arthur (Paddington)

      Rowlands, Ted

      Question accordingly negatived.

    Clause 36

      RELIEF FOR GAINS LESS THAN £9,500.
      Mr. Denzil Davies: I beg to move amendment no. 19, in page 27, line 23, leave out subsections (5) and (6).
      Mr. Deputy Speaker (Sir Myer Galpern): With this we may take the following amendments: No. 128, in page 27,
      1760
      line 23, leave out from beginning to end of line 27 on page 28.
      No. 129, in page 28, line 44, at end insert—
      'Provided that no increase in the total liability to capital gains tax for the years of assessment 1977–78 and 1978–79 shall result from the provisions of this section in the case of a husband and wife living together over what their total liability thereto would have been but for the changes made by this section'.
      Government amendments nos. 20 and 21.
      Government amendment no. 22:

    New Schedule

      RELIEF FOR GAINS LESS THAN £9,500
      Preliminary
      1. In this Schedule references to any subsections not otherwise identified are references to subsections of section 36 of this Act.
      Husband and wife
      2.—(1) For any year of assessment during which a married woman is living with her husband subsections (1) to (4) shall apply to them as if the amounts of £1,000, £5,000 and £600 were divided between them—

      (a) in proportion to their respective taxable amounts for that year (disregarding for this purpose paragraphs (a) and (b) of subsection (4)); or

      (b) where the aggregate of those amounts does not exceed £1,000 and allowable losses accruing to either of them in a previous year are carried forward from that year, in such other proportion as they may agree.

      (2) Sub-paragraph (1) above shall also apply for any year of assessment during a part of which (being a part beginning with 6th April) a married woman is living with her husband but—

      (a) her taxable amount for that year shall not include chargeable gains or allowable losses accruing to her in the remainder of the year; and

      (b) subsections (1) to (4) shall apply to her (without the modification in sub-paragraph (1) above) for the remainder of the year as if it were a separate year of assessment.

      3.—(1) for any year of assessment during which or during a part of which (being a part beginning with 6th April) the individual is a married man whose wife is living with him and in relation to whom paragraph 3(1) of Schedule 10 to the Finance Act 1965 applies subsection (7) shall apply as if—

      (a) the chargeable gains accruing to him in the year included those accruing to her in the year or the part of the year; and

      (b) all the disposals of assets made by her in the year or the part of the year were made by him.

      (2) Subsection (7) shall not apply for any year of assessment during which or during a part of which (being a part beginning with 6th April)—

      (a) the individual is a married man whose wife is living with him but in relation to whom the said paragraph 3(1) does not apply; or

      (b) the individual is a married woman living with her husband.

      Personal Representatives
      4. For the year of assessment in which an individual dies and for the two next following years of assessment, subsections (1) to (4) and (7) shall apply to his personal representatives as they apply to an individual.
      Trustees
      5.—(1) For any year of assessment during the whole or part of which settled property is held on trusts which secure that, during the lifetime of a mentally disabled person or a person in receipt of attendance allowance, any of the property which is applied, and any income arising from the property, is applied only or mainly for the benefit of that person, subsections (1) to (4) and (7) shall apply to the trustees of the settlement as they apply to an individual.
      (2) In this paragraph "mentally disabled person" means a person who by reason of mental disorder within the meaning of the Mental Health Act 1959 is incapable of administering his property or managing his affairs and "attendance allowance" means an allowance under section 35 of the Social Security Act 1975 or the Social Security (Northern Ireland) Act 1975.
      6.—(1) For any year of assessment during the whole or part of which any property is settled property, not being a year of assessment for which paragraph 5(1) above applies, subsections (1) to (4) and (7) shall apply to the trustees of a settlement as they apply to an individual but with the following modifications.
      (2) In subsections (1), (4) and (7) for "£1,000" there shall be substituted "£500".
      (3) For subsections (2) and (3) there shall be substituted—
      "(2) If an individual's taxable amount for a year of assessment exceeds £500 the amount of capital gains tax to which he is chargeable for that year shall not exceed one-half of the excess."
      (4) In subsection (7) for "£5,000" there shall be substituted "£2,500".
      (5) This paragraph applies where the settlement was made before 7th June 1978.'.
      Amendment (b), leave out paragraphs 2 and 3.
      Amendment (f), in paragraph 6(1), after "applies" insert
      "or in which an interest in possesion exists".
      Amendment (a), in paragraph 6(1) leave out from "individual" to end of paragraph.
      Amendment (c), in paragraph 6(5) leave out
      "where the settlement was made before 7th June 1978"
      and insert
      "whenever the settlement was made".
      Amendment (e), after paragraph 6(5) insert
      '(6) Interest in possession means an interest in possession to which an individual is beneficially entitled'.
      Amendment (d), after paragraph 6(5) insert
      '7. For any year of assessment during the whole or part of which settled property is held

      1763
      in trust so that an individual has an interest in possession in which he is beneficially entitled, subsections (1) to (4) and (7) shall apply to the trustees of the settlement as they apply to an individual'.
      4.45 p.m.
      Mr. Denzil Davies: Amendment no. 19 and the other Government amendments which are being taken with it implement undertakings given by the Government in Committee relating to the lower rate of charge for capital gains tax.
      First, they extend the reliefs in clause 36 from capital gains tax in certain cases to the trustees of a settlement for a mentally disabled person or for a person in receipt of attendance allowance. Secondly, they provide an exemption for all other trusts where the settlement was made before 7th June 1978. The exemption applies from 1977–78 where the net gains of the year do not exced £500, and there is a marginal relief which limits the tax bill to one-half of the excess of those gains over £500. The relief thus runs out where the gains reach £1,250.
      Those two provisions meet my right hon. Friend the Chief Secretary's undertaking in Committee to produce an interim measure, pending the outcome of consultations between the Inland Revenue and interested bodies including the Opposition and the Liberals' advisers, on the possible form of a long-term solution.
      Thirdly, the amendments extend the full reliefs in clause 36 to personal representatives for gains accruing to them in the year of death and in the two following years of assessment.
      I hope that with this explanation the House will be clear as to the nature of the amendments.
      Mr. Anthony Nelson: To the extent that the schedule tabled by the Government meets the undertaking and commitment given by them in Committee, we welcome this extension of partial capital gains tax relief. We welcome the extension of relief to personal representatives, and the two-year period seems to me to be entirely reasonable.
      We have tabled a number of amendments to the Government's schedule. Those in the name of my hon. and learned Friend the Member for Beaconsfield (Mr. Bell) seem to explore the position of man and wife in terms of the relief with which they will be provided in the new schedule.
      1764
      We spoke in Committee about the extent to which husband and wife should be entitled separately to claim the full relief, as individuals, provided in the clause, and my hon. and learned Friend's amendments seek to some extent to do that on this occasion.
      Amendment (a) to the schedule, tabled in my name, seeks to extend the relief provided to trustees of a settlement with settled property so that all trusts can benefit, as in paragraph 5(1) of the new schedule.
      The Government clearly accepted—certainly the Chief Secretary did in Committee—the case for extending the relief provided to individuals under the clause to trusts generally but felt unable, partly because of drafting difficulties of ensuring that multiple relief was not provided to trusts so that the opportunities for avoidance were extended, to extend this to trusts which could not be clearly defined as being in the interests of severely disabled or mentally disabled people. This seems to me to be an unduly difficult distinction which the Government have drawn. If there is a case for extending the full relief provided in the clause to certain categories of trusts, however well deserving those individual trusts might be, there at least seems to be a case in tax and morality for extending that relief to trusts generally.
      Even after the passage of this schedule, the clause as it stands will discriminate against trusts which in many cases have been set up for minors, widows and those generally unable to manage their own affairs. It may well be that the reality of the situation is that the loss of revenue by this tax on what are effectively inflationary gains is the reason for the Government feeling unable to extend this relief rather than the difficulties of distinguishing between certain categories of trusts. The indication that about 75 per cent. of capital gains tax revenue might not be forthcoming, if the extension were provided to trusts generally, is perhaps an indicatin of the real reason for the Government feeling unable to extend this relief.
      Mr. Nigel Lawson: The 75 per cent. figure is, of course, the figure that was given by the Chief Secretary. It was 75 per cent. of the total capital gains tax arising from trusts. What the

      1765
      Chief Secretary never told the Committee—I think my hon. Friend would agree that it might be useful if the House were now told—is what proportion of total capital gains tax revenue is paid by trusts at the present time. In other words, we know that it is 75 per cent. on the Chief Secretary's figure, but 75 per cent. of what?
      Mr. Nelson: I agree with my hon. Friend. This would be a most interesting breakdown to have. It was not provided in Committee, although I believe that on that occasion my hon. Friend pressed the point on the Chief Secretary, who did not give any elucidation.
      Many trusts, regardless of their objectives and the status of the beneficiaries, may be forced to realise gains in a way that many individuals are not. For example, they may be forced to increase the yield of their portfolio or to sell shares which have been held over a long period of time. Disposals might be required for a trust to be in accordance with the Trustee Investments Act, transfers on attainment of a given age might be a condition of the trust or there might be deemed disposals. In all these cases, trusts might be forced to realise gains. But as, in the vast majority of cases—we are talking about a considerable number of trusts nationally—such realisation will result in a substantial tax liability, there seems to be an increased case in equity for this relief to be extended.
      After all, differentiation in treatment might not have been so substantial before this relief was extended in the clause, but now that individuals are entitled to obtain a very valuable relief, up to about £9,500-worth of gains per annum, the exclusion entirely of certain trusts seems to be wholly unreasonable. Therefore, the extension of relief in clause 35 makes the relative position of trusts considerably worse.
      I reiterate what is a powerful argument for extending this relief generally, which is that over a period of time the prejudicial treatment of trusts which are not able to claim the full relief provided in the clause can amount to a considerable difference between their treatment in respect of capital gains and an individual's treatment. The example which I
      1766
      quoted in Committee was that over a period of seven years it is quite possible that a trust which realised gains of about £9,000, and over that time had losses brought forward of about £1,300 might find itself paying a capital gains tax liability of more than £2,300. Yet an individual, with exactly the same set of circumstances and assets, would pay a tax liability of only £150. In many cases, it is a pure accident that an individual happens to own the assets absolutely, or else they happen to have been provided for him in trust because of disability or whatever else. It seems wholly unreasonable that with the same set of circumstances the individual will have to pay only £150 capital gains tax whereas the trust will have to pay more than £2,300.
      I believe that the arguments were to some extent accepted by the Government and that they were prepared to introduce the full relief for the two categories of trusts—those providing for people on attendance allowance and those for the mentally disabled. I put it to the Minister—I hope that he will be able to clarify this—that even here there are some difficulties of definition. I take the point that he is anxious to ensure that trusts which provide for the most disabled members of our community should be entitled to this relief. But with regard, for example, to those in receipt of attendance allowance there are many cases in which individuals who are severely disabled might not qualify for attendance allowance, but who most certainly should in any cause of equity be entitled to the relief provided in the clause.
      I understand that a case is currently being pursued whereby certain individuals who have to be linked up to a kidney machine for two days a week are possibly not entitled to an attendance allowance. For these people, who in many cases are clearly severely disabled and for whom trusts may be provided, it seems unreasonable that the relief provided to individuals in the clause should not be extended to the trusts which provide for them.
      To some extent this was accepted by the Chief Secretary in Committee, because he said that there was no reason why one should not seek to help such trusts, especially where they covered small amounts of capital and provided income for widows, spinsters, pensioners and other categories. I hope that this debate will

      1767
      provide the Minister with an opportunity of reconsidering the matter.
      There are two other matters which I should like to raise. First, the Minister said that, although he would bring forward a partial relief—that of the £500 exemption and a reduced rate thereafter, tapering out at around £1,250-worth of capital gains for trusts generally which were set up before 7th June—he would consider, in consultation with ourselves, our advisers and other interested groups, the possibility of extending or providing this relief generally later on. Although this was readily taken up by certain of our advisers, and a reply was received from the Minister, this suggestion does not appear to have been backed up by a very helpful attitude.
      In the Bill, the Minister has not felt able to extend the relief and, indeed, has not given a very positive indication that he will enter into consultations with interested groups to ensure that this relief is extended by the time any future Bill is brought forward. It is obviously unlikely that this Government will bring such a Bill forward in the time left to them, but one would like to feel that the Government have the right intentions in this respect.
      The only reason that the Government proffered for not providing the full relief to all trusts was, in the words of the Chief Secretary:
      "The reason why I suggest £500—it is, of course, a lower level—is that there would be an element of double allowance in those cases where there is a life interest in possession and the individual entitled to that interest also makes gains qualifying for relief under Clause 35."—[Official Report, Standing Committee A, 7th June 1978; c. 862.]
      5.0 p.m.
      It seems to me that the Minister has gone to a half-way house in that he has provided an element of relief and, therefore, to some extent accepted the equity of the Opposition's case. In view of the costs of setting up trusts, it seems unlikely that many individuals will avoid their capital gains tax liability by setting up a profusion of trusts, and, therefore, there is no reason why the relief should not be extended to them all.
      Above all, we now have the nonsense of a position in which there are three categories of capital gains tax payer. There are individuals who will be entitled to the full relief provided in clause 35.
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      There are certain types of trust or settlement set up for severely disabled or mentally handicapped people which will also be entitled to that full relief. There are other trusts generally which provide for a relief of some £500, and there are trusts set up after 7th June which will get no such relief, as, indeed, companies will not. Therefore, it seems to me that, from having a position which persisted until a few months ago whereby everyone who realised capital gains was treated on the same basis, we shall have after the passing of the Bill a position in which there will be three different categories of capital gains tax payer.
      Pressing again the principle of simplicity, it seems to be desirable that the Government should consider the possibility, as we suggest in amendment (a), of extending this relief to all trusts generally.
      Amendment (c) seeks to ensure that the partial relief provided to all trusts in the new schedule does not apply only to those set up before the date of the announcement of this relief on 7th June but should extend to them whenever they were set up. It seems to me to be unduly arbitrary that such relief should be provided only to trusts which existed at that date, and it is hardly likely that a great profusion of trusts would be set up thereafter to claim what in any event is only a very marginal relief compared with that applying to an individual—petering out at £1,250 compared with £9,500 in the case of an individual.
      I am sure that I do not need to repeat all the arguments which were advanced in Committee. Therefore, on the basis of what I have said, I hope that the Minister will feel able on reconsideration to accept amendment (a) and amendment (c).
      Mr. Tony Newton: I wish to support amendment (a) and, in particular, what my hon. Friend the Member for Chichester (Mr. Nelson) said about the problem of disabled people. It seems to me that what the Government are proposing here—and I understand the Minister to be saying that these are essentially transitional provisions pending further consultation about the long-term solution—reveals the problems which are likely to arise when the Government attach excessive importance to not allowing any

      1769
      additional benefit to people of whom they do not really approve and, therefore, try to draw difficult distinctions between approved people and disapproved people for the purposes of taxation.
      That is clearly revealed by the Government's proposals in that they have accepted—I think rightly—that it would be unfair if trusts set up for the benefit of disabled people in broad terms were not to get reasonable tax advantages under these proposals. But the Government have not been prepared to allow those advantages to trusts generally. So we have paragraph 5(2) attempting to define disabled people for the purposes of this provision.
      Broadly speaking, it is probably all right in terms of the mentally disabled, because there is a reasonably clear-cut and fairly broad definition which can be drawn from the Mental Health Act 1959 and which is incorporated in this provision. It is when we come to the physically disabled that we see the possible absurdities and certainly the possible anomalies in what the Government propose. The only physically disabled people who will benefit from the concession in the new schedule are those who are in receipt of attendance allowance.
      There are not a large number of hon. Members in the Chamber at the moment, but I should guess that there is not an hon. Member present who has not had correspondence with constituents, with the Attendance Allowance Board and with Ministers which has not revealed just how restrictive are the criteria for the attendance allowance. A person has to require constant attendance by day and by night. Alternatively, for the lower rate of the allowance, he must require constant attendance throughout the day or throughout the night. A person has to be very severely disabled before he can qualify for the attendance allowance.
      In no way can very large numbers of people who are by any commonsense or normal definition severely disabled—often lacking limbs, for example—qualify for the attendance allowance. It should be made clear to the House that a very large number of disabled people who probably everyone in the House would accept on a commonsense basis should be able to
      1770
      benefit from trusts under these proposals will not be able to do so because of the narrow definition which has been adopted.
      There may, for example, be children getting compensation payments as a result of the recent announcement about vaccine damage. If the money were put into trust for them, they would not qualify for the tax advantages here. Admittedly it would depend on the extent of the vaccine damage, but it is possible that they would not necessarily qualify under these provisions.
      It is perhaps less likely, but it may be that some of the thalidomide children would not qualify as being severely disabled enough for attendance allowance, depending on the extent of the injuries. They, too, would not qualify for any benefits to a trust set up on their behalf under this provision.
      We know that the Attendance Allowance Board is in process of trying to withdraw the attendance allowance from numbers of kidney patients. There is a case before the national insurance commissioner, whose decision is about to be announced, which I hope will overthrow the efforts of the Attendance Allowance Board, and if the commissioner does not overthrow them I hope that this House will. At the moment, however, the board is trying to withdraw attendance allowance from numbers of kidney patients because they dialyse only two days a week instead of three. If the Attendance Allowance Board is upheld and if Parliament does not upset the national insurance commissioner in that event, those kidney patients will not qualify in relation to a trust under this provision.
      It seems to me, therefore, that there is a real risk of injustice and serious anomaly from the proposals as they stand and that the Minister ought to solve the problem by accepting the amendment to allow all trusts to qualify pending some further work, if that is what the right hon. Gentleman wishes to do, to identify the disabled on a broader basis. However, what would be very unfair and full of potential anomaly would be to allow the new schedule to pass into law as it stands at the moment.
      Mr. Lawson: It is worth recalling the origins of this very long, complex new schedule.

      1771
      It began with the Inland Revenue's consultative document on capital gains tax last October, which dealt with the totally unwarranted severity of capital gains tax at a time of inflation. There was a great deal of discussion about indexation and tabling and, at the end of the day, the Revenue came to the conclusion that all this was far too complicated for it. So, as a sop and because it was administratively convenient obviously to take a lot of people who were making only paper gains out of the gains tax net, it was decided to introduce a relief. So the relief was introduced in a rather inadequate way to meet the point. Nevertheless, it was a relief that we welcomed. Any relief is better than none. But the relief did not extend to trusts, and this was obviously grossly unfair on those who, for whatever reason, had their capital in trust and not held absolutely or directly.
      This was not contested when we put forward the argument in Committee. As a result, in order to meet it, the Government have produced this extremely complicated new schedule. I am afraid, as my hon. Friends have already pointed out, that the Government still have not got it right.
      There is something very curious about the Government, once having accepted that people who have capital held in trust need to be given relief in the same way as individuals are, should then say that they will give that relief only to some kinds of trust. They seem to think that individuals whose capital is held in trust in some circumstances are particularly worthy. That is not the point at issue. The point at issue is the unfairness between those who hold capital in trust and those who hold it absolutely. That is where the unfairness comes in.
      The only way of meeting that is to give relief to all those whose capital is held in trust and not draw an arbitrary distinction between them. They should all get the same relief.
      As my hon. Friend the Member for Braintree (Mr. Newton) has pointed out, for the physically disabled the line is drawn between those worthy of full relief and those less worthy who get only partial relief on the totally arbitrary and unsustainable basis of those who get the attendance allowance and those who do
      1772
      not. That is purely for administrative convenience.
      The only sensible thing for us to do would be to press amendment (a). Should that by any chance fail there is also the point of amendment (c). What the Government have done here is totally unsustainable. They have said they accept the arguments about unfairness to trusts and therefore they will give relief to trusts, but only to those already in existence at the time that we debated this matter upstairs in Committee. New trusts formed subsequently will not be eligible for any relief whatsover. That is the meaning of the last line of this lengthy schedule.
      The point at issue here—I hope that the Minister of State will pay attention to the argument that I am patiently deploying despite interruptions from the Public Galleries—is that since it has been conceded that there is an unfairness to those who hold capital in trust, the relief should be given to all those trusts, even those trusts not get set up.
      The Government are clearly under the impression that if they were to do this a whole lot of people would subsequently set up trusts all over the country. That is palpably absurd. The relief is so small that the costs of setting up the trust would not make it worth a candle. But of course there will be all sorts of people who, for normal and genuine reasons, will set up trusts subsequent to 7th June. They will get no relief at all, because of this arbitrary line in the Government's schedule. That is wholly unjustifiable. Therefore I hope that we shall have the opportunity to press this amendment to a Division if amendment (a) is not carried.
      When the Minister of State was introducing this he said that it was only a temporary, rough-and-ready solution, pending full consultation. The Chief Secretary had promised full consultations on a proper solution to this problem. These consultations were to be with the various advisers, including our advisers on the Opposition side of the House. I shall read to the House what the Chief Secretary said on 7th June:
      "I propose that there should be wide consultations between the Inland Revenue and various institutions and individuals—including the advisers of both hon. Gentlemen—to see whether an answer can be found to the problem."

      1773
      He went on:
      "I hope that we can have consultations fairly quickly, and if some other forms of trust can be included for Report I shall willingly look at them. I certainly do not rule them out entirely."—[Official Report, Standing Committee A, 7th June 1978; c. 862.]
      Clearly we thought that there would be consultations with our advisers and the Inland Revenue between 7th June and Report, so that we could see whether some sense could be made from this nonsense.
      Instead, after accepting—which we did, both orally and in writing—the Chief Secretary's offer of consultations with our advisers, we suddenly received a letter nut of the blue from the private secretary to the Chief Secretary saying that he was terribly sorry but there was absolutely nothing that could be done before Report and that there was no possibility of any discussions before September at the earliest.
      That goes back on the Chief Secretary's word, and is very shameful. Many people were hoping that as a result of the Chief Secretary's offer something could be done—as the Chief Secretary had indicated in the excerpt from Hansard that I have quoted—to find some way of bringing these people and their trusts within the ambit of the relief.
      It is deplorable that these consultations should not have taken place, and that the Bill is passing on to the statute book in this form. Of course, the consultations might not have produced any answers, but at least they should have been attempted. It is really very regrettable that, having made this offer, which we welcomed unreservedly at the time, we should now he told that there is no possibility of any talks until September. That is a rather empty offer anyway, because in September there will be an election campaign, leading to a change of Government.
      5.15 p.m.
      The Financial Secretary to the Treasury (Mr. Robert Sheldon): The hon. Member gave the impression that the Chief Secretary gave an undertaking that consultations would take place before Report. That is not so. The hon. Gentleman must be aware that the undertaking was given without a time limit. Because of the particular problems in
      1774
      volved, most notably the short space of time between Committee and Report, it was not practical, nor was it expected, either then or later, that these consultations would be held in that period.
      Mr. Lawson: I understand the Financial Secretary's loyalty to the Chief Secretary. I can only reply to him—notwithstanding the efforts of the Minister of State's compatriots in the Public Galleries—by reading again what the Chief Secretary said in Hansard on 7th June. He said:
      "I hope that we can have consultations fairly quickly, and if some other forms of trust can be included for Report I shall willingly look at them. I certainly do not rule them out entirely."—[Official Report Standing Committee A, 7th June 1978; c. 862.]
      That is what he said, and the Financial Secretary cannot get away from that.
      Therefore subject to anything that the Minister of State may say in replying to this debate, we shall certainly wish, when the time comes, to press these matters to a Division.
      Mr. Denzil Davies: The hon. Member for Chichester (Mr. Nelson) moved amendment (a), which I understand will be pressed to a Division, either now or later on, unless hon. Members are convinced by my arguments in the mean-time. [An HON. MEMBER: "They would be more convincing in Welsh."] I am quite prepared to reply to the debate in Welsh if hon. Members would prefer it, but it would not be in order.
      Amendment (a) apparently commends itself to the Conservatives. I was asked about the yield from capital gains tax in relation to trusts. The figure that I have, which is the best estimate that the Inland Revenue has, is about £60 million a year. If amendment (a) is accepted, depending on how many people would take advantage of the relaxation—and one can assume that almost anyone who could would do so—the estimate of the loss of yield would be about £50 million. That is the best figure that I can give to the hon. Gentleman.
      Accepting amendment (a) would involve—not immediately, because it would take some time to split up some trusts—a loss to the Revenue of about £50 million. It is only fair that I should tell hon. Members that before they press their amendment.
      Mr. Lawson: The Minister of State will agree that the first-year costs—thisyear costs—would be a tiny fraction of that amount.
      Mr. Davies: I do not know how the hon. Member is able to be much more certain than I can be. It may be possible for a large number of these trusts to be split or broken up into smaller units, and within this year it may be that it would involved half of the £50 million. I do not know. I said that I could not say—and neither can the hon. Gentleman. I think that the statement that he has made could not be substantiated. We are talking about £50 million, whether it is this year or next year.
      I hate to quote back at hon. Members what they said in Committee, because they might quote back at me what I said in Committee. However, in Committee the hon. Member for Chichester said, in moving other amendments on these lines, that he wished
      "to ensure that no individual is able to circumvent his tax liability by setting up multiple trusts."—[Official Report, Standing Committee A, 7th June 1978; c. 850.]
      It follows from amendment (a) that what would happen would be the setting up of multiple trusts. That is the reason why we are finding so much difficulty in giving to trusts the relief that is given to individuals. There is no secret about this. The main reason for the difficulty is that once that kind of relief is given to trusts, there will be a proliferation of multiple trusts, to take advantage of the low rate. As I have indicated, we believe that the cost of that would be about £50 million.
      Mr. Nelson: However deserving are the beneficiaries of the trusts that will receive the full relief under the new schedule—and I am sure that they are deserving—is it not the case that were they minded to set up multiple trusts, even in those limited deserving categories, they would not be prevented from doing so under the new schedule as it is drafted? The Minister cannot have it both ways.
      Mr. Davies: I accept that entirely. That is where the dilemma takes us. Once we recognised that there was a problem relating to the multiplicity of trusts that would follow from amendment (a) we failed, in time for the Finance Bill and these debates, to produce something that
      1776
      would give a measure of relief to trusts without entailing this danger.
      But we recognise, of course, that there are certain categories that are very deserving—trusts for the mentally handicapped and the physically handicapped. We gave a measure of relief in those cases. I recognise that it is illogical—at any rate, it is not completely logical—but it follows from the difficulty.
      My right hon. Friend the Chief Secretary offered consultations with the Opposition on this point. We recognised the difficulty and we offered consultations to see how we could give relief to trusts in general without creating a state of affairs in which there would be a multiplicity of trusts, trusts split up. We do not know yet how to deal with that. It seems that the Opposition do not know how to deal with it, either, because now they are pressing amendment (a), which would create that very situation. I do not know where that leaves the consultations, or whether hon. Members still wish to have consultations if they are to press amendment (a).
      Mr. Lawson: Tomorrow.
      Mr. Davies: That is entirely a matter for the Opposition. However, I should have thought that having made up their minds by voting for amendment (a), having said "We stand for the same regime on trusts as for individuals", and knowing that the consequence of that is bound to be a multiplicity of trusts, there would not be much to consult about, although we shall be quite happy to honour the undertaking and to go on with the consultations.
      The hon. Member for Braintree (Mr. Newton) dealt with a narrower point. He said that there was some difficulty, in that there could be cases in which individuals who are not in receipt of attendance allowance could still be physically disabled. I accept entirely that there may be some such cases. But whatever definition one introduces into the legislation—and this category is the one used for capital transfer tax purposes, as the hon. Member will know—if one were merely to say "physically disabled" or "seriously disabled", one would still have the same problem of having to decide whether, in a particular case, a person fell within whatever definition was laid down.
      Mr. Newton: I accept that this will be one of the long-term difficulties with all our provision for the disabled. However, why, for example, was this not extended also to people in receipt of mobility allowance, who are defined as being unable to walk or virtually unable to walk? Many of those will not be in receipt of the attendance allowance but are, none the less, so disabled that they are unable to walk, or virtually unable to walk.
      Mr. Davies: This matter was debated at some length in discussion on the Finance Act 1977, when we looked at it in relation to capital transfer tax. It was felt at the time—and this was accepted—that the best definition was the receipt of attendance allowance, but I accept entirely that one could use other definitions. However, one still has the same problem. If we change this definition to mobility allowance, next year the hon. Member will table an amendment and will no doubt be able to find cases in which people are not in receipt of mobility allowance but are still physically disabled and should be benefited. So this is a problem that will remain with us whatever choice of definition we make.
      I think that I have dealt with most of the—
      Mr. Lawson: The date—amendment (c).
      Mr. Davies: The date is, I think, a reasonable date. As my right hon. Friend said in Committee, this is a temporary relief, pending consultations, which we would have hoped that we would have had with the Opposition, without them committing themselves in the way that they propose, it seems, by voting for amendment (a). We hope that this is a temporary measure and that we can have consultations. We hope that next year we shall be able to bring something forward that is clearer and more logical than the present position.
      I accept that the present position is entirely illogical. That is why the date was chosen. It is a reasonable date. It is a temporary solution pending consultations. But now, as I have said, the Opposition are deciding that they want amendment (a) with all the consequences of the multiplicity of trusts, and I wonder how fruitful those consultations will be.
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      Therefore, I cannot accept any of the amendments.
      Amendment agreed to.
      Amendments made: No. 20, in page 28, line 10, leave out subsections (8) and (9) and insert—
      '(8) Schedule (Relief for gains less than £9,500) to this Act shall have effect as respects the application of this section to husbands and wives, personal representatives and trustees.'.
      No. 21, in page 28, line 40, leave out '(9)' and insert '(4), (7), (8)'.—[Mr. Bates.]

    Clause 38

      RELIEF FOR GIFTS OF BUSINESS ASSETS
      Mr. Denzil Davies: I beg to move, amendment no. 57, in page 31, leave out line 7 and insert—
      '(7) Subject to subsection (8) below, in this section and Schedule 7 to this Act'.
      Mr. Deputy Speaker: With this we may take Government amendments nos. 58, 59 and 60.
      Mr. Davies: These amendments extend the relief for gifts of business assets by expanding the word "trade" to include the activity of commercially managed woodlands. Section 33 of the Finance Act 1965 already recognises that the activity bears the characteristics of a trade by providing that the relief for the replacement of business assets should be available for assets used for the purpose of commercial woodlands. It seems reasonable to follow a similar course in clause 38 and schedule 7.
      The amendments also put right a small technical defect in schedule 7. The Forestry Commission of Great Britain has brought it to our attention that clause 38 does not include the management of woodlands. This is something that we had not appreciated. I do not think that it was raised in Committee. Be that as it may, the amendments seek to put right that position. Again, it is a small measure of additional relief for woodlands.
      Amendment agreed to.
      Amendment made: No. 58, in page 31, line 12, at end insert—
      '(8) In this section and Schedule 7 to this Act and in determining whether a company is

      1779
      a trading company for the purposes of this section and that Schedule, the expression "trade" shall be taken to include the occupation of woodlands where the woodlands are managed by the occupier on a commercial basis and with a view to the realisation of profits.'.—[Mr. Bates.]

    Schedule 7

      RELIEF FOR GIFTS OF BUSINESS ASSETS
      Amendments made: No. 59, in page 72, line 14, at end insert 'and'.
      No. 60, in page 72, line 16, leave out from 'Act' to end of line 18.—[Mr. Bates.]

    Clause 40

      TRANSFER OF BUSINESS ON RETIREMENT
      5.30 p.m.
      Mr. Denzil Davies: I beg to move amendment no. 23, in page 31, line 38, leave out 'In' and insert 'For'.
      Mr. Deputy Speaker (Sir Myer Galpern): With this we may take the following amendments:
      Government amendment no. 24, amendment no. 36, in page 32, line 4, after 'years', insert
      'or 55 years in the case of a full-time fisherman',
      and Government amendments nos. 25 to 27.
      Mr. Davies: The amendment gives a scaled-down capital gains tax retirement relief where the business has been owned for less than 10 years at the time of disposal. Thus, an appropriate percentage of the maximum relief due by reference to the individual's age at the time of the disposal will be available where the period of ownership of the business falls short of 10 years, provided that the business has been owned for a year or more. The percentage will be 10 per cent. where the period is exactly one year, rising to 100 per cent. for 10 years.
      The amendment also provides for the purposes of the scaled-down relief that periods in which the individual has been the proprietor of his business should be aggregated with those in which his family trading company, of which he is a full-time director, carried on the same busi
      1780
      ness. Thus, the amendment brings within section 34 of the Finance Act 1965 the provision for aggregating such periods at present contained separately in paragraph 2(3) of schedule 10 to the Finance Act 1966. Paragraph 2(3) is therefore repealed.
      This amendment arises as a result of a new clause tabled in Committee by the hon. Member for Weston-super-Mare (Mr. Wiggin). Since that clause was somewhat restrictive, these amendments go further than that clause and provide what I am sure the House will agree to be a welcome improvement.
      Mr. Douglas Henderson: I wish to refer to amendment No. 36, which stands in my name and in the names of my SNP colleagues. The Minister of State did not refer to that amendment in his introductory remarks, but it relates to an occupational group on which I hope the Government will look with some sympathy.
      We tabled the amendment in Committee, but unfortunately no SNP Member was selected to serve on that Committee. I understand that the amendment in question was not called. I hope that the Government will be sympathetic on the amendment, because it deals not with people who need periods of service or business aggregated, but with people who have spent their whole lives in the occupation of fishing—a hazardous and dangerous occupation. In the past four years, two fishing boats from my constituency have been lost without trace at sea. There have been similar catastrophes in other constituencies.
      The concession that the Government have introduced on capital transfer tax is welcome, but although it is a welcome lift in the rate of concession I wish to emphasise that the cost of building fishing boats has escalated at a much greater rate. Four years ago we used to talk of a fishing boat costing £1,000 a foot. However, in respect of an 80 ft. boat—the characteristic length of boat in my constituency and in most constituencies from which the inshore fleets ply—we are now talking of a figure of between £6,000 and £7,000 a foot. A boat between 80 ft. and 85 ft. now costs about £500,000.
      I wish to emphasise the social consequences, because in the Scottish fishing

      1781
      industry, which the amendment seeks to benefit, the boats are not company boats but family boats. It is not a case of a large multinational company quoted on the Stock Exchange having equity in these boats and employing the skippers and crew. This is a case where the funds are generated from within the family and where the responsibility for ownership passes from father to son, as it has for generations.
      I fear that one of the unintended consequences of this legislation may be that the fishing industry in Scotland will be fundamentally and radically changed. The only way to generate capital will be by bringing in company money—money which the fishermen do not want because they wish to continue to keep their boats in a family business.
      In the Scottish fishing industry there are 1,000 skipper-owners who operate on a shared basis. In other words, the crew who work on the boat share in the profits. This is a socially healthy scheme to operate in this hazardous and dangerous occupation. I fear that, unless some action can be taken, the prospects of the industry continuing in this way will be jeopardised.
      My right hon. Friend the Member for Western Isles (Mr. Stewart) was told in a recent parliamentary Answer by the Secretary of State for Scotland that as at December 1974 there were 2,639 boats registered in Scottish ports in the inshore fleet, ranging from boats under 40 ft. to boats up to 80 ft. Therefore, it is not an enormous problem for the Government to take care of in this legislation.
      The Scottish Fishermen's Federation pointed out that when it made a submission requesting that the retirement age for inshore fishermen for the purposes of these provisions should be treated as 55 years, the Inland Revenue superannuation fund office earlier this year said that it was prepared to accept retirement annuities with a retirement age of 55 for full-time fishermen. I welcome that decision by the Inland Revenue, which seems to me to be realistic in examining the nature of the work and the problems faced by fishermen. I do not know whether the Minister of State has ever been on a fishing boat. He is looking very pensive.
      Mr. Denzil Davies: Yes. I have.
      Mr. Henderson: If he has been on a boat, I do not know how far out to sea he went and whether he went out of the harbour. I extend to him and to the Financial Secretary, the Chief Secretary and the Chancellor of the Exchequer, an invitation, here and now, to go aboard a fishing boat in my constituency. I will arrange it on any date that is convenient to them. They will go out on an excellent boat and they will have a pleasant trip at sea. To ensure their safety and to make sure that they will he permitted to return, I shall go with them—otherwise I am afraid I could not guarantee that they would come back.
      If the Minister accepts that invitation, he might well have a better appreciation of the situation—and this applies to his Treasury colleagues and the appropriate civil servants.
      Mr. J. Enoch Powell: The accommodation on the inshore boats plying out of the hon. Gentleman's constituency must be more lavish than those in the fishery of County Down. If he experiences any overcrowding as a result of his invitation, the Minister and his colleagues will be welcome and will learn a great deal if they will join in a trip on a fishing boat out of Kilkeel, in my constituency. May I add that I associate myself more seriously with the hon. Gentleman's case?
      Mr. Henderson: I am grateful for the right hon. Gentleman's support. I do not propose to enter into competition with him over the merits of the boats in our constituencies. He said that the accommodation is limited on these boats, and that is true. Normally they carry a crew of seven or eight. If we were to take with us the Chancellor of the Exchequer, the Chief Secretary, the Financial Secretary, the Minister of State and two or three members of the Civil Service, we would expect—
      Mr. Deputy Speaker: I hope that the hon. Gentleman is not including the occupant of the Chair, because I turn seasick very readily.
      Mr. Henderson: Naturally, Mr. Deputy Speaker, I shall consult you before extending any such invitation to you, because I realise that you are not responsible for this legislation. If one had to

      1783
      accommodate all those people on a normal boat there would be no room for the crew, and we would expect the Chancellor of the Exchequer, the Financial Secretary and their colleagues to play their part in hauling up the nets, operating the winches, gutting the fish, and undertaking all the other numerous tasks that have to be carried out at sea. If the Ministers underwent that experience, it might concentrate their minds wonderfully on the amendment.
      This matter was referred to briefly in Committee and I pay tribute, unusually, to the hon. Member for Edinburgh, Pentlands (Mr. Rifkind), who raised it. The hon. Gentleman was given a most disturbing reply by the Chief Secretary, who made the extraordinary statement that:
      "It would be difficult to define a particular group—for example, fishermen—as I am sure that the hon. Gentleman will accept."—[Official Report, Standing Committee A, 13th June 1978; c. 1164.]
      I do not know at what hour of the night or morning the Chief Secretary was speaking, but there is surely no difficulty in defining a particular group such as fishermen. They are defined for many purposes under the national insurance legislation and other legislation. This is a case where particular concern should be shown to a clearly understood and defined group.
      There are just over 7,500 full-time fishermen in Scotland, of whom about 1,000 are skipper-owners. The Government should look at the amendment seriously for the sake of the industry, which is suffering great troubles. It is inhumane for the Government to expect fishermen to go to sea at the age of 60 or 65, facing all the hazards of their job, and not give them at least the option of the capital transfer tax relief provisions, which would allow them at the age of 55 to pass on to their sons their share in a boat. I know the fishermen in my constituency well. They are a hardy breed, and many would want to carry on, but there are some who, for health, domestic or other reasons, might decide that it was better to call it a day at 55 and allow their sons, many of whom have skippers' tickets, to take over the boats.
      Even if the Minister cannot accept the amendment, will he consider the possibility that if there are medical grounds
      1784
      for a skipper's early retirement, he should have the option of obtaining the capital transfer tax relief provisions at the age of 55?
      I do not know what sort of reply we shall get from the Minister of State. He gave no indication of his view on the amendment when he spoke earlier, but I hope that he will give a reasoned reply and will say that the Government have considered the matter seriously, and that he will add some lustre to his name in Scotland, if nowhere else, by saying that he will accept the amendment.
      Mr. Malcolm Rifkind: I have no desire to join the boat trip being thoughtfully organised by the hon. Member for Aberdeenshire, East (Mr. Henderson) for the Treasury Ministers. The hon. Gentleman and the Ministers are in deep water most of the time anyway, and I see no need for the rest of us to join them in that predicament.
      I raised the matter in Committee when we considered the general question of entitlement to retirement relief. The hon. Member for Aberdeenshire, East is correct in saying that this is an unusual, perhaps even unique, case. Those working in this industry are expected to retire earlier than the general population and they are entitled to consider earlier retirement because of the nature of their work.
      The Scottish Fishermen's Federation and a number of hon. Members, including my hon. Friend the Member for North Angus and Means (Mr. Buchanan-Smith), have drawn attention to the grave injustice in this case. Fishermen, particularly the inshore men, have to make a very unsatisfactory choice. Either they retire at the appropriate age for the type of work they do, and thereby lose any prospect of relief, or they carry on, despite the fact that they are approaching an age at which the nature of their job makes it highly unsatisfactory that they should carry out such arduous work.
      The whole purpose of the provisions in the Finance Acts is to provide retirement relief. While the retirement ages for the bulk of the population are 65 for men and 60 for women, there should be nothing rigid about a particular age for the purposes of this entitlement. There

      1785
      can be no objection in principle to allowing the relief to be available to people who retire at the normal age of retirement for the job they do.
      5.45 p.m.
      There may be drafting problems, and it might be wrong to make an exception for fishermen alone. There may be other groups who, for equally good reasons, have to contemplate retiring earlier than those in the rest of the population. However, even if the Minister cannot accept the amendment I hope that he will acknowledge that the case is overwhelming and that he should accept it, at least in principle.
      I suggest that the Minister should say that the Government accept the justice of the case and will see whether, in future legislation, a way can be found to allow groups or individuals who, not through personal choice but by the nature of their job, are expected to retire, and perhaps have to retire, earlier than the bulk of the population should not be denied any entitlement to retirement relief of the sort proposed in the Bill.
      That is not an unreasonable request. If the Minister were able to give such an assurance, some of us would be happy to accept that for the time being. I hope that he will certainly not take the negative and unhelpful view that was taken by the Minister who dealt with this matter in Committee.
      Mr. Lawson: We welcome the tapering relief introduced into the retirement relief by these amendments, particularly by amendment no. 24. I wish to make only two brief observations. The first is that it is worth recording how this relief came about. In the Committee stage of the Finance Bill last year my hon. Friend the Member for Weston-super-Mare (Mr. Wiggin) moved an amendment dealing with this point. The Government said that they would look at it, but nothing happened. In the intervening year, my hon. Friend had a prolonged correspondence with the Minister of State, but there was nothing in this Bill to remedy the situation.
      In Committee this year, my hon. Friend was persistent. He deserves the congratulations of the House for pursuing the matter. He tabled a new clause which,
      1786
      again, was not accepted by the Government, though they accepted the principle. As a result of the campaign that my hon. Friend has waged persistently for more than a year, we now have the concession in the Bill. It is a lesson to us all that it is necessary to show persistence in these matters. Sometimes it takes longer than a year before the serried ranks of Treasury Ministers give in to a reasoned case. That is one reason why it is often important that the same points are selected for debate year after year. It is no argument for not selecting a matter for debate to say that it was selected the previous year. As this case exemplifies, it is often only through persistence that a point is met.
      The other issue that I wish to raise is that although we have had eloquently expressed by the hon. Member for Aberdeenshire, East (Mr. Henderson) the case for early retirement of one category of people, there is another way of looking at the matter, namely, to consider not particularly professions or categories but those people who are forced to retire early through ill health.
      I know of many cases of individuals who have not reached the age of 60 having severe heart attacks and being told they must retire and sell out on medical grounds. They are then faced with the choice of going on and probably literally killing themselves in order to try to reach the age of 60 and qualify for the relief or to retire prematurely on health grounds, in which case they will forfeit the relief altogether.
      When the Minister of State is considering whether there are professional categories for whom early retirement is appropriate, he should also consider the category of people who are obliged to retire early on genuine grounds of ill health. We welcome the concession but we think that there are other important matters that need consideration.
      Mr. Denzil Davies: In referring to amendment no. 36 the hon. Member for Aberdeenshire, East (Mr. Henderson) extended to my right hon. Friend the Financial Secretary and myself an invitation to go for a short trip—
      Mr. Henderson: A long trip.
      Mr. Davies: —on a Scottish fishing boat. If the hon. Gentleman says that the

      1787
      invitation was for a long trip, that is what I feared. It will be clear to him when I finish speaking why I think it better to decline his invitation.
      Mr. Henderson: Shame.
      Mr. Davies: I shall confine my fishing activities to mackerel fishing off the coast of west Wales. That is a much less hazardous business, but not for the mackerel.
      The hon. Gentleman made his case exclusively in respect of fishermen. We understand the hazardous nature of the work. We understand that many fishermen would wish to retire before 65 years, and that some feel that they have to stay on to get the retirement relief. The difficulty about accepting an amendment of this sort is that there may be other groups that are in the same position. As well as there being other groups there may be individuals in the same position. For instance, an individual may have a business that involves equally hazardous undertakings. That person may not form a group, but he might be in the same position as fishermen on account of the nature of his work.
      Mr. Henderson: I am sorry that the right hon. Gentleman has declined my invitation to take a trip on a Scottish fishing boat. The invitation was offered in all sincerity and generosity. Now that the Financial Secretary has arrived in the Chamber, he may wish to reconsider his decision. He said that there may be other groups in the same position as fishermen. Is he able to tell the House of any comparable group?
      Mr. Davies: I suppose that one could give a list.
      Mr. Henderson: Give it.
      Mr. Davies: Nevertheless, it is a bad precedent in tax legislation even to legislate for groups. There may be individuals who are in the same position. For example, a mining engineer—not necessarily a coal mining engineer—might run a business that involves hazardous work. He might feel that he wishes to retire and pass on his business because of the nature of the work. Why should such a person be excluded because we have defined groups in our legislation?
      Mr. Nicholas Ridley: What objections were there to the decision to make a special group of North Sea oil divers?
      Mr. Davies: There were good arguments both ways on the issue, which was not clear-cut. I am saying that we should not necessarily legislate for groups. I am saying that there may be many people who do not form recognised classes, groups or categories but who engage in hazardous businesses and would wish to have the benefit of the relief.
      Mr. Henderson: Name them.
      Mr. Davies: I do not know them. We cannot name them. That is why we cannot legislate for individuals or groups of individuals.
      The only way to deal with the problem is by considering the age that is provided. If there is a good case for saying that the age of 65 years is too high, consideration can be given to fixing a different age.
      With respect to the hon. Member for Blaby (Mr. Lawson), I do not think that we can proceed by reference to ill health. That would involve a definition of ill health. How much ill health would count? What ill health would qualify for the relief? Such a definition would make these matters extremely difficult.
      The hon. Member for Aberdeenshire, East said that Scottish fishermen and fishermen in general might not be able to pass on their boats from father to son—I accept that the boat is probably the major asset—because of capital gains tax. However, clause 38, which deals with relief on the transfer of business assets, has the effect of relieving from capital gains tax that sort of transfer. There may be one or two marginal cases, but we have dealt substantially with that issue.
      I accept that the value of a fishing boat is quite high, and I accept that, prima facie, there may be a charge to capital gains tax if the owner of a boat wants to pass on his business, including the boat, to his son. However, clause 38 meets that point, and in almost all such cases there would not be a charge to capital gains tax.
      The problem arises if a boat is sold on retirement. The capital gains tax provisions would apply if the owner retired

      1789
      at the age of 55 years and sold his boat. However, that is not the case that we are discussing. The result of clause 38 is that the family venture or business is not hampered when it is wished to retain the asset and the business in the family. I can give the hon. Gentleman the reassurance that we have gone some way generally to meet his argument.
      I do not believe that we can introduce general relief into tax legislation. The difficulty is not necessarily that of definition but of identifying groups and leaving out other groups and individuals who do not fall within the definition but who are deserving cases. If there is to be any relief along these lines, there will have to be general consideration of the retirement age. As society changes its views on these matters, no doubt the retirement age will be considered from time to time.
      It is for those reasons that I cannot accept amendment no. 36.
      Amendment agreed to.
      Amendments made: No. 24, in page 31, line 40, leave out from 'retirement)' to end of line 7 on page 32 and insert
      there shall be substituted the following subsections:—
      "(1) If an individual who has attained the age of 60 years—

      (a) disposes by way of sale or gift of the whole or part of a business, or

      (b) disposes by way of sale or gift of shares or securities of a company,

      and throughout a period of at least one year ending with the disposal the relevant conditions have been fulfilled, relief shall be given under this section in respect of gains accruing to him on the disposal.
      (1A) For the purposes of subsection (1) above the relevant conditions are fulfilled at any time if at that time,—

      (a) in the case of a disposal falling within paragraph (a) of that subsection, the business in question is owned either by the individual or by a company with respect to which the following conditions are at that time fulfilled, namely,—

      (i) it is a trading company;

      (ii) it is the individual's family company; and

      (iii) he is a full-time working director of it; and

      (b) in the case of a disposal falling within paragraph (b) of that subsection, either the conditions in sub-paragraph (i) to (iii) of paragraph (a) above are fulfilled with respect to the company in question or the individual owns the business which, at the time of the disposal, is owned by the company;

      1790
      and in relation to a particular disposal the period, up to a miximum of 10 years, which ends with the disposal and throughout which the relevant conditions are fulfilled is in this section referred to as 'the qualifying period'.
      (1B) The amount available for relief under this section shall be,—

      (a) in the case of an individual who has attained the age of 65 years, the relevant percentage of £50,000; and

      (b) in the case of an individual who has not attained that age, the relevant percentage of the aggregate of £10,000 for every year by which his age exceeds 60 and a corresponding part of £10,000 for any odd part of a year;

      and for the purpose of this subsection 'the relevant percentage' means a percentage determined according to the length of the qualifying period on a scale rising arithmetically from 10 per cent. where that period is precisely one year to 100 per cent. where it is ten years."'.
      No. 25, in page 32, line 22, at end insert:
      '(2A) In subsection (4) of that section (application of relief) for the words "subsection (1) above" there shall be substituted the words "this section" and the words "within that subsection" shall be omitted.'—[Mr. Denzil Davies.]
      Mr. Denzil Davies: I beg to move amendment no. 28, in page 32, line 22, at end insert:
      '(2A) In subsection (6) of that section, in paragraph (b) of the definition of "family company" for the words "seventy-five per cent." there shall be substituted the words "fifty-one per cent." and for the words "ten per cent." there shall be substituted the words "five per cent.".'.
      The amendment modifies the definition of "family company" in section 34(6) of the Finance Act 1965, which is used for the purpose of the capital gains tax retirement relief. The clause therefore applies automatically to the roll-over relief for gifts of business assets in clause 38.
      In Standing Committee the hon. Members for Chichester (Mr. Nelson) and Norfolk, South (Mr. MacGregor) tabled amendments with the aim of extending clause 37, which is now clause 38, to cover gifts of shares in a trading company in which the transferor had a material interest. Another amendment was tabled in relation to material interest. The Chief Secretary rejected that amendment but gave a commitment that he would meet the point in the earlier amendment. The amendment meets my right hon. Friend's undertaking.
      Mr. John Wakeham: We welcome the amendment to redefine the definition of a family company and confirm that in our opinion it is a much better definition than that which was put before the Standing Committee. As the right hon. Gentleman has said, the issue was raised in Standing Committee. We are grateful to him for fulfilling the undertaking that was given by the Chief Secretary.
      In many instances the definition will be fine, especially for businesses that are controlled by one family. I confirm that what has been done meets strictly the undertaking that was given. However, it will not cover some instances that many of us think it should cover—for example, family businesses that are controlled by several families, three or four families being in partnership together. That is the sort of family company that might well own a fishing boat, a subject that we were only recently discussing. Those businesses, if they were partnerships, would get relief that they do not get as family companies. These are examples that are likely to become more and more common in future, especially when professional people, or people with high skills, go into a business with a high degree of technology.
      If three or four highly skilled people join together to set up a company, they will, because of the better definition that is before us but which is still not a wide enough definition, not be able to get the exemption. In welcoming the amendment and in confirming that it meets the undertaking, I am certain that we shall have to return to this topic again for further changes in the years to come.
      Amendment agreed to.

    Clause 41

      RELIEF IN RESPECT OF LOANS TO TRADERS
      6.0 p.m.
      Mr. Graham Page: I beg to move amendment no. 182, in page 32, line 29, after 'trade', insert
      '(other than that of a solicitor)'.
      I must at once admit an interest, but an interest on behalf of the young entrants to my profession. Clause 41 is welcome in giving relief in respect of loans which
      1792
      the borrower fails to repay. The relief is specified in subsection (2):
      "If, on a claim by a person who has made a qualifying loan"
      —the lender who has made the loan—
      "the inspector is satisfied that—
      (a) any oustanding amount of the principal of the loan has become irrecoverable"
      it can become an allowable loss equal to the amount that
      "had accrued to the claimant when the claim was made."
      The difficulty is the definition of the qualifying loan. That occurs in subsection (1):
      "In this section 'a qualifying loan' means a loan in the case of which—
      (a) the money lent is used by the borrower wholly for the purposes of a trade carried on by him, not being a trade which consists of or includes the lending of money".
      I should like to deal with the word "trade". As the clause stands, trade would not include a profession or vocation. A later amendment will alter that, so I am anticipating acceptance of that later amendment, that "trade" will include a profession. Therefore, it would include the profession of a solicitor.
      In the solicitors' profession it is normal to accommodate clients with loans in order, for example, to bridge the gap between the purchase of one house and the sale of another. Frequently, solicitors assist clients with short-term loans in that way. It is not a major part of the practice, but it would certainly come within the definition that the trade or profession includes the lending of money.
      I put some of these points to the Minister in Committee. I appreciate that those words are necessary for the generality of borrowers. Obviously, a qualifying loan should not be a loan to enable the borrower to relend it or to go into the business of relending it, but if the clause remains unamended it will mean that the young solicitor who may wish to borrow capital to start in practice will not be as sure a borrower as anyone else setting up in trade. If the lender took the trouble to read this legislation, he might say "This is a profession in which money is sometimes lent to clients. Therefore, it includes the lending of money. If this young solicitor should fail and not return the money, I shall not be able to treat this loan as an allowable loss." Therefore, he would

      1793
      hesitate to lend the young solicitor the money to set up in practice.
      I do not want young entrants to my profession to be put in that difficulty. Therefore, I propose this amendment, which would insert after "trade"
      "(other than that of a solicitor)".
      It is a narrow amendment. It cannot possibly open the floodgates to any avoidance of tax. I am sure that it will be of great assistance to the young in a profession which does not go in for the business of lending money. There can be no cheating of the Inland Revenue, as there might be if we removed the words altogether. I suggest that making this slight exception can do no harm to the Inland Revenue.
      Mr. Denzil Davies: The right hon. Member for Crosby (Mr. Page) raised this matter in Committee, and he has pursued it on the Floor of the House.
      I wrote to the right hon. Gentleman explaining why it was necessary to deny the relief in the clause for money lending in general. I think that he accepted the reasons for that. I understand that he seeks to safeguard the position of a solicitor being thought to be carrying on the trade of lending money. That is where the difference between us lies. As I said in Committee upstairs, I do not believe—indeed, there is authority—that the lending of money by a solicitor in the way described by the right hon. Gentleman is the carrying on of the trade of lending money. There are apparently two tax cases on the books which represent authority for that proposition.
      At the end of the day it must be a question of fact, but I should say that most solicitors engaged in lending as an incidental part of their profession are not carrying on the trade of lending money. Indeed, if a solicitor establishes himself as carrying on the trade of lending money—if that is possible for a professional person—I do not see why he should get the relief in the clause. I think that the right hon. Gentleman agrees with that.
      The right hon. Gentleman seems to think that the incidental lending of money by solicitors means that they come within the clause, in the sense that their profession includes the lending of money. There is nothing to fear here. It will
      1794
      be exceptional for it to be said that the profession includes the lending of money when the solicitor is merely lending money incidental to his business. For that reason, I cannot accept special relief in the Bill for this group.
      Mr. Peter Rees: It has always been a matter of surprise to me that debts, other than debts on a security, have been excluded from capital gains tax, particularly the reliefs for losses under capital gains tax. But there it is, and I should not be in order if I were to widen the debate to raise that matter.
      The Opposition were glad to see clause 41 in the Bill. The motives which led the Government to introduce it are perhaps slightly suspect. However, I do not want to reopen the debate that we had yesterday on the reliefs for small businesses.
      My right hon. Friend the Member for Crosby (Mr. Page), as one would suspect, made a small but important point. The Minister of State has not entirely satisfied me with his reply. He referred to two cases. I do not think that they establish the point that he endeavoured to make. It is true that a solicitor will not, in other than exceptional circumstances, be regarded as a money lender. The point is that this provision excludes moneys lent to people whose trade consists of or includes the lending of money. As "trade" is to be defined, if the House accepts amendment no. 14 in the name of the Chancellor of the Exchequer, it will include "profession".
      I do not believe that any of the cases to which the Minister of State has been referred by his assiduous advisers establish that the profession of a solicitor does not include, even though it is a subsidiary aspect of his profession, the lending of money. My right hon. Friend made a very good point.
      I know that the Minister of State is open-minded on these matters. I should not be disposed to encourage my right hon. Friend, if he needs encouragement or discouragement, to press the amendment to a Division. However, I ask the Minister of State to go back to his advisers in the hope that they may be disposed to take advice from one of the Law Officers on the precise scope of clause 41(1)(a). If they feel that there is any merit in this proposition, as I do—I was persuaded by my right hon.

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      Friend's argument—I hope that the Minister of State, at least informally, will say that he will introduce a remedial measure in the next Finance Bill if he is fortunate or unfortunate enough to be commending it to the House.
      Mr. Graham Page: I cannot say that I am satisfied with the answer by the Minister of State. I hope that he will look into this matter again to see whether he can allow this very narrow except ion.
      I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Mr. Denzil Davies: I beg to move amendment no. 14, in page 32, line 37, at end insert—
      '(2) In subsection (1) above references to a trade include references to a profession or vocation; and where money lent to a company is lent by it to another company in the same group, being a trading company, that subsection shall apply to the money lent to the first-mentioned company as if it had used it for any purpose for which it is used by the other company while a member of the group.'.
      Mr. Deputy Speaker: With this we may take Government amendments nos. 15, 16, 17 and 18.
      Mr. Davies: These amendments are in two groups. Amendments nos. 14, 17 and 18 implement three undertakings which I gave in Committee. Amendment no. 14 extends the scope of a qualifying loan to include money lent to a borrower who uses it for the purposes of a profession or vocation carried on by him. It also extends the clause to include money lent to a company which, in turn, lends it to a trading company in the same group. Amendment no. 17 provides for relief for a member of a group which guarantees a loan made to a trading member of the same group by a person who is not a member of that group. Amendment no. 18 gives the necessary definition of a trading company. These three amendments meet commitments which I made in Committee.
      Amendments nos. 15 and 16 deal with points raised in Committee by the hon. Member for Hitchin (Mr. Stewart). He asked whether the relief was due for a guaranteed payment in respect of the irrecoverable amount of a debt and a security. Amendment no. 15 achieves that result by including a debt and a
      1796
      security for a qualifying loan for the purposes of relief for guaranteed payments. The hon. Member also argued that relief should be given for guaranteed payments in respect of irrecoverable interest as well as for the principal of the loan. I accepted that argument in Committee, and amendment no. 16 fulfils the undertaking that I then gave.
      Mr. Graham Page: My hon. Friend the Member for Hitchin (Mr. Stewart) has asked me to apologise for his not being present. He is engaged on other parliamentary business in the precincts of the Chamber. On his behalf, I thank the Minister in particular for introducing amendments nos. 14, 15 and 16 for which my hon. Friend pressed.
      My hon. Friends and I were eager that these amendments should be made. We are grateful that they have been redrafted. Last night I began to count the score of goals. We have scored another five in this group of amendments. We are grateful for the concessions.
      Mr. Deputy Speaker: The right hon. Member for Crosby (Mr. Page) will be playing in the World Cup football match when next it is played.
      Amendment agreed to.
      Amendments made: No. 15, in page 33, line 8, after 'of', insert
      'a loan which is, or but for subsection (1)(c) above would be,'.
      No. 16, in page 33, line 9, after first 'of', insert
      ', or of interest in respect of,'.
      No. 17, in page 33, line 22, leave out 'or' and insert
      'and the claimant and the lender were not'.
      No. 18 in page 34, line 25, after '1965)', insert ',
      "trading company" has the meaning given by paragraph 11 of Schedule 16 to the Finance Act 1972 '.—[Mr. Denzil Davies.]

    Schedule 8

      PROFIT SHARING SCHEMES
      Amendment made: No. 86, in page 74, line 14, at end insert—
      '(1A) Where the company concerned has control of another company or companies. The scheme may be expressed to extend to all or any of the companies of which it has control; and in this Schedule a scheme which is expressed so to extend is referred to as a "group

      1797
      scheme" and, in relation to a group scheme, the expression "participating company" means the company concerned or a company of which for the time being the company concerned has control and to which for the time being the scheme is expressed to extend.'.—[Mr. Denzil Davies.]
      Mr. Robert Sheldon: I beg to move amendment no. 87, in page 74, line 18, at end insert:
      or, in the case of a group scheme, by a participating company'.
      Mr. Deputy Speaker: With this we may discuss Government amendments nos. 88, 89, 84 and 158.
      6.15 p.m.
      Mr. Sheldon: Amendment no. 87 makes it possible for a controlling company to set up one scheme for all companies that are subordinate to the holding company. The intention is that where a profit-sharing scheme is created the holding company will not need to have profit-sharing schemes for each of the subsidiary companies.
      This represents a commitment given in Committee to the hon. Member for Norfolk, South (Mr. MacGregor. We accepted his argument that it would put a great deal of work on groups of companies if each company in the group had to set up its own individual profit-sharing scheme.
      The amendments will make it possible for a controlling company to set up a single profit-sharing scheme within the group of which all the subsidiary companies can make use if they wish. The amendments provide useful flexibility and I am happy to accept the arguments in favour of them.
      Mr. John MacGregor: This is one of the many amendments which we proposed in Committee to try to remove some of the administrative complications and tight restrictions on profit-sharing schemes. Our view, and that of many companies, was that to insist on a series of schemes in a group of companies would be restrictive and would add greatly to their administrative burden. I welcome the Financial Secretary's honouring of the commitment that it would be possible to introduce a single group scheme.
      Amendment agreed to.
      Mr. Ridley: I beg to move amendment no. 41, in page 74, line 39, leave out 'a full-time' and insert 'an'.
      Mr. Deputy Chairman (Mr. Oscar Murton): With this we may discuss amendment no. 42, in page 74, line 40. after 'concerned', insert
      'and spends more than half his working time working for it'.
      Mr. Ridley: This amendment covers a new point. In part, I seek clarification through it. The amendment involves the definition of "full-time employee". What does "full-time" mean? Does it mean that a person has to be working for a certain proportion of the week or all the week, or is it possible for a person to work part-time for one company and part-time for another company? There is no definition of "full-time".
      The Financial Secretary owes it to us to give a definition, because this could cause trouble. It is unfortunate that we cannot seek to amend the schedule in any other direction. If the Financial Secretary will comment, it will be helpful to all those who administer the schemes. The schedule reads:
      "is then a full-time employee or director of the company".
      Does the director have to be full-time or not? It is not clear from the drafting. I should have thought that if a person was allowed to be a part-time director, as many people are, the words would be "or a director". I shall be grateful if the Financial Secretary will clear that up.
      I do not feel tremendously committed to the terms of my amendment, because upon consideration I believe that it is a good idea that those who principally work for a company, although they might have other activities and work for a number of different companies, should be able to participate. The meaning of "full-time" is not clear.
      Mr. Robert Sheldon: The amendment seeks clarification of the definition of a full-time employee. I shall give the explanation as well as I can, but there is no real need to define a full-time employee. That is because there is nothing in the schedule to stop a company from including part-timers in its profit-sharing scheme. Provided that all full-timers with five years' service are eligible.

      1799
      full-timers can be defined in any way suitable to the company and its employees. The important aspect is that a scheme has to be open to all full-time employees.
      In the next amendment we shall deal with the question of the requirement that each of the employees should be able to join these schemes on similar terms. That prescribes that there should be no discrimination in favour of or against any employee. There is no need for this amendment on the definition of "full-time employee". It is for the company to provide a definition. That is the most suitable way in which to proceed.
      Mr. John Pardoe: The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) has raised a point that we did not cotton on to in Standing Committee. If it is true—and it is a highly attractive thought—that part-time directors and part-time employees of two different companies—I go no further than two at this stage—can participate in profit-sharing schemes run by both companies, can they have up to £500 of shares from each, or is there a limit of £500 per person? Or would such a person have to take part of the £500 from one company and part from the other?
      Mr. Ridley: I am scarcely rising to assist the Financial Secretary to get the answer to his question. The hon. Member for Cornwall, North (Mr. Pardoe) should not limit his question to those who are working part-time only for two companies. We know of some people who are part-time directors of up to 50 companies. Are they also eligible for joining 50 private schemes?
      Mr. Pardoe: I stressed that I was going only as far as two companies, but the hon. Member is perfectly right. The mind boggles at the opportunities for getting £500 each from a large number of companies.
      Mr. Lawson: My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) has raised an important new point which, in spite of the exhaustive discussions we had in Committee, did not arise then. The point has been further elaborated by the hon. Member for Cornwall, North (Mr. Pardoe).
      1800
      As I understood the Financial Secretary, he was saying that there was no need for a definition of "full-time" or part-time but it was entirely up to the company to say which applied because the company could perfectly well include part-time employees in its scheme. If that is so, it is difficult to see why the words "full-time" occur in the schedule. The only reason must be that while, according to the Financial Secretary's logic, it is true that part-time employees may be included, they may also be excluded, whereas full-time employees may not be excluded.
      If that is the case, we need a definition of full-time and part-time employees. It clearly cannot be up to the firm to decide the law of the land. It is the law of the land, if the Bill reaches the statute book, which determines that full-time employees may not be excluded from such a scheme while part-time employees may be excluded. The point needs a little more explanation from the Financial Secretary.
      Mr. Robert Sheldon: On the point raised by the hon. Member for Cornwall, North (Mr. Pardoe), I should explain that paragraph 3 of schedule 8 provides for a £500 limit for any participant in a tax year. That is the total sum for each individual.
      The correct way for dealing with full-time employees under profit-sharing schemes is that they have to be included in a scheme if they have five years' service with the company. It is not for us to define "full-time". That will depend on the operations of a particular company, and it should be for the company to decide. Why should we limit or restrict it? The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) has not made a case for excluding certain employees.
      We should like to include as many employees as possible, and to exclude them only for the reasons I have stated where preferential terms may be offered to certain individuals. As long as companies comply with that obligation, we think that it is right to give them the choice to decide for themselves who should be eligible.
      Mr. Lawson: The Financial Secretary has not quite met the point. The Government have very carefully said that it would be wrong to have a scheme which

      1801
      provided that some employees could participate while others could not. They have therefore carefully said that it would be wrong to have any kind of an exclusive scheme. Now they are saying that it is possible for there to be exclusion—namely, the exclusion of part-time employees. Nowhere, however, have they defined "part-time employees". The Financial Secretary says blithely that it is entirely up to the company, but if that is so he has torpedoed the universality that he has attempted to write into the Bill.
      Mr. Graham Page: It is not clear from the wording of paragraph 2(a) that it intends the director to be full- or part-time. It reads
      "full-time employee or director".
      If, as has been suggested, he is a director of a number of companies, is he full-time in all of them or part-time in each? That is not an extraordinary state of affairs. I declare, as is shown in the Register of Members' Interests, that I am a director of 30 companies. They are all subsidiaries of one company, and, although it looks as though I am considerably important, I am not. If one turns over the page in the register, one can see the names of other hon. Members whom one knows to have far more trading interests than I but who have nothing against their names. No doubt they have very efficient wives.
      It is not fanciful, therefore, to suggest that any of us may be directors of a number of companies. Could we then enter into the schemes of each of those companies? Then comes the question of what is a full-time employee. A scheme must provide cover for all full-time employees. Suppose that a company employed people working a 40-hour week and others working for 35 hours. Are those on 35 hours part-time or full-time employees, given that the other employees are working 40 hours?
      Finally comes the point about whether anyone can obtain the relief in respect of the £500. The Financial Secretary quoted paragraph 3 of schedule 8, which reads
      "The scheme must provide that the total of the initial market values of the shares appropriated to any one participant in a year of assessment will not exceed £500."
      But that refers only to what a scheme does, not to what the participant may he allotted in some other scheme. The
      1802
      scheme referred to here is that set up by the company in which a person is employed. Perhaps we are going round in a circle, because if a person is employed full-time in one company it might be that he cannot be employed full-time in another and, therefore, cannot participate in more than one scheme. However, if he can be employed full-time as a director in 30 or 50 different companies, does that mean that he can take part in 30 or 50 different schemes?
      6.30 p.m.
      Mr. Ridley: The Financial Secretary said that paragraph 2 relates only to eligibility, and that all full-time employees must be able to join the scheme. However, he said clearly that all part-timers would be able to join the scheme. The condition here is that the scheme will not be passed unless everybody who is full-time is eligible. There is, therefore, no doubt from what the Minister says that any part-timer can join, which means, as my right hon. Friend the Member for Crosby (Mr. Page) said, that under sub-paragraph (3) one may have as many of these positions as one likes if one can be made a part-timer in a number of companies.
      Mr. Graham Page: My perspicacity had not gone as far as that. My hon. Friend is undoubtedly right, that part-timers can join a scheme. They can, therefore, join any scheme and any number of schemes and thereby become participators and be entitled to the £500-worth of shares.
      I do not know what we can do at this stage to amend those words or get the schedule right. I suppose that we could have an undertaking that there will be an amending Act in future. I do not think that there is any power under the schedule to amend it by order. All that can be done is to have some extra-statutory concessions or directions from the Inland Revenue, which the majority of us on this side dislike immensely. Nevertheless, it may be a way out—if "extra-statutory concession" describes properly what the Government intend in this part of the schedule.
      Mr. Robert Sheldon: As I said, no individual is allowed to have more than £500-worth of shares in any tax year, irrespective of the number of schemes in which he is involved.
      Mr. Ridley: Where does it say that?
      Mr. Sheldon: Clause 47 deals with that point.
      As I said, the allowance is £500 per person, and it applies to full-time employees, who have to be in the scheme. Part-timers may be in the scheme.
      I was asked for a definition. There was a definition under the Conservative 1972 scheme, where "full-time" was defined as
      "required to devote substantially the whole of his time to service as a director or employee".
      That is a little rigid and I prefer to keep it more flexible. There may be abuses, but I hope that they will not arise and I prefer companies to have the option of arranging the matter in the way which suits them best. If it turns out that the system is not working satisfactorily, we can always return to it.
      I was asked about directorships. Full-time directors are in the same position as full-time employees. A part-time director of several companies in a group—that is perhaps what the right hon. Member for Crosby (Mr. Page) had in mind—will be working full time for the group as a whole.
      I prefer to leave this provision as it is. We have the opportunity to return to it if there any difficulties, but our first method of approach should be flexibility unless there is convincing reason for not allowing it.
      Mr. Ridley: The Financial Secretary has cleared up the point raised by the hon. Member for Cornwall, North (Mr. Pardoe)
      about how many times someone may collect £500-worth of shares if he is part-time. That was helpful, but I am not satisfied on the main point of the amendment.
      If a company can decide which of its employees and directors are full time, it can squeeze out those it decides are part time. I know that this paragraph deals only with eligibility, but at the same time it gives a company the right to say that a certain group who may work eight hours on day shift are full time and another group who work seven hours on night shift are part time, and it has the right not to make the part-timers an offer of participation.
      A row could easily happen in a private company between shareholders and directors—this is common in vexatious situations—and, to spite a minority shareholder, the majority could exclude him by some device of this sort.
      This should have been defined. It is a genuine slip, I believe, and by agreeing to amendment no. 41 but not pressing amendment no. 42 we can put it right. It would then be necessary for the company to demonstrate that the scheme was open to all its employees and directors, whether part-time or full-time. Since that is the Government's objective, I think that we should back it. I hope that my right hon. and hon. Friends will support the amendment.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 238, Noes 255.

      Division No. 267]

      AYES

      [6.36 p.m.

      Aitken, Jonathan

      Brotherton, Michael

      Dykes, Hugh

      Alison, Michael

      Brown, Sir Edward (Bath)

      Eden, Rt Hon Sir John

      Amery, Rt Hon Julian

      Bryan, Sir Paul

      Edwards, Nicholas (Pembroke)

      Atkins, Rt Hon H. (Spelthorne)

      Buchanan, Richard

      Elliott, Sir William

      Atkinson, David (B'mouth, East)

      Buchanan-Smith, Alick

      Emery, Peter

      Awdry, Daniel

      Buck, Antony

      Eyre, Reginald

      Baker, Kenneth

      Budgen, Nick

      Fairbairn, Nicholas

      Banks, Robert

      Bulmer, Esmond

      Farr, John

      Bell, Ronald

      Burden, F. A.

      Fell, Anthony

      Bendall, Vivian

      Butler, Adam (Bosworth)

      Finsberg, Geoffrey

      Bennett, Dr Reginald (Fareham)

      Chalker, Mrs Lynda

      Fisher, Sir Nigel

      Benyon,W.

      Channon, Paul

      Fletcher, Alex (Edinburgh N)

      Berry, Hon Anthony

      Churchill, W. S.

      Fletcher-Cooke, Charles

      Biffen, John

      Clark, Alan (Plymouth, Sutton)

      Fookes, Miss Janet

      Biggs-Davison, John

      Clark, William (Croydon S)

      Forman, Nigel

      Body, Richard

      Cooke, Robert (Bristol W)

      Fox, Marcus

      Boscawen, Hon Robert

      Cope, John

      Galbraith Hon T. G. D.

      Bottomley, Peter

      Cormack, Patrick

      Gardiner, George (Reigate)

      Bowden, A. (Brighton, Kemptown)

      Costain, A. P.

      Gardner, Edward (S Fylde)

      Boyson, Dr Rhodes (Brent)

      Crowder, F. P.

      Glyn, Dr Alan

      Bradford, Rev Robert

      Dean, Paul (N Somerset)

      Godber, Rt Hon Joseph

      Braine, Sir Bernard

      Dodsworth, Geoffrey

      Goodhart, Philip

      Brittan, Leon

      Drayson, Burnaby

      Goodlad, Alastair

      Brocklebank-Fowler, C.

      du Cann, Rt Hon Edward

      Gorst, John

      Brooke, Hon Peter

      Durant, Tony

      Gow, Ian (Eastbourne)

      Gower, Sir Raymond (Barry)

      Macfarlane, Neil

      Ridsdale, Julian

      Grant, Anthony (Harrow C)

      MacGregor, John

      Rifkind, Malcolm

      Grieve, Percy

      MacKay, Andrew (Stechford)

      Roberts, Wyn (Conway)

      Griffiths, Eldon

      Macmillan, Rt Hon M. (Farnham)

      Rodgers, Sir John (Sevenoaks)

      Grylls, Michael

      McNair-Wilson, M. (Newbury)

      Rost, Peter (SE Derbyshire)

      Hamilton, Archibald (Epsom & Ewell)

      McNair-Wilson, P. (New Forest)

      Royle, Sir Anthony

      Hamilton, Michael (Salisbury)

      Madel, David

      Sainsbury, Tim

      Hampson, Dr Keith

      Marshall, Michael (Arundel)

      St. John-Stevas, Norman

      Hannam, John

      Marten, Neil

      Scott, Nicholas

      Harrison, Col Sir Harwood (Eye)

      Mates, Michael

      Scott-Hopkins, James

      Harvie Anderson, Rt Hon Miss

      Mather, Carol

      Shaw, Giles (Pudsey)

      Haselhurst, Alan

      Maude, Angus

      Shaw, Michael (Scarborough)

      Havers, Rt Hon Sir Michael

      Maudling, Rt Hon Reginald

      Shelton, William (Streatham)

      Hawkins, Paul

      Maxwell-Hyslop, Robin

      Shepherd, Colin

      Heyhoe, Barney

      Mayhew, Patrick

      Shersby, Michael

      Heath, Rt Hon Edward

      Meyer, Sir Anthony

      Sims, Roger

      Higgins, Terence L.

      Miller, Hal (Bromsgrove)

      Sinclair, Sir George

      Hodgson, Robin

      Mills, Peter

      Skeet, T. H. H.

      Holland, Philip

      Miscampbell, Norman

      Smith, Dudley (Warwick)

      Hordern, Peter

      Mitchell, David (Basingstoke)

      Smith, Timothy John (Ashfield)

      Howe, Rt Hon Sir Geoffrey

      Moate, Roger

      Speed, Keith

      Howell, David (Guildford)

      Moore, John (Croydon C)

      Spence, John

      Howell, Ralph (North Norfolk)

      More, Jasper (Ludlow)

      Spicer, Jim (W Dorset)

      Hunt, David (Wirral)

      Morgan, Geraint

      Spicer, Michael (S Worcester)

      Hunt, John (Ravensbourne)

      Morgan-Giles, Rear-Admiral

      Sproat, Iain

      Hurd, Douglas

      Morris, Michael (Northampton S)

      Stainton, Keith

      Hutchison, Michael Clark

      Morrison, Charles (Devizes)

      Stanbrook, Ivor

      Irving, Charles (Cheltenham)

      Morrison, Hon Peter (Chester)

      Stanley, John

      James, David

      Neave, Airey

      Steen, Anthony (Wavertree)

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

      Nelson, Anthony

      Stewart, Ian (Hitchin)

      Jessel, Toby

      Neubert, Michael

      Stokes, John

      Johnson Smith, G. (E. Grinstead)

      Newton, Tony

      Stradling Thomas, J.

      Jones, Arthur (Daventry)

      Normanton, Tom

      Tapsell, Peter

      Jopling, Michael

      Nott, John

      Taylor, Teddy (Cathcart)

      Joseph, Rt Hon Sir Keith

      Onslow, Cranley

      Tebbit, Norman

      Kaberry. Sir Donald

      Osborn, John

      Thatcher, Rt Hon Margaret

      Kellett-Bowman, Mrs Elaine

      Page, John (Harrow West)

      Thomas, Rt Hon P. (Hendon S)

      Kilfedder, James

      Page, Rt Hon R. Graham (Crosby)

      Townsend, Cyril D.

      Kimball, Marcus

      Page, Richard (Workington)

      Trotter, Neville

      King, Evelyn (South Dorset)

      Parkinson, Cecil

      van Straubenzee, W. R.

      King, Tom (Bridgwater)

      Pattie, Geoffrey

      Vaughan. Dr Gerard

      Kitson, Sir Timothy

      Percival, Ian

      Viggers, Peter

      Knight, Mrs Jill

      Peyton, Rt Hon John

      Wakeham, John

      Knox, David

      Pink, R. Bonner

      Walder, David (Clitheroe)

      Lamont, Norman

      Prentice, Rt Hon Reg

      Walker, Rt Hon P. (Worcester)

      Langford-Holt, Sir John

      Price, David (Eastleigh)

      Walker-Smith, Rt Hon Sir Derek

      Latham, Michael (Melton)

      Prior, Rt Hon James

      Warren, Kenneth

      Lawrence,Ivan

      Pym, Rt Hon Francis

      Weatherill, Bernard

      Lawson, Nigel

      Raison, Timothy

      Whitney, Raymond

      Le Marchant, Spencer

      Rathbone, Tim

      Wiggin, Jerry

      Lester, Jim (Beeston)

      Rees, Peter (Dover & Deal)

      Winterton, Nicholas

      Lewis, Kenneth (Rutland)

      Rees-Davies, W. R.

      Wood. Rt Hon Richard

      Lloyd, Ian

      Renton, Rt Hon Sir D. (Hunts)

      Loveridge, John

      Renton, Tim (Mid-Sussex)

      TELLERS FOR THE AYES

      Luce, Richard

      Rhodes James, R.

      Sir George Young and

      McCrindle, Robert

      Ridley, Hon Nicholas

      Lord James Douglas-Hamilton.

      NOES

      Abse, Leo

      Callaghan, Jim (Middleton & P)

      Davis, Clinton (Hackney C)

      Allaun, Frank

      Campbell, Ian

      Deakins, Eric

      Archer, Rt Hon Peter

      Canavan, Dennis

      Dean, Joseph (Leeds West)

      Armstrong, Ernest

      Carmichael, Neil

      de Freitas, Rt Hon Sir Geoffrey

      Ashley, Jack

      Carter, Ray

      Dell, Rt Hon Edmund

      Atkins, Ronald (Preston N)

      Carter-Jones, Lewis

      Dempsey, James

      Atkinson, Norman (H'gey, Tott'ham)

      Cartwright, John

      Dewar, Donald

      Bagier, Gordon A. T.

      Castle, Rt Hon Barbara

      Doig, Peter

      Bates, Alf

      Clemitson, Ivor

      Dormand, J. D.

      Bean, R. E.

      Cocks, Rt Hon Michael (Bristol S)

      Douglas-Mann, Bruce

      Bidwell, Sydney

      Cook, Robin F. (Edin C)

      Dunnett, Jack

      Bishop, Rt Hon Edward

      Corbett, Robin

      Dunwoody, Mrs Gwyneth

      Blenkinsop, Arthur

      Cowans, Harry

      Eadie, Alex

      Booth, Rt Hon Albert

      Cox, Thomas (Tooting)

      Edwards, Robert (Wolv SE)

      Boothroyd, Miss Betty

      Craigen, Jim (Maryhill)

      Ellis, John (Brigg & Scun)

      Bottomley, Rt Hon Arthur

      Crawshaw, Richard

      English, Michael

      Boyden, James (Bish Auck)

      Cronin, John

      Evans, Fred (Caerphilly)

      Bradley, Tom

      Crowther, Stan (Rotherham)

      Evans, Gwynfor (Carmarthen)

      Bray, Dr Jeremy

      Cryer, Bob

      Evans, John (Newton)

      Broughton, Sir Alfred

      Cunningham, G. (Islington S)

      Ewing, Harry (Stirling)

      Brown, Hugh D. (Provan)

      Cunningham, Dr J. (Whiteh)

      Fernyhough, Rt Hon E.

      Brown, Robert C. (Newcastle W)

      Dalyell, Tam

      Fitch, Alan (Wigan)

      Brown, Ronald (Hackney S)

      Davidson, Arthur

      Flannery, Martin

      Buchan, Norman

      Davies, Bryan (Enfield N)

      Fletcher, Ted (Darlington)

      Buchanan, Richard

      Davies, Rt Hon Denzil

      Foot, Rt Hon Michael

      Callaghan, Rt Hon J. (Cardiff SE)

      Davies, Ifor (Gower)

      Fowler, Gerald (The Wrekin)

      1806

      1807

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

      MacFarquhar, Roderick

      Ryman, John

      Freeson, Rt Hon Reginald

      McGuire, Michael (Ince)

      Sandelson, Neville

      Freud, Clement

      MacKenzie, Rt Hon Gregor

      Sever, John

      Garrett, John (Norwich S)

      McMillan, Tom (Glasgow C)

      Shaw, Arnold (Ilford South)

      Garrett, W. E. (Wallsend)

      McNamara, Kevin

      Sheldon, Rt Hon Robert

      George, Bruce

      Madden, Max

      Shore, Rt Hon Peter

      Gilbert, Rt Hon Dr John

      Magee, Bryan

      Short, Mrs Renée (Wolv NE)

      Ginsburg, David

      Mahon, Simon

      Silkin, Rt Hon John (Deptford)

      Golding, John

      Mallalieu, J. P. W.

      Silkin, Rt Hon S. C. (Dulwich)

      Gould, Bryan

      Marshall, Dr Edmund (Goole)

      Silverman, Julius

      Gourlay, Harry

      Marshall, Jim (Leicester S)

      Skinner, Dennis

      Graham, Ted

      Maynard, Miss Joan

      Smith, Cyril (Rochdale)

      Grocott, Bruce

      Meacher, Michael

      Smith, Rt. Hon. John (N Lanarkshire)

      Hamilton, James (Bothwell)

      Mikardo, Ian

      Snape, Peter

      Hamilton, W. W. (Central Fife)

      Millan, Rt Hon Bruce

      Spearing, Nigel

      Hardy, Peter

      Miller, Dr M. S. (E Kilbride)

      Spriggs, Leslie

      Harrison, Rt Hon Walter

      Mitchell, Austin (Grimsby)

      Stallard, A. W.

      Hart, Rt Hon Judith

      Mitchell, R. C. (Soton, Itchen)

      Steel, Rt Hon David

      Hattersley. Rt Hon Roy

      Molloy, William

      Stewart, Rt Hon M. (Fulham)

      Healey, Rt Hon Denis

      Moonman, Eric

      Stoddart, David

      Heffer, Eric S.

      Morris, Alfred (Wythenshawe)

      Stott, Roger

      Hooley, Frank

      Morris, Rt Hon J. (Aberavon)

      Strang, Gavin

      Horam, John

      Mulley, Rt Hon Frederick

      Summerskill, Hon Dr Shirley

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

      Murray, Rt Hon Ronald King

      Swain, Thomas

      Howells, Geraint (Cardigan)

      Newens, Stanley

      Taylor, Mrs Ann (Bolton W)

      Hoyle, Doug (Nelson)

      Noble, Mike

      Thomas, Dafydd (Merioneth)

      Huckfield, Les

      Oakes, Gordon

      Thomas, Jeffrey (Abertillery)

      Hughes, Mark (Durham)

      Ogden, Eric

      Thomas, Mike (Newcastle E)

      Hughes, Robert (Aberdeen N)

      O'Halloran, Michael

      Thomas, Ron (Bristol NW)

      Hunter, Adam

      Orme, Rt Hon Stanley

      Thorne, Stan (Preston South)

      Irvine, Rt Hon Sir A. (Edge Hill)

      Ovenden, John

      Tierney, Sydney

      Irving, Rt Hon S. (Dartlord)

      Owen, Rt Hon Dr David

      Tilley, John

      Jackson, Colin (Brighouse)

      Padley, Walter

      Tinn, James

      Jackson, Miss Margaret (Lincoln)

      Palmer, Arthur

      Tomlinson, John

      Janner, Greville

      Pardoe, John

      Torney, Tom

      Jay, Rt Hon Douglas

      Park, George

      Urwin, T. W.

      Jeger, Mrs Lena

      Parker, John

      Varley, Rt Hon Eric G.

      Jenkins, Hugh (Putney)

      Parry, Robert

      Walker, Harold (Doncaster)

      John Brynmor

      Pavitt, Laurie

      Walker, Terry (Kingswood)

      Johnson, James (Hull West)

      Pendry, Tom

      Ward, Michael

      Johnson, Walter (Derby S)

      Penhaligon, David

      Watkinson, John

      Johnston, Russell (Inverness)

      Phipps, Dr Colin

      Weetch, Ken

      Jones, Alec (Rhondda)

      Prescott, John

      Weitzman, David

      Jones, Dan (Burnley)

      Price, C. (Lewisham W)

      Wellbeloved, James

      Judd, Frank

      Price, William (Rugby)

      White, James (Pollok)

      Kelley, Richard

      Radice, Giles

      Whitehead, Phillip

      Kerr, Russell

      Rees, Rt Hon Merlyn (Leeds S)

      Whitlock, William

      Kilroy-Silk, Robert

      Richardson, Miss Jo

      Willey, Rt Hon Frederick

      Kinnock, Neil

      Roberts, Albert (Normanton)

      Williams, Rt Hon Alan (Swansea W)

      Lambie, David

      Roberts, Gwilym (Cannock)

      Williams, Rt Hon Shirley (Hertford)

      Lamond, James

      Robertson, George (Hamilton)

      Wilson, William (Coventry SE)

      Latham, Arthur (Paddington)

      Robinson, Geoffrey

      Wise, Mrs Audrey

      Leadbitter, Ted

      Roderick, Caerwyn

      Woodall, Alec

      Lever, Rt Hon Harold

      Rodgers, George (Chorley)

      Woof, Robert

      Lewis, Ron (Carlisle)

      Rodgers, Rt Hon William (Stockton)

      Wrigglesworth, Ian

      Litterick, Tom

      Rooker, J. W.

      Young, David (Bolton E)

      Loyden, Eddie

      Rose, Paul B.

      Luard, Evan

      Ross, Stephen (Isle of Wight)

      TELLERS FOR THE NOES:

      Mabon, Rt Hon Dr J. Dickson

      Ross, Rt Hon W. (Kilmarnock)

      Mr. Donald Coleman and

      McCartney, Hugh

      Rowlands, Ted

      Mr. Frank R. White.

      McElhone, Frank

      Amendment accordingly negatived.
      Amendment made: No. 88, in page 74, line 40, after "concerned", insert
      "or, in the case of a group scheme, a participating company".—[Mr. Robert Sheldon.]
      Mr. Robert Sheldon: I beg to move amendment no. 66, in page 74, line 47, at end insert—
      "(2) For the purposes of sub-paragraph (1) above, the fact that the number of shares to be appropriated to the participants in a scheme varies by reference to the levels of their remuneration, the length of their service or similar factors shall not be regarded as meaning that the participants are not eligible to participate in the scheme on similar terms.".
      The amendment deals with those who are eligible for approved profit-sharing schemes and clarifies the words "on similar terms". It ensures that all employees are able to join profit-sharing schemes without any partiality being shown to certain of them.
      Allowable schemes must be open to all employees on similar terms. This does not mean that the same number of shares has to be allocated to each of the employees. They can be apportioned on the basis of length of service or the salary of the employee, for instance.
      What we want to avoid—this has been possible under previous schemes—is a position when £500 could be paid to one higher-paid employee and perhaps only £50 to another with almost the same salary. We want to avoid that type of discrimination. The amendment makes this clear and fulfils a commitment made by the Chief Secretary in Committee.
      Mr. MacGregor: I am grateful for this amendment, which certainly clarifies what is meant by "on similar terms". As the Financial Secretary will recall, I pointed out during the Committee debate on schedule 8 that there was confusion among a number of people whether "on similar terms" meant that there had to be the same number of shares for each employee. Clearly, if that had been the case it would have been a considerable damper upon the value of profit-sharing schemes in many companies.
      There was just one sentence which the Financial Secretary used in introducing the amendment which worried me. He said that the purpose of the amendment was to avoid the position which might arise when a company might wish to
      1810
      discriminate between two employees on the same salary. I have welcomed the fact that in the profit-sharing schemes as a whole, as far as possible, discretion has been given to companies to interpret the schemes for themselves, ensuring that they best fit their own purposes. I am a little concerned if the Chief Secretary is hinting that the Inland Revenue will not approve schemes if there is any option for the company to give a different number of shares to employees on the same salary.
      Mr. Robert Sheldon: I am sorry if I have misled the hon. Gentleman and did not make myself clear. The position is that, if one employee were to be given the opportunity of receiving substantially more when there were relatively small differences in salary between him and another employee, that would not be an approved scheme. It is approved as long as the conditions are the same. The membership of the approved schemes must be available on similar terms.
      Mr. MacGregor: I would have preffered that that condition was not written into the approval to be given by the Inland Revenue. I can well see, given that this is not only a scheme to encourage people to have shares but is meant to encourage certain people in a company, that some companies may wish to discriminate between people on certain salaries. I would have preferred that that was left to the companies. I hope that the condition will be used with great discretion and flexibility by the Revenue.
      By and large, I welcome the amendment because it removes uncertainty. It makes clear that people with different salaries will be entitled to different numbers of shares. There are two points to be made in that respect. As the Financial Secretary will recall, concern was expressed in Committee about the fact that the £500 limitation might be inadequate for middle to senior management. I remember my hon. Friend the Member for Chichester (Mr. Nelson) raising this point. I still have that concern to a certain extent. The amendment makes it clear that where a company can give only a certain amount of shares it will be able to give rather more to its middle to senior management. That is a help. We have to watch the operation

      1811
      of these schemes carefully. If we find that the £500 limitation is too small for middle to senior management, I hope that it can be raised.
      I have a question for the Financial Secretary. It is clear that there can be variability in the number of shares which individual employees can have, related to their salary. This means, particularly if, as we hope, these schemes grow, that they will eventually be regarded as part of the overall remuneration package given to employees. I remember that my hon. Friend the Member for Blaby (Mr. Lawson) made this point in our earlier debates.
      I would expect that fairly soon such a scheme would be regarded as part of the overall remuneration package by many employees and, therefore, by the trade unions in their negotiations. We have read today in the newspapers that the Prime Minister is talking about a 5 per cent. limit next year in whatever pay policy is to come forward. Is it the Government's intention that these schemes will be regarded as part of any future pay policy, if there be one? If this is so, I believe that it will kill such schemes because it will mean that they will be unable to get off the ground. It is obvious that employees will be looking for an immediate return, shown up in their wage packet, from any pay policy. This means that there will be no scope for introducing these schemes in the immediate future.
      Will these schemes be regarded at any time in the near future as part of the pay policy or will they, as I hope, be regarded as a long-term incentive for employees and, therefore, separate from pay policy?
      Mr. Nelson: I support the comments of my hon. Friend the Member for Norfolk, South (Mr. MacGregor) and give a cautious welcome to this amendment, which follows assurances given in Committee. It helps to clarify the situation, but there is still in my mind a slight uncertainty over the words "or similar factors" in the amendment.
      We are told in schedule 8(2) that the board must be satisfied that at any time every person who fulfils certain defined conditions will then be eligible to participate in the scheme "on similar terms". Those similar terms are qualified by this amendment to allow a variable
      1812
      for employees depending on their length of service, level of remuneration "or similar factors". It seems that if the Government are anxious to define the position, so that companies know exactly what their rights and liabilities are in terms of getting authorisation for an employees' scheme, the "similar factors" should be spelt out a little more clearly by the Financial Secretary.
      My hon. Friend the Member for Norfolk, South has raised the question of the extent to which such schemes will be included within the negotiated packages within or without the Government's pay policy for the next year. This is an important matter. My inclination would be to support my hon. Friend's approach —namely, that it would certainly be prejudicial to the chances of any of these schemes getting off the ground if they were to be included within the packages.
      7.0 p.m.
      It seems to me that logically they should not be included, because one is concerned with the incomes policy and with the extent to which income during the year will influence the level of inflation and the Government's economic policy generally. As this is not taxed income, as it cannot be disposed of and as an employee who enters into a scheme has no option for the first five years even to have the benefit of the taxed money which has gone into the trust, it seems to me that this has no bearing whatsoever on the gross or net remuneration of the employee during that year, or even during the first five-year period, and that, therefore, it certainly should be outside the terms of any pay or productivity deal which might be affected by the Government's pay policy.
      Clearly, such schemes might be of direct relevance to the level of productivity. Indeed, I think that hon. Members on each side will hope that the schemes will have exactly that sort of effect. But the fact that such schemes must apply on similar terms to all employees clearly to some extent does not make them a productivity deal. A productivity deal is more likely to link the efforts of the individual or of certain individuals within a company to particular financial aspirations or forecasts. The fact that all employees must receive the benefit of such schemes on similar terms means once more, in my view, that it should not be

      1813
      regarded as part of a remuneration package which should he included for the, purposes of considering whether a company does or does not comply with the Government's economic policy.
      I hope that the Financial Secretary will be able to clarify the definition of "all similar factors" and that he will underline our understanding that these will not be included in remuneration packages for the purposes of the Government's incomes policy.
      Mr. Robert Sheldon: On the matter of incomes policy, the hon. Member for Chichester (Mr. Nelson) has already replied to his hon. Friend the Member for Norfolk, South (Mr. MacGregor), and I agree with what he said.
      Profit sharing is a means of investment by employees in their own companies. It increases employees' capital, and it is certainly not income. We do not consider it as such. In fact, as we know, the whole purpose of these profit-sharing schemes is to give employees an interest in the long-term future of their companies. That is what it is all about. Clearly, share capital is not the same as the pay on which employees live, and the five-year locking-in period is obviously an essential part of this distinction. I see no problems there.
      With regard to the definition of "similar factors", I think that it is right to have legislation in these matters not too precisely defined. Of course, we can all look at our own industrial experience and consider similar factors such as length of service and remuneration, depending on the industry concerned. But I would wish to see as large an amount of flexibility at the introduction of this new scheme as we can reasonably accept and defend. It is open to us to keep a watch on the way in which the schemes develop. The difficult aspect of the introduction of these new schemes and the legislation which allows them to be born is guessing at the way in which they may develop. For that reason, I think that we need to leave them as free as we possibly can.
      That is why we have found ourselves able to accept some of the valuable suggestions which have been put forward by the hon. Member for Norfolk, South in these matters. His ideas were directed in the main to increasing flexibility, which
      1814
      we accepted, and because we accepted that flexibility originally we were also pleased to accept his further suggestions on the same basic point.
      Mr. Lawson: As the Financial Secretary intimated, my hon. Friend the Member for Norfolk, South (Mr. MacGregor) is to be congratulated on the immense amount of work he has done on improving the Government's scheme. The Government also deserve the congratulations of the House on having accepted and incorporated a number of the improvements that my hon. Friend has proposed.
      Amendment no. 66 is an important one. It leaves the situation imprecise, as the Financial Secretary conceded, and I envisage that there may be certain problems. Companies will not know whether their schemes will get Inland Revenue clearance. But I agree with the right hon. Gentleman that in an experimental scheme of this kind—this is new ground of a sort—it is perhaps sensible to leave it imprecise for the time being, despite these difficulties.
      Many fears were expressed to me, and the important thing is that the amendment makes it absolutely clear that it is not the case that every employee has to have the same amount or else the scheme is invalid. It is very important to make that clear and to show that there can be all manner of variations which would be acceptable. Bearing in mind the last amendment, one of the variations might be, for example, that the part-timer working five hours a week might get only one-eighth of the allocation of the man working 40 hours a week. But that amendment was defeated, and we welcome this one.
      We heard something very important a few moments ago, and it is much more important than the amendment itself. The Financial Secretary has given the House an assurance that any shares handed out to an employee in a profit-sharing scheme will not be taken into account for the purposes of phase 4 of the pay policy, the White Paper for which is awaited. That is a very important assurance indeed, because the schemes which are perhaps closest to these profit-sharing schemes are pension arrangements. There, too, there is no immediate income in the hands of the employee. But it was specifically stated in the last

      1815
      pay policy White Paper—and, indeed, in the White Paper of the right hon. Gentleman's predecessor—that an improvement in a pension scheme very much counted as an increase in remuneration for the purposes of pay policy. Indeed, we recall that the Government very nearly took the Sun Alliance Assurance Company to court on this specific point. The Government backed down because they decided that they would lose.
      There is, therefore, a great change, which we welcome, towards greater flexibility, and it will help in the introduction of these schemes. The more flexibility we can have in pay, the better. We know that the Government said that their last pay policy would be flexible and that the 10 per cent. would be an average, but the 10 per cent. has become a rigid norm.
      The Financial Secretary has given the House a very important assurance. It is one that we shall certainly remember when we come to debate the White Paper.
      Amendment agreed to,
      Mr. Robert Sheldon: I beg to move amendment no. 93, in page 75, line 3, leave out 'section 43(1)' and insert
      paragraphs (a), (c) and (d) of subsection (1) of section 43'.
      Mr. Deputy Speaker: With this we may take Government amendments nos. 90 to 92 inclusive.
      Mr. Sheldon: Amendment no. 93 and the other three amendments which are being taken with it form part of a series of changes in this part of the Bill. These amendments remove the power of the Board of Inland Revenue to withdraw approval of a profit-sharing scheme if one of the participants in the scheme disposes of his shares during the five-year period, that is to say, the period in which he has to have these shares retained with the trustees.
      The second aspect of the amendments is that they make sure that if a participant sells his shares during the five-year period—or his interest in the shares, because the shares are held by the trustees—he will have to pay tax on the full market value at the date of disposal of the shares.
      The first part of the amendments meets the point which the hon. Member for Norfolk, South (Mr. MacGregor) made
      1816
      in Committee. He suggested that it was unfair to give the Inland Revenue power to withdraw approval of the entire scheme if just one of the participants disposed of his interest in his shares. In the ordinary case, neither the company nor the trustees would know that the disposal had taken place. This would clearly be unfair.
      The second part is to make sure that there will still be a disincentive to disposals of share interests during the retention period. Obviously, the two must go together—the eligibility of the schemes to continue despite individual withdrawals and the disincentive to make transfers of beneficial interest.
      Mr. MacGregor: I welcome this group of amendments. I echo the words of my hon. Friend the Member for Blaby (Mr. Lawson) in thanking the Financial Secretary for the constructive way in which he has responded to many of the points that were made in Committee. He is quite right to draw attention to the fact, as I did in Committee, that, as the Bill originally stood, companies might be placed in the impossible position of finding their schemes made invalid if one employee did something of which they had no knowledge. This group of amendments, so far as I understand them, puts this situation right.
      It is a pity that this possibility was there in the first place. I hope that it was a drafting mistake rather than an intention to tie up the schemes in so much red tape that they would never get off the ground. As a result of our debates in Committee we have managed to remove many restrictions of this type. We have removed many of the fears, and made it much more possible that the schemes will be a practical possibility for companies.
      Amendment agreed to.
      Mr. Robert Sheldon: I beg to move amendment no. 160, in page 75, line 31, at beginning insert 'date on which the'.
      Mr. Deputy Speaker: With this we may take Government amendment no. 161.
      Mr. Sheldon: These are drafting amendments which make sure that the Board of Inland Revenue will not have the power to take away approval of a profit-sharing scheme on the basis that newly issued shares do not rank for the

      1817
      next dividend on the same basis as shares of the same class already in issue.
      Amendment agreed to.
      Amendment made: No. 161, in page 75, line 32, leave out 'period began' and insert 'date'.—[Mr. Robert Sheldon.]
      Mr. Robert Sheldon: I beg to move amendment no. 192, in page 76, line 1, leave out from "which" to first "a" in line 2 and insert
      "either is or has control of a company which—(i) is".
      This amendment removes a restriction on the type of shares used for profit-sharing schemes which can be utilised by companies which are owned by a consortium. Perhaps I can explain. If there were a number of companies, all members of a consortium, some of which were quoted and some of which were not, the shares of the quoted companies could be used in a profit-sharing scheme for the consortium. But shares in the ones which were not quoted could not be used in the scheme for the consortium. However, if an unquoted consortium member company was held by a holding company, which itself was a quoted company, the shares of that quoted company could be used in the schemes of the consortium. The position is that under the Bill as drafted the shares of the quoted company holding an unquoted company which forms part of a consortium can be used in a scheme, provided that that quoted company has three-twentieths of the shares in the consortium. What we have done here is to remove the three-twentieths qualification entirely. I think that that will commend itself to the House.
      Amendment agreed to.
      Amendment made: no. 89, in page 76, line 34, at end insert
      "or, if the scheme is a group scheme, a participating company".—[Mr. Robert Sheldon.]
      7.15 p.m.
      Mr. Robert Sheldon: I beg to move amendment no. 82, in page 77, line 16, leave out from beginning to "subsection" in line 18.
      Mr. Deputy Speaker: With this we may take Government amendment no. 83.
      Mr. Sheldon: Paragraph 11 of this schedule provides:
      1818
      "An individual shall not be liable to have shares"
      under a profit-sharing scheme if in the preceding 12 months he has had:
      "a material interest in a close company which is—

      (a) the company whose shares are to be appropriated; or

      (b) a company which has control of that company or is a member of a consortium which owns that company."

      In the Bill as originally published, a material interest was defined as broadly a 5 per cent. interest in the company held by the individual and his relatives. We debated this in Committee, and a commitment was given to increase the 5 per cent figure for profit-sharing purposes. This has now been increased to 25 per cent.
      Mr. MacGregor: The Financial Secretary has explained in factual terms what the amendment does. It would be right to underline that this is a very important amendment, admittedly for a comparatively small group of companies. However, it is very important for them. I again welcome the fact that the Financial Secretary has responded to the points made in Committee.
      It is worth putting on record that the two types of people who will particularly be helped by this change in the definition of "material interest" are, first, family companies, where it was unfair that those who had just over 5 per cent. of the shares in that family company would be excluded from the profit-sharing schemes from now on. The second group, again in close companies, relates to situations where families may wish to bring in young key executives to play a leading part in the company, and in order to give them an incentive seek to reward them with more than 5 per cent. of the equity. In that case, they too would have been prevented from benefiting from the profit-sharing schemes.
      The point is that because of the actions which this Government took in their 1974 Finance Act, any other form of share incentive scheme was also hit, so that this very important group of people would find that they were actually disadvantaged and prevented from getting any benefit out of the tax reliefs in the profit-sharing scheme. I therefore believe that this is a significant amendment, and

      1819
      I am grateful to the Government for tabling it.
      Amendment agreed to.
      Amendment made: No. 83, in page 77, line 19 at end insert
      'shall have effect, with the substitution of a reference to 25 per cent. for any reference therein to 5 per cent., for the purpose of determining whether a person has or had a material interest in a company'.—[Mr. Robert Sheldon.]

    Clause 43

      THE PERIOD OF RETENTION, THE RELEASE DATE AND THE APPROPRIATE PERCENTAGE
      Mr. Robert Sheldon: I beg to move amendment no. 126, in page 36, line 43, leave out from 'offer' to second 'any' in line 44 and insert 'for'.
      Mr. Deputy Speaker: With this we may take Government amendment no. 127.
      Mr. Sheldon: Under the Bill as drafted, shares could not be disposed of in the five-year retention period except in cases of a company reconstruction or amalgamation, when the shares were to be replaced by shares in another company. In other words, under the legislation as it stood before the debates in Committee, if another company wished to make a cash offer for the shares of a company which was running a profit-sharing scheme, the trustees who held that scheme's shares would have been unable to accept the offer. The hon. Member for Cornwall, North (Mr. Pardoe) tabled an amendment which made it possible for trustees to accept cash offers for their shares during the five-year period of retention, thus making sure that perfectly reasonable takeovers may take place.
      When accepting that amendment, the Minister of State, who dealt with this matter in Committee, made it clear that he was able to go further, because as a matter of drafting the amendment did not cover the cases of takeover for cash resulting in arrangements under section 206 of the Companies Act. He made a commitment to bring forward a further amendment to complement the amendment of the hon. Member for Cornwall, North in order to cover this point. These amendments meet that commitment.
      Amendment agreed to.
      Amendment made: No. 127, in page 37, line 7, at end insert—
      (ab) directing the trustees to agree to a transaction would be entered into pursuant to them as are of a particular class, if the transaction affecting his shares or such of a compromise, arrangement or scheme applicable to or affecting—

      (i) all the ordinary share capital of the company in question or, as the case may be, all the shares of the class in question; or

      (ii) all the shares, or shares of the class in question, which are held by a class of shareholders identified otherwise than by reference to their employment or their participation in an approved scheme; or'. —[Mr. Robert Sheldon.]

      Amendment made: No. 90, in page 37, line 20, at end insert—
      '(2A) If, in breach of his obligation under paragraph (b) of subsection (1) above, a participant assigns, charges or otherwise disposes of the beneficial interest in any of his shares, then, as respects those shares, he shall be treated for the purposes of this Chapter as if, at the time they were appropriated to him, he was ineligible to participate in the scheme; and section 47 below shall apply accordingly.'.—[Mr. Robert Sheldon.]
      Mr. MacGregor: I beg to move amendment no. 68, in page 37, line 24, leave out 'fifth' and insert 'third'.
      Mr. Deputy Speaker (Mr. Oscar Murton): With this we are to take Government amendments nos. 37, 38 and 39 and the following amendments:
      No. 157, in line 34, leave out 'fifteenth' and insert 'fifth'.
      No. 70, in line 45, leave out from 'of' to end of line 11 and insert
      'that date, the appropriate percentage is 40 par cent.'.
      Mr. MacGregor: This group of amendments contains what is perhaps the most significant change in profit-sharing schemes as a result of our debates in Committee, and these are in the Government amendments. I have no doubt that the Financial Secretary will be explaining them, but they are fairly straightforward. They telescope the period during which employees have to hold their shares before getting the benefits of the tax reliefs. They have a quicker taper from the fifteenth to the tenth year, and employees will now have complete tax relief if they wish to sell their shares after the tenth

      1821
      year instead of after the fifteenth year, as the Bill provided originally.
      This is a very important change. As the Financial Secretary will recall, it mirrors almost exactly an amendment which the Opposition moved in Committee and which was not accepted on that occasion, although the Minister of State indicated that he would look at the point again.
      There are two reasons why this is so important and why, therefore, the Opposition welcome it. The first is that the 15-year period was clearly too long—I know that the hon. Member for Cornwall, North (Mr. Pardoe) shared our view—if we wanted to encourage employees to take up shares. It would have greatly inhibited the introduction of schemes in many countries. The time scale was such that many people would not have seen the benefits of the schemes for a very long time.
      The second reason is perhaps the one which has convinced the Government. It was on this that the Minister of State dwelt in Committee. It is that there would have been enormous administrative complications for companies in the selling of shares, in tracing employees who had left, in rights issues and so on if the tax reliefs did not operate until the end of the 15-year period. We can all envisage the number of times that there could have been transactions of one kind or another during that 15-year period, and that, too, would have been a major obstacle to companies taking up these schemes.
      I hope I am right in thinking that the Government accepted our view that the incentive aspect was too long in 15 years and, therefore, that 10 years was more appropriate, and not just the point about administration.
      Although the Opposition are glad to see this change, there are two points in amendments nos. 68 and 157 to which I wish to draw attention. I deal with amendment no. 68 first. It is on the same related point of tax reliefs but on a quite different aspect of it. It provides that if an employee wishes to sell his shares after three years instead of five years, he will be able to do so, although, of course, he will have to pay during that period the full whack of tax as indicated in the
      1822
      Bill. He will not be able to sell the shares tax-free. From the third to the seventh year he will have to take it at the full rate of tax, and at reduced rates of tax from then on until the tenth year, when he will get the full tax relief.
      We want to change the fifth year to the third year. We believe that, if these schemes are to be made attractive to employees, it is necessary that there should be a time scale during which they cannot sell the shares other than for reasons such as death already given in the Bill. At the same time, it is necessary for them to see some point not too far ahead when they will be able to get the benefits of the shares even with the tax attached to them. With the introduction of a new scheme where we want to make the terms so exciting and generous that people will want to take advantage of it, five years is too long. In Committee we thought that two years was more appropriate, but now we put forward three years.
      This is also important because earlier, when we had that very important statement from the Financial Secretary on the implications for pay policy of profit-sharing schemes and the fact that they would be excluded, I referred to the fact that many employees would see these schemes as part of their overall remuneration package. If they feel that they have to wait as long as five years before they get the ownership of the shares, I do not believe that they will see the advantages. We think that three years is a reasonable compromise.
      The hon. Member for Cornwall, North opposed the argument which we advanced in Committee for two years rather than five. By extending the period slightly, we are enticing him to come a little our way, hoping that he will now agree that three years is a reasonable period in order to get these schemes off the ground in a massive way.
      Amendment no. 157 is on the same point as the Government's amendments except that in amendment no. 157 we wish to reduce the period after which the shares can be sold free of all tax from 10 years to five, with no tapering. I take the point that there must be a period during which the full tax applies. I am very much in favour of that delay before the tax reliefs come into play, because I see one of the advantages of these schemes

      1823
      as being that more and more employees gradually will see the benefits of equity holdings, even if they are in their own companies. Therefore, they need to be locked in for a certain time without tax reliefs.
      However, I am a little concerned again that 10 years is too long. For many younger employees, 10 years is a very long time. It may mean that they do not see this as an attractive package. There is also the point that, although there is an immense advantage in moving down from 25 years to 10, there will still be administrative problems for companies in tracing employees if they have to keep their records for 10 years.
      One of the criticisms of these schemes always has been that employees have too many of their eggs in the one basket—namely not only do they get their remuneration but they get shares from the same company. I am very anxious to encourage many more of our fellow citizens to acquire savings of their own, especially in equities, because there are so many tax disadvantages in that direction at present. Therefore, I can see advantages in these schemes in enabling employees after a certain period—five years may be too generous and seven years may be more reasonable—to sell the shares in their companies and, having acquired a certain appetite for equities, to spread the load by buying unit trusts or shares in other companies as well. Therefore, again I feel that one of the advantages of bringing the period down to 10 years is that it deals with the eggs-in-the-one-basket argument.
      Unless the Financial Secretary is prepared to accept amendment no. 68, we shall wish to press it for the reasons that I have given. It may be that we shall not wish to press amendment no. 157, because the Government have at least met us half-way in making the change from 15 years to 10 years. But I believe that the position has to be watched very carefully as these schemes develop. If it seems that the 10-year period is too big an obstacle for many companies, we should reserve the right to come back to a change along the lines of amendment no. 157, if necessary. However, on this occasion it is amendment no. 68 which I wish to press.
      Mr. Robert Sheldon: Perhaps I might first comment on the Government's
      1824
      amendments and then deal with the arguments advanced by the hon. Member for Norfolk, South (Mr. MacGregor).
      Government amendments nos. 37, 38 and 39 have two objectives. The first is to bring forward the release date so that it is set at 10 years after the date on which the shares are appropriated rather than the 15 years originally in the Bill. Secondly, they make an associated reduction in the percentage taper referring to disposals of shares before the release date. If the disposal date is between seven and 10 years of the date of appropriation, the percentage of the sale that is charged to tax will be 25 per cent. and not 40 per cent. I note the welcome that this has had from the hon. Member.
      The hon. Member for Norfolk, South wants to go further in all these aspects. In amendment no. 68, he wants to reduce the period of retention during which a participant in a profit-sharing scheme is not able to realise his shares from five years to three years. Amendment no. 157 brings forward the release date to five years after the date on which the shares were appropriated rather than the 10 years which the Government proposed. He has another amendment which also deals with the taper. The hon. Member dealt with two aspects. It is common ground between the Government and the Opposition that 15 years is too long, and there is the obstacle of looking too far ahead and blunting the incentive.
      7.30 p.m.
      We are concerned with the need to identify the employee with the long-term future of the company if these schemes are to succeed. It is not for the Government to decide the level of the incentive. We are simply concerned with laying the framework so that the companies can organise the incentives that most meet their particular demands. The long-term future of the company and the identification of the employee with its position needs to be seen in contrast to the point put by the hon. Member for Norfolk, South, who said that he was a little concerned about the excess of savings of the individual in the company.
      There is a balance to he struck here. I believe that a period of 10 years is right for complete tax exemption. I also believe that there should be a period of

      1825
      five years after which an employee can make use of the funds, although he is liable to tax on them. If we accepted a three-year period, the identification with the long-term future of the company would be that much less. After the debates in Committee upstairs and the changes that we made consequent upon them, we feel that we have found a reasonable way of looking at these things in the initial period. It will be open to us to see the various ways in which these means are open to companies to employ in setting up the various schemes. We can return to these matters year after year and make sure that the provisions we have set out meet the requirements both of the companies and of the employees in the light of the different schemes as they are established.
      Mr. Lawson: I share your anxiety to make progress, Mr. Deputy Speaker. Therefore, I shall confine my remarks to amendment no. 68.
      The Financial Secretary said that he was concerned to encourage identification between the worker and the company. That is why he wants a longer period of retention. I accept that identification between the worker and the company is desirable. That is why we welcome this section of the Bill. But there will be identification only if the schemes get off the ground in the first place.
      With a period of retention as long as five years there will be few schemes of this kind, because they simply will not be attractive enough to the workers concerned. Since the debate in the Committee upstairs I have had a submission from British Caledonian Airways. One point that it made was this that
      "The maximum period that the trustee should hold the shares on behalf of an individual should be three years. Any significant time over that will detract from the value of the scheme."
      That is true. If workers are told that if they sign up in a scheme, they must hold the shares for rive years and cannot in any circumstances, save a few limited ones set out in the Bill, dispose of them, it will be a disincentive. The shares are locked in. This will not be an attractive deal and there will not be any schemes.
      1826
      Therefore, the Government's purpose will not be achieved.
      The hon. Member for Cornwall, North (Mr. Pardoe) did not fully understand this when we debated this matter upstairs. He thought that someone could sell his shares during the retention period, but if he did so he would not get the tax benefit. That is not the case. The shares must be held for 10 years before the individual can get the tax benefit, and I agree that there should be encouragement to hold on to the shares. But the retention period of five years is too long. During that time shares are held by trustees on behalf of the workers who are thus locked in for a five-year period that we want to reduce to three.
      The employee concerned might be in the most acute financial difficulties. He might need to dispose of the shares in order to raise money. He has the shares but he cannot get rid of them; therefore they are worthless to him. That is very wrong.
      The only circumstances laid down in the Bill in which an employee can get rid of his shares is if he suffers injury or disability, dismissal by redundancy, or death. The Government moved an amendment in response to our arguments in Committee and added the additional condition of reaching retirement age. However, none of these things caters for accidents or hazards in the financial sphere.
      The employee, during the retention period, might not only find himself in acute financial difficulties and unable to pay his mortagee, for example; he might also find that the shares are going down in value. They might be depreciating all the time, yet he might be unable to get rid of them. This will not give him a very happy feeling about investment in equities.
      The Financial Secretary may laugh, but it is not really very funny. I thought that the whole purpose of this part of the Bill was to encourage people to invest. For that reason and the other reasons that I have stated, I feel that a three-year retention period would be more appropriate, and I am delighted that my hon. Friend intends to press the matter to a Division.
      Question put, That the amendment be made:—

      Division No. 268]

      AYES

      [7.38 p.m.

      Aitken, Jonathan

      Hamilton, Michael (Salisbury)

      Neubert, Michael

      Alison, Michael

      Hampson, Dr Keith

      Newton, Tony

      Amery. Rt Hon Julian

      Hannam, John

      Normanton, Tom

      Atkins, Rt Hon H. (Spelthorne)

      Harrison, Col Sir Harwood (Eye)

      Nott, John

      Atkinson, David (B'mouth, East)

      Harvie Anderson, Rt Hon Miss

      Onslow, Cranley

      Baker, Kenneth

      Haselhurst, Alan

      Osborn, John

      Banks, Robert

      Hastings, Stephen

      Page, John (Harrow West)

      Bell, Ronald

      Havers, Rt Hon Sir Michael

      Page, Rt Hon R. Graham (Crosby)

      Bendall, Vivian

      Hawkins, Paul

      Page, Richard (Workington)

      Bennett, Sir Frederic (Torbay)

      Hayhoe, Barney

      Parkinson, Cecil

      Bennett, Dr Reginald (Fareham)

      Higgins, Terence L.

      Pattie, Geoffrey

      Benyon, W.

      Hodgson, Robin

      Percival, Ian

      Biffen, John

      Holland, Philip

      Peyton, Rt Hon John

      Biggs-Davison, John

      Hordern, Peter

      Pink, R. Bonner

      Body, Richard

      Howe, Rt Hon Sir Geoffrey

      Prentice, Rt Hon Reg

      Boscawen, Hon Robert

      Howell, David (Guildford)

      Price, David (Eastleigh)

      Bottomley, Peter

      Howell, Ralph (North Norfolk)

      Prior, Rt Hon James

      Bowden, A. (Brighton, Kemptown)

      Hunt, David (Wirral)

      Raison, Timothy

      Boyson, Dr Rhodes (Brent)

      Hunt, John (Ravensbourne)

      Rathbone, Tim

      Braine, Sir Bernard

      Hurd, Douglas

      Rees, Peter (Dover & Deal)

      Brittan, Leon

      Hutchison, Michael Clark

      Rees-Davies, W. R.

      Brocklebank-Fowler, C.

      Irving, Charles (Cheltenham)

      Renton, Rt Hon Sir D. (Hunts)

      Brooke, Hon Peter

      James, David

      Renton, Tim (Mid-Sussex)

      Brotherton, Michael

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

      Rhodes James, R.

      Brown, Sir Edward (Bath)

      Jessel, Toby

      Ridsdale, Julian

      Bryan, Sir Paul

      Johnson Smith, G. (E. Grinstead)

      Rifkind, Malcolm

      Buchanan-Smith, Alick

      Jones, Arthur (Daventry)

      Roberts, Wyn (Conway)

      Buck, Antony

      Jopling, Michael

      Rost, Peter (SE Derbyshire)

      Budgen, Nick

      Joseph, Rt Hon Sir Keith

      Sainsbury, Tim

      Bulmer, Esmond

      Kaberry, Sir Donald

      Scott, Nicholas

      Burden, F. A.

      Kellett-Bowman, Mrs Elaine

      Scott-Hopkins, James

      Butler, Adam (Bosworth)

      Kilfedder, James

      Shaw, Giles (Pudsey)

      Chalker, Mrs Lynda

      Kimball, Marcus

      Shaw, Michael (Scarborough)

      Channon, Paul

      King, Evelyn (South Dorset)

      Shelton, William (Streatham)

      Churchill, W. S.

      King, Tom (Bridgwater)

      Shepherd, Colin

      Clark, Alan (Plymouth, Sutton)

      Kitson, Sir Timothy

      Shersby, Michael

      Clarke, Kenneth (Rushclifle)

      Knight, Mrs Jill

      Sims, Roger

      Cooke, Robert (Bristol W)

      Knox, David

      Sinclair, Sir George

      Cope, John

      Lamont, Norman

      Skeet, T. H. H.

      Cormack, Patrick

      Langtord-Holt, Sir John

      Smith, Dudley (Warwick)

      Costain, A. P.

      Latham, Michael (Melton)

      Smith, Timothy John (Ashfield)

      Craig, Rt Hon W. (Belfast E)

      Lawrence, Ivan

      Speed, Keith

      Dean, Paul (N Somerset)

      Lawson, Nigel

      Spence, John

      Dodsworth, Geoffrey

      Le Marchant, Spencer

      Spicer, Jim (W Dorset)

      Douglas-Hamilton, Lord James

      Lester, Jim (Beeston)

      Spicer, Michael (S Worcester)

      Drayson, Burnaby

      Lloyd, Ian

      Sproat, Iain

      Durant, Tony

      Loveridge, John

      Stainton, Keith

      Dykes, Hugh

      Luce, Richard

      Stanley, John

      Eden, Rt Hon Sir John

      McCrindle, Robert

      Steen, Anthony (Wavertree)

      Edwards, Nicholas (Pembroke)

      Macfarlane, Neil

      Stewart, Ian (Hitchin)

      Elliott, Sir William

      MacGregor, John

      Stokes, John

      Emery, Peter

      MacKay, Andrew (Stechford)

      Stradling Thomas, J.

      Eyre, Reginald

      Macmillan, Rt Hon M. (Farnham)

      Tapsell, Peter

      Fairbairn, Nicholas

      McNair-Wilson, M. (Newbury)

      Taylor, Teddy (Cathcart)

      Farr, John

      McNair-Wilson, P. (New Forest)

      Tebbit, Norman

      Fell, Anthony

      Madel, David

      Thatcher, Rt Hon Margaret

      Finsberg, Geoffrey

      Marshall, Michael (Arundel)

      Thomas, Rt Hon P. (Hendon S)

      Fisher, Sir Nigel

      Marten, Neil

      Townsend, Cyril D.

      Fletcher-Cooke, Charles

      Mates, Michael

      Trotter, Neville

      Fookes, Miss Janet

      Mather, Carol

      van Straubenzee, W. R.

      Forman, Nigel

      Maude, Angus

      Vaughan, Dr Gerard

      Fox, Marcus

      Maudling, Rt Hon Reginald

      Viggers, Peter

      Galbraith Hon T. G. D.

      Maxwell-Hyslop, Robin

      Wakeham, John

      Gardiner, George (Reigate)

      Mayhew, Patrick

      Walder, David (Clitheroe)

      Gardner, Edward (S Fylde)

      Meyer, Sir Anthony

      Walker, Rt Hon P. (Worcester)

      Glyn, Dr Alan

      Miller, Hal (Bromsgrove)

      Walker-Smith, Rt Hon Sir Derek

      Godber, Rt Hon Joseph

      Mills, Peter

      Warren, Kenneth

      Goodhart, Philip

      Miscampbell, Norman

      Weatherill. Bernard

      Goodlad, Alastair

      Mitchell, David (Basingstoke)

      Wells, John

      Gorst, John

      Moate, Roger

      Whitney, Raymond

      Gow, Ian (Eastbourne)

      Moore, John (Croydon C)

      Wiggin, Jerry

      Gower, Sir Raymond (Barry)

      More, Jasper (Ludlow)

      Winterton, Nicholas

      Grant, Anthony (Harrow C)

      Morgan, Geraint

      Wood, Rt Hon Richard

      Grieve, Percy

      Morgan-Giles, Rear-Admiral

      Young, Sir G. (Ealing, Acton)

      Griffiths, Eldon

      Morris, Michael (Northampton S)

      Grylls, Michael

      Morrison, Charles (Devizes)

      TELLERS FOR THE AYES:

      Hall-Davis, A. G. F

      Neave, Airey

      Mr. Anthony Berry and

      Hamilton, Archibald (Epsom & Ewell)

      Nelson, Anthony

      Mr. Peter Morrison.

      The House divided: Ayes 230, Noes

      NOES

      Abse, Leo

      Freeson, Rt Hon Reginald

      Oakes, Gordon

      Allaun, Frank

      Garrett, John (Norwich S)

      O'Halloran, Michael

      Anderson, Donald

      Garrett, W. E. (Wallsend)

      Orme, Rt Hon Stanley

      Archer, Rt Hon Peter

      George, Bruce

      Ovenden, John

      Armstrong, Ernest

      Gilbert, Rt Hon Dr John

      Owen, Rt Hon Dr David

      Ashley, Jack

      Ginsburg, David

      Padley, Walter

      Atkins, Ronald (Preston N)

      Golding, John

      Palmer, Arthur

      Atkinson, Norman (H'gey, Tott'ham)

      Gould, Bryan

      Pardoe, John

      Bagier, Gordon A. T.

      Gourlay, Harry

      Park, George

      Bain, Mrs Margaret

      Grocott, Bruce

      Parker, John

      Bates, Alf

      Hamilton, James (Bothwell)

      Parry, Robert

      Bean, R. E.

      Hamilton, W. W. (Central Fife)

      Pavitt, Laurie

      Bldwell, Sydney

      Hardy, Peter

      Pendry, Tom

      Bishop, Rt Hon Edward

      Harrison, Rt Hon Walter

      Penhaligon, David

      Blenkinsop, Arthur

      Hart, Rt Hon Judith

      Phipps, Dr Colin

      Booth, Rt Hon Albert

      Hattersley, Rt Hon Roy

      Prescott, John

      Boothroyd, Miss Betty

      Healey, Rt Hon Denis

      Price, C. (Lewisham W)

      Bottomley, Rt Hon Arthur

      Heffer, Eric S.

      Price, William (Rugby)

      Boyden, James (Bish Auck)

      Henderson, Douglas

      Radice, Giles

      Bradley, Tom

      Hooley, Frank

      Rees, Rt Hon Merlyn (Leeds S)

      Bray, Dr Jeremy

      Horam, John

      Reid, George

      Broughton, Sir Alfred

      Howell, Rt Hon Denis (B'ham, Sn. H)

      Richardson, Miss Jo

      Brown, Hugh D. (Provan)

      Howells, Geraint (Cardigan)

      Roberts, Albert (Normanton)

      Brown, Robert C. (Newcastle W)

      Hoyle, Doug (Nelson)

      Roberts, Gwilym (Cannock)

      Brown, Ronald (Hackney S)

      Huckfield, Les

      Robertson, George (Hamilton)

      Buchan, Norman

      Hughes, Mark (Durham)

      Robinson, Geoffrey

      Buchanan, Richard

      Hughes, Robert (Aberdeen N)

      Roderick, Caerwyn

      Callaghan, Rt Hon J. (Cardiff SE)

      Hunter, Adam

      Rodgers, George (Chorley)

      Callaghan, Jim (Middleton & P)

      Irvine, Rt Hon Sir A. (Edge Hill)

      Rodgers, Rt Hon William (Stockton)

      Campbell, Ian

      Irving, Rt Hon S. (Dartford)

      Rooker, J. W.

      Canavan, Dennis

      Jackson, Miss Margaret (Lincoln)

      Rose, Paul B.

      Carmichael, Neil

      Janner, Greville

      Ross, Stephen (Isle of Wight)

      Carter, Ray

      Jay, Rt Hon Douglas

      Ross, Rt Hon W. (Kilmarnock)

      Carter-Jones, Lewis

      Jeger, Mrs Lena

      Rowlands, Ted

      Cartwright, John

      Jenkins, Hugh (Putney)

      Ryman, John

      Castle, Rt Hon Barbara

      John Brynmor

      Sandelson, Neville

      Clemitson, Ivor

      Johnson, James (Hull West)

      Sever, John

      Cocks, Rt Hon Michael (Bristol S)

      Johnson, Walter (Derby S)

      Shaw, Arnold (Ilford South)

      Coleman, Donald

      Johnston, Russell (Inverness)

      Sheldon, Rt Hon Robert

      Cook, Robin F. (Edin C)

      Jones, Alec (Rhondda)

      Shore, Rt Hon Peter

      Cowans, Harry

      Jones, Dan (Burnley)

      Silkin, Rt Hon John (Deptford)

      Cox, Thomas (Tooting)

      Judd, Frank

      Silkin, Rt Hon S. C. (Dulwich)

      Craigen, Jim (Maryhill)

      Kerr, Russell

      Skinner, Dennis

      Crawshaw, Richard

      Kinnock, Neil

      Smith, Cyril (Rochdale)

      Cronin, John

      Lambie, David

      Smith, Rt. Hon. John (N Lanarkshire)

      Crowther, Stan (Rotherham)

      Lamond, James

      Snape, Peter

      Cryer, Bob

      Latham, Arthur (Paddington)

      Spearing, Nigel

      Cunningham, G. (Islington S)

      Leadbitter, Ted

      Spriggs, Leslie

      Cunningham, Dr J. (Whiteh)

      Lee, John

      Stallard, A. W.

      Dalyell, Tam

      Lever, Rt Hon Harold

      Steel, Rt Hon David

      Davidson, Arthur

      Lewis, Ron (Carlisle)

      Stewart, Rt Hon Donald

      Davies, Bryan (Enfield N)

      Litterick, Tom

      Stewart, Rt Hon M. (Fulham)

      Davies, Rt Hon Denzil

      Loyden, Eddie

      Stoddart, David

      Davies, Ifor (Gower)

      Mabon, Rt Hon Dr J. Dickson

      Stott, Roger

      Davis, Clinton (Hackney C)

      McCartney, Hugh

      Strang, Gavin

      Deakins, Eric

      McDonald, Dr Oonagh

      Sumrrerskill, Hon Dr Shirley

      Dean, Joseph (Leeds West)

      McElhone, Frank

      Taylor, Mrs Ann (Bolton W)

      de Freitas, Rt Hon Sir Geoffrey

      MacFarquhar, Roderick

      Thomas, Dafydd (Merioneth)

      Dell, Rt Hon Edmund

      McGuire, Michael (Ince)

      Thomas, Jeffrey (Abertillery)

      Dempsey, James

      MacKenzie, Rt Hon Gregor

      Thomas, Mike (Newcastle E)

      Dewar, Donald

      McMillan, Tom (Glasgow C)

      Thomas, Ron (Bristol NW)

      Doig, Peter

      McNamara, Kevin

      Thompson, George

      Dormand, J. D.

      Madden, Max

      Thorne, Stan (Preston South)

      Douglas-Mann, Bruce

      Magee, Bryan

      Tilley, John

      Dunnett, Jack

      Mahon, Simon

      Tomlinson, John

      Dunwoody, Mrs Gwyneth

      Mallalieu, J. P. W.

      Torney, Tom

      Eadie, Alex

      Marshall, Dr Edmund (Goole)

      Urwin, T. W.

      Edwards, Robert (Wolv SE)

      Marshall, Jim (Leicester S)

      Varley, Rt Hon Eric G.

      Ellis, John (Brigg & Scun)

      Maynard, Miss Joan

      Walker, Harold (Doncaster)

      Ellis, Tom (Wrexham)

      Mikardo, Ian

      Walker, Terry (Kingswood)

      English, Michael

      Millan, Rt Hon Bruce

      Ward, Michael

      Evans, Fred (Caerphilly)

      Miller, Dr M. S. (E Kilbride)

      Watkinson, John

      Evans, Ioan (Aberdare)

      Mitchell, Austin (Grimsby)

      Weetch, Ken

      Evans, John (Newton)

      Mitchell, R. C. (Soton, Itchen)

      Weitzman, David

      Ewing, Harry (Stirling)

      Molloy, William

      Wellbeloved, James

      Fernyhough, Rt Hon E.

      Moonman, Eric

      Welsh, Andrew

      Fitch, Alan (Wigan)

      Morris, Alfred (Wythenshawe)

      White, Frank R. (Bury)

      Flannery, Martin

      Morris, Rt Hon J. (Aberavon)

      White, James (Pollok)

      Fletcher, Ted (Darlington)

      Mulley, Rt Hon Frederick

      Whitehead, Phillip

      Ford, Ben

      Murray, Rt Hon Ronald King

      Whitlock, William

      Fowler, Gerald (The Wrekin)

      Newens, Stanley

      Willey, Rt Hon Frederick

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

      Noble, Mike

      Williams. Rt Hon Alan (Swansea W)

      1830

      1831

      Williams, Rt Hon Shirley (Hertford)

      Woof, Robert

      TELLERS FOR THE NOES:

      Wilson, William (Coventry SE)

      Wrigglesworth, Ian

      Mr. Ted Graham and

      Wise, Mrs Audrey

      Young, David (Bolton E)

      Mr. James Tinn.

      Woodall, Alec

      Question accordingly negatived.
      Amendment made: No. 84, in page 37, line 26, leave out 'the company concerned' and insert 'a relevant company'.—[Mr. Robert Sheldon.]
      Mr. Robert Sheldon: I beg to move amendment no. 62, in page 37, line 31, at end insert—
      (a) the date on which the participant reaches pensionable age, as defined in Schedule 20 to the Social Security Act 1975; or'.
      This amendment fulfils a commitment given in Standing Committee by the Minister of State so that if a participant reaches pensionable age—65 for men and 60 for women—within five years of the date on which shares were appropriated, the period in which those shares are held, the retention period will end and the participant will be able to sell those shares without waiting for the five years to pass. In other words, an employee who reaches normal retirement age will be given the same treatment as the Bill provides for those who lose their jobs on account of injury or disability or becase they are made redundant. This fully meets the commitment we gave.
      Mr. Peter Rees: We are grateful to the Minister for taking heed of the point made, with his usual assiduity and eloquence by my hon. Friend the Member for Norkik, South (Mr. MacGregor). We are grateful that he has considered the point and w8 welcome this step.
      Mr. Powell: I wish to draw the attention of the Financial Secretary to a little curiosity, following a brief exchange that took place yesterday.
      The right hon. Gentleman has introduced into the Bill another reference to the Social Security Act 1975, which does not extend to Northern Ireland. It appears to me that an interesting consequence follows from this. In the construction of this Bill in its application to Northern Ireland, it will be necessary to resort to the Social Security Act 1975, which does not extend to Northern Ireland, to decide what provisions apply in Northern Ireland. I fully accept that the purpose is to ascertain the age of 60 for women and 65 for men and that that
      1832
      could have been done by writing that provision into the amendment which we are discussing. But this illustrates the difficulty in which we get by attempting to run, or pretending to run, two concurrent statute books for the two parts of the United Kingdom.
      I wish to make a practical request of the right hon. Gentleman, who kindly responded to my inquiry yesterday afternoon. I ask that a study should be made in the context of our Finance Acts of the extent to which this kind of cross-referencing between the statutes applying to Northern Ireland and those not applying to Northern Ireland is necessary. It is true that we would thereby effect only a minor tidying-up, but this would be helpful in the context of the larger debate that will fill a number of years to come as to the form in which this House is to legislate for Northern Ireland.
      Mr. Robert Sheldon: I wish briefly to respond to the right hon. Gentleman, because he has made a good point. It is only right that I should give the commitment to investigate the part of this provision for which I have responsibility.
      Amendment agreed to.
      Amendments made: Nos. 158, in page 37, line 32, at end insert—
      '(3A) In subsection (3)(a) above, "relevant company" means the company concerned or, if the scheme in question is a group scheme, the participating company; and in the application of subsection (3)(a) above to a participant in a group scheme, the participant shall not be treated as ceasing to be an employee or director of a relevant company until such time as he is no longer an employee or director of any of the particular companies.'.
      No. 37, in line 34, leave out 'fifteenth' and insert 'tenth'.
      No. 38, in page 38, line 2, at end insert 'and'.
      No. 39, in line 5, leave out from 'is' to end of line 11 and insert '25 per cent.'.—[Mr. Robert Sheldon.]

    Clause 44

      DISPOSAL OF SCHEME SHARES
      Amendments made: No. 91, in age 39, line 33, after 'for', insert:
      '(subject to subsection (8) below)'.
      No. 92, in page 40, line 6, at end add
      'or
      (c) a disposal of shares falling within that subsection is one which is treated as taking place by virtue of subsection (7) above and takes place within the period of retention.'.—[Mr. Robert Sheldon.]

    Clause 49

      INTERPRETATION AND CONSTRUCTION
      Amendments made: No. 159, in Clause 49, page 45, line 27, at end insert
      '"group scheme" and, in relation to such a scheme, "participating company" have the meaning assigned by paragraph 1(1A) of that Schedule'.
      No. 162, in page 46, line 10, after 'shares', insert 'in relation'.—[Mr. Robert Sheldon.]

    Clause 50

      REDUCTION OF TAX
      Mr. Graham Page: I beg to move amendment no. 168, in page 46, line 32, leave out subsections (1) and (2) and insert
      '(1) The Tables set out in Schedule 9 to this Act shall, in the case of any chargeable transfer made after 26th October 1977, be substituted for the Tables in section 37(3) of the Finance Act 1975, rates of tax).'.
      Mr. Deputy Speaker: With this we may also take Government amendment no. 13,
      Mr. Page: This is an amendment to subsections (1) and (2) of the clause. As the Bill stands, subsection (1) substitutes certain tables in schedule 9 for the tables in the Finance Act 1975. Having made that substitution and taken that subsection by itself, those provisions in the Finance Act 1975 are, in effect, repealed. In subsection (2) the repeal applies only to chargeable transfers made after 26th October 1977. Therefore, the 1975 tables are, in effect, restored for chargeable transfers that occur before that date.
      I am grateful to the Minister for writing to me on this matter and for tabling amendment no. 13 which the Government regard as solving the problem about repealing a table and then keeping it alive. However, I do not think amendment no. 13 either fits the Bill or provides an
      1834
      example of elegant draftsmanship. I believe that the matter can be put far more neatly—I say this with great modesty—as I have set out in amendment no. 168. That provides that the tables set out in this Act
      "shall, in the case of any chargeable transfer made after 26th October 1977, be substituted for the tables"
      in the appropriate provisions in the 1975 Act.
      That provides in one subsection clearly what is intended by the two subsections in the Bill, but does not repeal and then revive the provisions. It substitutes as from a certain date, for a certain purpose. This is a tidier way of bringing about what subsections (1) and (2) of the Bill endeavour to do.
      Mr. Denzil Davies: Amendment no. 168 is in substance similar to amendment no. 13, which is.the Government amendment on the same point. There was considerable discussion in Committee on this matter. Amendment no. 13 meets the point made by the right hon. Member for Crosby (Mr. Page) in Committee. Clearly, he still prefers his own drafting to that of the parliamentary draftsman, and I do not criticise him for that.
      No doubt the right hon. Gentleman will not criticise me if I prefer the parliamentary draftsman's version. There is no question of substance between us. It is a question of deciding which the neater drafting and, despite my great respect for the right hon. Gentleman, I prefer to rely on the drafting of the parliamentary draftsman and I ask the House to accept amendment no. 13 and reject amendment no. 168.
      8.0 p.m.
      Mr. Peter Rees: Since this is a point of technicality and some refinement, I do not propose to take much time, but I cannot forbear to observe to the Minister of State—since he so often tells us that our amendments are defective—that my right hon. Friend the Member for Crosby (Mr. Page) has proposed a more elegant and precise amendment. The Minister, out of loyalty to the parliamentary draftsman, prefers his own amendment.
      I am not entirely persuaded, because if the substantial point made by my right hon. Friend in Committee is valid, the objection could still apply to the Minister's amendment. We might yet be

      1835
      left in a little uncertainty about what would happen about transfers that take place before the Bill becomes law. Do the old tables or the new tables apply? Do any tables apply? We understand that the tables in section 37 of the 1975 Act are repealed by clause 50, but it is not appropriate for me to take up more of the House's time.
      Although the ipse dixit of the Minister is never conclusive, perhaps we should rely on his assurance. If the courts prove him wrong, no doubt he will be happy to introduce retrospective legislation to indemnify those who have been prejudiced by his errors.
      Amendment negatived.
      Amendment made: No. 13, in page 46, line 35, leave out ' The new Tables apply' and insert 'Subsection (1) above applies'.

    Clause 54

      DEFINITION OF CONTROL OF COMPANY
      Mr. Denzil Davies: I beg to move amendment no. 99, in page 49, line 27, at end insert
      'but after paragraph (b) there shall be inserted "and
      (c) where a company has shares or securities of any class giving powers of voting limited to either or both of the following—

      (i) the question of winding up the company;

      (ii) any question primarily affecting shares or securities of that class,

      the reference in the preceding provisions of this sub-paragraph to all questions affecting the company as a whole shall be read as a reference to all such questions except any in relation to which those powers are capable of being exercised.".'
      Mr. Deputy Speaker (Mr. Oscar Murton): With this we may take Government amendments nos. 100, 101 and 102.
      Mr. Davies: Amendments nos. 99 and 100 go together, as do amendments nos. 101 and 102. Amendment no. 99 is designed to meet a criticism levelled at the clause in Committee and to allow shares with certain limited voting rights to be ignored in deciding whether other shares give a person voting control of a company. Amendment no. 100 is a technical amendment which corrects a minor omission. Amendment no. 99 meets the
      1836
      point. We discussed the matter in Committee, when the right hon. Member for Crosby (Mr. Page) and other hon. Members raised the question of the definition of voting rights. The amendment fulfils an undertaking that I gave at that time.
      Amendments nos. 101 and 102 follow on from amendment no. 99 and deal with the same point in relation to transfers to employee trusts. This follows from the undertaking that is met by amendment no. 99 in relation to control. Amendments nos. 101 and 102 are designed to make a corresponding adjustment to the nature of the trustees' control of a company for the purpose of the exemption for transfers to employee trusts by individuals. Both pairs of amendments meet the same point. The second two are designed to deal with the point in relation to transfers to employee trusts.
      Mr. Graham Page: I thank the Minister for dealing with the point which I raised in Committee. On this occasion I have no complaints about the drafting—though perhaps my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) has some complaint about the draftsmanship. I could find none because I was so overcome with gratitude to the Minister for carrying out the assurance that he gave in Committee in dealing with the point I raised.
      Mr. Peter Rees: There is not often a divergence of view between myself and my right hon. Friend the Member for Crosby (Mr. Page) and I hope that there will not be many more such occasions in future. Perhaps the divergence is not on the draftsmanship but on the substance of the amendments.
      I raised this matter in Committee. I know that the Minister's heart is in the right place and I congratulate him on having taken on board, to a degree, the point I put to him, which relates not only to business assets relief but to the payment of CTT by instalments and the relief for transfers to employee trusts.
      My hon. Friends and I readily conceded in Committee that the definition of control of a company, which is crucial if these various reliefs are to apply, had been a little too laxly drawn and that there were various situations—I shall not say "schemes" because that has slightly unattractive overtones, particularly after our debate last night—where relief was

      1837
      conceded and where, on a fair consideration of the debates of the House, it probably should not have been conceded.
      The Government, wishing to tighten the conditions that had to be satisfied, went for overkill and we pointed out that there were many situations where, in commercial truth, a person had control of a company but, by the definition adopted in clauses 54 and 55, would not be regarded as having control because he needed not only to hold more than half the ordinary shares in a company but to have powers of voting on all questions affecting the company.
      The Minister of State has eliminated cases where other shareholders might have a blocking right in regard to the winding-up of a company or on questions primarily affecting shares or security of a special class. That is the primary, but not the only, point that was put to the Minister of State. For example, the holders of preference shares often have the right to vote when there is a resolution to wind up a company or when their preference dividends are in arrears. Those cases have been met by the amendments, and we are grateful for that.
      However, I do not think that those who advise the Minister of State—I assume that the amendments have not sprung entirely from his own fertile mind—have thought this through with sufficient care. They will be aware that, for example, sometimes there are separate classes of shares that carry the right to appoint or remove directors. That situation would be covered by the amendments because that would be a question primarily affecting shares and securities of that class.
      Equally, however, these rights are sometimes defined merely by reference to numbered shares. They are treated not as separate classes—A shares, B shares, C shares and so on—but on the basis that shares 1 to 100 have the right to appoint and remove directors and so on. That situation is not covered by the amendments, although on any fair view the existence of those rights would not prevent the holder of 51 per cent. of the ordinary shares having control of the company.
      Let me give the House another example. Institutions or the Industrial and Commercial Finance Corporation take a share of a company when they inject capital
      1838
      into it and they have the right to prevent alterations of the articles of association. That is quite fair and there is no hint of tax avoidance. It is done to protect their position when they invest in a company that is in a slightly precarious situation Those circumstances would not be covered by the amendments.
      I shall not ask my right hon. and hon. Friends—it might be a slightly idle exercise to do so at this moment, and the right hon. Gentleman might be slightly pressed to muster support in his defence—to vote against the amendment. The group of amendments goes some way to meet the points which we raised in Standing Committee and which the right hon. Gentleman, with his usual open mind, has recognised to have validity.
      We shall support the amendment, but, in view of the two examples that I have given him, we ask that the right hon. Gentleman—I have no doubt that those who advise him, if they were to ask around in the business community, especially the institutions and the ICFC, would be able to multiply the instances and perhaps refine them—recogniss that perhaps the amendment has not gone all the way to meet the substantial arguments that we advanced.
      Should the right hon. Gentleman be commending another Finance Bill to the House in the reasonably near future, we hope that he will move further amendments to meet our arguments. I am sure he will recognise that they have a certain validity.
      Mr. Denzil Davies: I hope that I can give the hon. and learned Gentleman that assurance. In my next Finance Bill next year I shall ensure that the clause is amended to meet his point.
      Amendment agreed to.
      Amendment made: No. 100, in page 49, line 32, after '3(7)', insert or 4(b) or (bb)'.—[Mr. Denzil Davies.]

    Clause 55

      EMPLOYEE TRUSTS
      Amendments made: No. 101, in page 50, line 1, leave out 'subsections (2) and (3) below' and insert:
      'the provisions of this section'.
      No. 102, in page 50, line 26, at end insert:
      (3) Where the company has shares or securities of any class giving powers of voting limited to either or both of the following—

      (a) the question of winding up the company;

      (b) any question primarily affecting shares or securities of that class,

      the reference in subsection (2)(a)(ii) above to all questions affecting the company as a whole shall be read as a reference to all such questions except any in relation to which those powers are capable of being exercised.'.—[Mr. Denzil Davies.]
      Mr. Denzil Davies: I beg to move amendment no. 103, in page 51, line 23, after 'section', insert—
      'and Chapter III of Part III above '.
      Mr. Deputy Speaker: With this we may take Government amendments nos. 125, 104 and 105.
      Mr. Davies: Amendment no. 103 is consequential on amendments nos. 125, 104 and 105, which deal with the interaction between the employee trust rules and those relating to profit-sharing schemes. Those amendments give effect to an undertaking given in Standing Committee to consider the interaction between the conditions relating to profit-sharing schemes and employee trusts. They ensure that no capital transfer tax charges will arise on distributions out of employee trusts where the distributions are appropriations of shares to persons participating in profit-sharing schemes. In addition, they amend the conditions relating to the capital transfer tax and capital gains tax exemptions for transfers by companies to employee trusts.
      The hon. and learned Member for Dover and Deal (Mr. Rees) raised these matters in Standing Committee. At that time I said that we would consider the interaction. I hope that the amendments go a considerable way to allay his fears and to meet the point that he raised.
      Mr. Peter Rees: It is true that the amendment attempts to meet the doubts that I raised about the capital transfer tax implications of the profit-sharing schemes that may be set up under the relieving provisions of the Bill. I am grateful to the right hon. Gentleman for having met the point. It would be a rash man who said at this stage that the amendment completely meets the point. This is an
      1840
      area that bristles with technical difficulties, as the right hon. Gentleman recognised. However, the amendment is the first instalment. I have no doubt that we shall be able to draw the right hon. Gentleman's attention in the months and years to come—if he is in his present position—
      Mr. Peter Morrison: He will not be.
      Mr. Rees: As my hon. Friend suggests it may be that I am being unduly kind to the right hon. Gentleman. I think that I am. In any event, I am sure that there will be difficulties in respect of capital transfer tax, capital gains tax, income tax and additional rate tax when dealing with profit-sharing schemes. However, as a first instalment, as an earnest that the Administration recognises that this is a rather thorny area, the Opposition welcome this group of amendments.
      Amendment agreed to.

    Schedule 10

      EMPLOYEE TRUSTS
      Amendments made: No. 125, in page 79, line 35 at end insert
      'and after paragraph (b) there shall be inserted the words"but, if the trusts are those of a profit sharing scheme approved under the Finance Act 1978, paragraph (b) of this subparagraph does not preclude the application of sub-paragraph (3)(c) above in relation to any appropriation of shares in pursuance of the scheme.".'
      No. 104, in page 80, line 17 at end insert
      'and at the end there shall be inserted the words "or, if the trusts are those of a profit sharing scheme approved under the Finance Act 1978, of any power to appropriate shares in pursuance of the scheme.".'
      No. 105, in page 80, line 31 at end insert
      'and at the end there shall be inserted the words "or, if the trusts are those of a profit sharing scheme approved under the Finance Act 1978, of any power to appropriate shares in pursuance of the scheme.".'—[Mr. Denzil Davies.]

    Clause 59

      PROTECTIVE TRUSTS
      8.15 p.m.
      Mr. Denzil Davies: I beg to move amendment no. 131, in page 55, line 30 leave out '6(2) or'.

      1841
      This is a minor amendment, consequential on an amendment that was accepted in Standing Committee and moved by the Opposition. That amendment confined the operation of the clause to cases where the forfeiture occurs after 11th April 1978. The clause is concerned with forfeiture, and I accepted an amendment in Standing Committee that confined the operation of the clause to cases of forfeiture that occurred after 11th April 1978. There can, therefore, be no possibility of a charge arising on Budget day 1978 under paragraph 6(2) of schedule 5 to the Finance Act 1975. The relevant words in the clause are now unnecessary and can be deleted. The amendment is consequential on accepting the amendment moved by the Opposition in Committee.
      Mr. Peter Rees: I rise to express gratitude to the Minister of State. I had a small hand in Standing Committee in moving the amendments to which amendment no. 131 is consequential.
      I should be grateful to be told why it is that because the Minister accepted the amendment in Committee it is unlikely, or, as he said, impossible, that a charge could be raised under paragraph 6(2) of schedule 5. It would be of assistance to the House and to those outside who follow our debates to know why it is that no charge could now arise. Obviously the right hon. Gentleman would not wish to narrow any relief granted for those who might benefit under a protected trust.
      Mr. Denzil Davies: I shall try to deal with the hon. and learned Gentleman's question. As he knows, it is a technical subject. In its original form, the clause applied where forfeiture occurred before Budget day 1978 as well as after that date. The switch to interest in possession status would have provoked an unwanted charge under paragraph 6(2) of schedule 5 of the Finance Act 1975. The clause therefore contained a provision to negate that charge.
      The safeguard is no longer necessary, because in Standing Committee I accepted an Opposition amendment, no. 678, which confined the operation of the clause to cases where forfeiture occurs after 11th April 1978. Where a forfeiture has already occurred on or before that date the trust will continue to be governed by the old rules, which treated these matters
      1842
      as a discretionary trust. There will be no switch from discretionary trust to interest in possession status on 11th April 1978 as a result of the clause
      There is now no possibility of the clause provoking a charge under paragraph 6(2) of schedule 5 of the Finance Act 1975 on Budget day. Therefore, the reference to paragraph 6(2) in the last three lines of the clause is redundant and is deleted by the amendment.
      I hope that that satisfies the hon. and learned Gentleman and his advisers.
      Amendment agreed to.

    Clause 60

      GOVERNMENT SECURITIES IN FOREIGN OWNERSHIP
      Mr. Denzil Davies: I beg to move amendment no. 130, in page 56, line 5,
      'and the new sub-paragraph (2A) set out above applies where the disposition mentioned in that sub-paragraph is on or after that date.'
      The new sub-paragraph (2A) introduced by clause 60(1) ensures that the rules that govern availability of relief for Government securities held by discretionary trusts cannot be avoided by an appointment or advancement on new discretionary trusts. As it stands, the subparagraph operates where the advancement or appointment or new trusts took place on or after 27th March 1974. The amendment restricts the operation of the subparagraph so that it applies only when the appointment or advancement takes place on or after 20th April 1978.
      I think that this amendment meets criticisms made in Committee by the hon. and learned Member for Dover and Deal (Mr. Rees) and others regarding the date of the operation of this part of the clause.
      Mr. Peter Rees: Again, I rise to thank the Minister of State for having met the point put to him by myself and others of my right hon. and hon. Friends in Committee on the slightly retroactive effect of the clause. We were a little disturbed that those whose protected life interest trusts had been determined before the enactment of the Bill—in fact, before the Bill was introduced—might have had their status and the capital transfer tax consequences altered as a result of the Bill.

      1843
      The Minister, in his usual frank and open way, has listened to the arguments and been convinced by them. We are grateful that he has met our objections by moving amendment no. 130.
      Amendment agreed to.

    Clause 63

      DISCLOSURES OF INFORMATION TO TAX AUTHORITIES IN OTHER MEMBER STATES
      Mr. David Stoddart: I beg to move amendment no. 29, in page 5, line 27, leave out Clause 63.
      Mr. Deputy Speaker: With this we may take Government amendment no. 98 and the following amendments:
      No. 30, in page 56, line 33, at end insert:
      'but no disclosure shall be made under this section unless the taxpayer concerned has been informed that such disclosure has been requested and has given his consent in writing to the disclosure'.
      No. 8, in page 56, line 33, at end insert:
      'The Commissioners of Inland Revenue or an authorised officer of those Commissioners shall not disclose information by virtue of the said Directive without requiring the competent authorities of the receiving State to afford the information the same degree of confidentiality which it enjoys in the United Kingdom.'.
      No. 9, in page 56, line 33, at end insert:
      'Nothing in this section shall permit the Commissioners of Inland Revenue or an authorised officer of those Commissioners to authorise the use of information disclosed by virtue of the said Directive other than for the purposes of taxation or to facilitate legal proceedings for failure to observe the tax laws of the receiving state.'.
      Mr. Stoddart: Clause 63 engendered a good deal of debate in Committee upstairs, and rightly so, because it seeks not only to make available to foreign tax authorities the private affairs of United Kingdom citizens but to legislate by reference to another authority—namely, a directive of the EEC. Therefore, the clause seeks to legislate on the basis of a non-parliamentary and, indeed, non-British document. I—and, I hope, the House—will not accept with equanimity the subordinate role to which we appear to have been relegated by the introduction of the clause.
      1844
      There is no doubt that the scope of EEC directive no. 77/799 is very wide. It goes beyond the double taxation agreements, since it provides for continuous collaboration between all the members of the Community and the Commission, which apparently intends to keep a kind of surveillance over the way that this mutual assistance works.
      Hon. Members will have obtained a copy of the Official Journal of the European Communities which contains EEC directive 77/799. Therefore, it will not be necessary for me to quote the document at length. However, I should like to draw particular attention to one or two points which need some emphasis.
      First, I direct attention to the final paragraph of the preamble. It states:
      "Whereas collaboration between the Member States and the Commission is necessary for the permanent study of co-operation procedures and the pooling of experience in the fields considered, and in particular in the field of artificial transfer of profits within groups of enterprises, with the aim of improving those procedures and of preparing appropriate Community rules".
      It will be noted that the last words of that paragraph refer to "preparing appropriate Community rules". As so often happens in matters appertaining to the EEC, an innocuous-sounding phrase can mean a great deal. In this case it could be the start of the merging of our tax system into a Community system—all the better perhaps to facilitate economic and monetary union and the federal European State which some hon. Members apparently wish to see.
      Article 3 is very short and I quote it in its entirety:
      "Automatic exchange of information. For categories of cases which they shall determine under the consultation procedure laid down in Article 9, the competent authorities of the Member States shall regularly exchange the information referred to in Article 1(1) without prior request."
      That allows categories of cases to be extended by administrative action without further reference to the House of Commons. The House should take due note of the fact that this non-elected body, responsible to no one, can extend legislation without the House having knowledge of it. That is a serious matter. Therefore, the classes of taxpayers referred to in the preamble to the directive can be extended unbeknown to Parliament or to the people themselves.

      1845
      The tax and, therefore, the personal affairs—make no mistake about that; it is not only the tax, but the personal affairs—of every individual and enterprise in the land can be made available to eight alien States. That is an unprecedented intrusion into the lives of British people by foreign Governments.
      I find it quite incredible that such a prospect should be viewed by the House with apparent equanimity, especially as I am sure that, if it were proposed that the tax affairs of individuals should be made known to the Supplementary Benefits Commission, all hell would be let loose. There would be an outcry of colossal proportions. The Opposition and many of my hon. Friends, if not all of them, would be on their feet if this facility were extended to one of our own Departments of State, yet we are proposing to extend this facility and this private information about people's personal affairs to eight foreign Governments.
      I should have thought that my right hon. and hon. Friends on the Front Bench, who have great concern for the rights of the individual, would be far more cautious in recommending the clause to the House. Indeed, I am sorry that they included it in the Bill.
      But the Opposition also have responsibility here, because they prate loud and long about the rights and freedoms of the individual and are for ever condemning the growth of bureaucracy and its baleful encroachment on the lives of individuals. Through this clause and the directive, we see a massive extension in one fell swoop of a bureaucracy more pervasive and powerful than we have ever known in this country. We shall see how far Opposition Members care for individual freedom and the fight against bureaucracy when they vote on the clause tonight.
      There are two other provisions in the directive to which I should like to draw attention. First, there is provision for officials of the tax authorities of other States to be present in this country. Presumably, the purpose is to enable them to make inquiries about our citizens. The British people will not take too kindly to being investigated by tax inspectors from foreign States, even if that is done with their own Government's consent.
      The other provision which holds great danger is contained in article 4(2). This
      1846
      permits member States to extend the exchange of information provided for in the article beyond that which is specified in the article. Once again, by administrative action the powers of tax officials will be extended without further reference to the House. The scope of those inquiries will be extended without our knowledge and without the House having the opportunity to have its say.
      8.30 p.m.
      It will be said that the public need not worry about the directive because it is intended to catch only the multinational companies and other big organisations which endeavour to defraud the tax authorities in the EEC. It will be said that the individual and the small company have nothing to fear. Such an argument might sound plausible, particularly to some of my hon. Friends who, understandably and laudably, wish to dial with large-scale tax evasion. But I do not believe that the big boys will be caught. The minnows will be caught while the sharks swim laughing all the way to the bank. I hope that my hon. Friends will keep that in mind.
      There are other and better ways which have been set out by the Labour Party to deal with multinationals. My hon. Friends should reflect that compulsory planning agreements would do far more than the whole of this directive to end tax evasion. Then the job would be done without involving the freedom and privacy of so many citizens who cannot and would not embark upon tax fraud.
      During the debate in Committee, worries were expressed about the privacy of information given to foreign tax authorities and the use to which that information would be put. My right hon. Friend the Financial Secretary did his best to allay those fears. Indeed, he has tabled an amendment to try to deal with them. I do not believe that his amendment is a substitute for the rejection of the clause.
      The tax authorities of other countries do not necessarily take the same meticulous care as is taken by our Inland Revenue Department to ensure the complete confidentiality of information revealed by the citizen for tax purposes. My right hon. Friend should examine the procedures in some other countries. He would probably find that our Inland Revenue Department is meticulous and mindful

      1847
      of the confidentiality of information that is given to it.
      I return to the question of the standing of this House in relation to EEC legislation. In Standing Committee, the hon. Member for Eastbourne (Mr. Gow) asked the Financial Secretary:
      "Will the right hon. Gentleman explain one point which is crucial to the vote that we shall be taking shortly? In the view of the Government, what would be the consequence for the United Kingdom Government and the United Kingdom Parliament if this Committee and later, the House were to remove clause 62 from the Bill?"
      The clause that we are now discussing was clause 62 when we were in Committee. The Financial Secretary replied:
      "We should be in breach of our obligations and would be taken to the European Court in due course."—[Official Report, Standing Committee A, 21st June 1978; c. 1653.]
      That was an intriguing answer. It certainly raises interesting constitutional and, perhaps, judicial questions. Let us reflect on the implications. By including the clause to implement the directive, the Government have clearly met their obligations. If the clause is rejected, the responsibility for failure to implement the directive will rest firmly on the shoulders of this House and of individual hon. Members.
      In those circumstances, whom would the Commission prosecute? It could hardly be the Government, since they would have discharged their responsibility. Would it be Mr. Speaker? We do not know. Would the Speaker of this House, as in earlier times, be called upon to bear the punishment as an individual for the collective actions of Parliament? Is he to be taken to the Tower at the behest of this new absolute monarch in Europe, to be incarcerated and perhaps even fined or, even worse, beheaded, as were so many Speakers before him?
      This is an interesting matter upon which we should certainly reflect. Perhaps Parliament as a body would be prosecuted, although I see some difficulty there. Perhaps it might be those individual Members of Parliament who voted against clause 63 and the edict of the EEC. Perhaps we would be surcharged as local councillors are surcharged, or perhaps we would be put in the Tower.
      I do not know whether there would be a confrontation, but there could be. I
      1848
      sincerely hope that later the Government will have second thoughts and withdraw the clause, or that perhaps the official Opposition will join other hon. Members in trying to knock it out.
      I said earlier that the clause and the directive which it seeks to implement are only the thin end of the wedge. I have been proved right. After I tabled the amendment, my attention was drawn to a new draft directive, R1123/78, which would extend the provision of directive 77/799 to value added tax. Since many hon. Members will not have seen it, I shall read out the explanatory memorandum. It was prepared by Her Majesty's Customs and Excise and is dated 28th June 1978. It reads
      "Subject Matter… This proposal would amend Directive 77/799/EEC on Mutual Assistance in the field of direct taxation (on which an Explanatory Memorandum was submitted by the Board of Inland Revenue in May 1976) to provide for the competent authorities in Member States to assist each other in the correct assessment and collection of value added tax. Directive 77/799/EEC provides for:

      (a) the mutual provision of information by each Member State to the others either on request or, in certain circumstances, automatically or spontaneously without prior request;

      (b) inquiries to be carried out by a Member State at the request of another;

      (c) the presence of another Member State's tax officials to be allowed in a Member State for the purpose of exchanging information; and

      (d) continuous collaboration by Member States and the Commission so as to keep under review the assistance being provided under the Directive and to improve the machinery."

      Thus, close on the heels of directive 77/799 comes another proposed directive to deal with VAT, which is bound to cause further headaches.
      The small business men whom the Opposition so often befriend will feel even more harassed. The Opposition have made great political capital of late out of the harassment of small business people by Customs and Excise. If the new draft directive is passed—as it surely will be as night follows day if clause 63 remains in the Bill—I say particularly to the Opposition that they will have sold the pass for small businesses. They cannot in conscience oppose the draft directive if they support the clause.
      Matters are even more serious than that. It will not be long before the EEC

      1849
      will collect its own resources through VAT. Every small business man who pays VAT will be visited not only by Her Majesty's Customs and Excise but by the customs and excise officers of foreign Governments. He will feel very harassed in those circumstances.
      The Tories should consider the repercussions. They will never again be able to hold up their heads and say that they are the champions of small business men if they allow that directive to follow closely on the heels of the one we are discussing.
      Mr. Max Madden: My hon. Friend has been describing graphically the fate which lies in store for many sections of the community. Would he say what fate might befall tax consultants? Does he think that one of the Opposition spokesmen might have an interest in this matter?
      Mr. Stoddart: I am obliged for that intervention, but I fear that under the directive the only fate which will befall tax consultants is that they will get richer because there will be more for them to do. It may therefore be welcome to tax consultants on both sides of the House. Nevertheless, let us hope that they will have the good sense to reject clause 63.
      I hope that the House will realise the serious implications of the clause, not only for the taxpayer and the small business man but for the future of this House and the sovereignty of the British nation. If hon. Members understand them, they will undoubtedly reject the clause by a large majority.
      8.45 p.m.
      Mr. Powell: The more imaginative and historical portions of the eloquent speech of the hon. Member for Swindon (Mr. Stoddart) should not obscure the serious implications of what he said nor diminish the importance of the debate which he has initiated. Clause 63 is a clause without a predecessor, but, as the hon. Gentleman said, it is a clause which, if it stays in the Bill, is destined soon to have a successor.
      The clause refers to Commissioners of Inland Revenue and their authorised officers; and the origin of the clause is a Directive of last year. The hon. Gentleman understated the instantaneity with
      1850
      which the debate on the clause in Committee was followed by the arrival, hot from Brussels the following day, of the next directive, the directive making the same requirements in respect of VAT. So this is only a preliminary to the corresponding clause in next year's Finance Bill, which will make the same enactment, only in respect of the Commissioners of Customs and Excise, as this makes in respect of the Commissioners of Inland Revenue.
      We—those of us who have warned of the expanding nature of the claims and encroachments of the European Community—have usually had to wait at any rate a few months for the verification of our warnings. In this case the interval was measured only in hours. The hon. Gentleman was right, at the outset of this debate, to draw attention to the next stage.
      It is important that the terminology of this remarkable and unprecedented clause should be studied carefully by the House. With great respect to Treasury Ministers, I am not absolutely certain—I have studied the proceedings in Committee again carefully—whether they themselves are fully alive to the implications of the wording of the clause. It purports to say that:
      "No obligation as to secrecy imposed by statute or otherwise shall preclude the Commissioners of Inland Revenue…from disclosing…information required to be so disclosed by virtue of the Directive"—
      the directive referred to in the clause.
      In the course of the Committee proceedings the Financial Secretary was asked to quote the statute in which these obligations were to be found. He referred the inquirer to the Taxes Management Act 1970. I take it—no doubt the right hon. Gentleman will correct me if I am mistaken—that the reference was to schedule 1, which contains the forms of declaration required of those who serve in the Inland Revenue. The declaration there says:
      "I will not disclose any information received by me in the execution of my duties except for the purposes of my duties or for the purposes of any prosecution…or in such other cases as may be required by law."
      It is upon those last words that I want to rest for a moment.

      1851
      The present confidentiality requirements allow for a disclosure
      "as may be required by law"
      in cases other than the execution of the duties of tax collection or proceedings in the courts. That perhaps casts light upon the term "required", which appears in the clause. Presumably the clause is intended to create a new requirement of law: by writing the law of the Community into the law of this country, a requirement of law is created which is covered by the declaration of confidentiality binding upon all Inland Revenue personnel.
      But then one realises that, if that were so, we should not require a clause in this form. We should not then require to waive the obligation imposed by statute, because the obligation imposed by statute has an exception already where there is a requirement of law. So the case is by no means so simple.
      Then our eye lights upon that remarkable word "preclude". The clause does not say that the obligation as to secretary shall not apply in these cases. It does not say that the requirements of the directive shall be requirements of law for the purposes of the Taxes Management Act 1970. It simply says that the obligation shall not "preclude" the Commissioners of Inland Revenue from complying with the requirements of the directive.
      We are entitled to have a careful explanation from the Government of the reason why this clause is drawn in such a curious form. I will come at once to an indication, which was given in the debate in Committee, of what lies behind it.
      The Financial Secretary was invited by the hon. Member for Edinburgh, Pentlands (Mr. Rifkind)—indeed, there is an amendment on the Amendment Paper tonight by the hon. Member to this effect—to write safeguards into the Bill. The reply of the Financial Secretary was clear. He said "We have only to do what is required by the directive and we have only to do it upon the terms of the directive itself." He proceeded to draw attention to the terms of the directive upon which he relied. He said "There is no need whatever to set any of this out, no need to indicate the safeguards, because they are in the directive, and clause 63
      1852
      only covers what is required by the directive."
      The Financial Secretary even quoted, not merely the articles of the directive but the preamble, which, at any rate in the construction of United Kingdom statutes, is not part of the law. But the Financial Secretary regards the preamble to an EEC directive as an integral part of the directive. The right hon. Gentleman nods assent. This is one important difference that we must bear in mind when we are reading the orders of our masters that come from Brussels. It is no use skipping through the "whereases." They are just as binding, just as carefully to be interpreted, as the articles, when we come to them and supposing that we can understand them.
      In particular, the right hon. Gentleman drew attention to the requirement of confidentiality:
      "whereas it is also necessary that the receiving States afford the information the same degree of confidentiality which it enjoyed in the State which provided it, if the later so requires."
      The right hon. Gentleman said, in Committee:
      "Therefore the position, as I see it, is quite clearly safeguarded."—[Official Report, Standing Committee A, 21st June 1978; c. 1649.]
      The position of the Financial Secretary was that we can go through every bit of the directive—not "can"; but "must", for we are duty bound as a legislature, since we are embodying this in the law of our country—from the first "whereas" to the complimentary close or whatever they have in an EEC directive and pick out what we are actually required to do, because it is only where a requirement is imposed by the directive, so the Financial Secretary says, that this clause and the waiving of confidentiality will apply. Likewise also the safeguards attached to the requirements will automatically be invoked. So, we are bound by the requirements and protected by the safeguards which are written into the document.
      That was the doctrine of the Financial Secretary. Presumably it was the doctrine of the Government. But no longer, for there is an amendment being taken together with this one—no. 98, in the name of the right hon. Gentleman the Chancellor of the Exchequer—which reads:
      "Neither the Commissioners nor an authorised officer shall disclose any information in

      1853
      pursuance of the said Directive unless satisfied that the competent authorities of the other State are bound by, or have undertaken to observe, rules of confidentiality with respect to the information which are not less strict than those applying to it in the United Kingdon."
      Later on, therefore—if the clause were, by any mischance, to remain after this debate—up would pop the Financial Secretary to move into the statute a safeguard which, presumably, therefore, is not valid or existent by reason of the directive. If he says "Oh, this is only for greater assurance", can we, please, have written into the Bill all the other safeguards and all the other conditions which are in the directive? And can we please have them written in the construable language of a United Kingdom statute, instead of having to distil them as best we can from the terms of the directive?
      The fact is that the Government have put their own foot through their claim that we are protected by the terminology of the directive at the same time as we are required by it to do anything. Whatever they believed three weeks ago, they no longer believe it now.
      Let us see what are the requirements of the directive. Let us see what are the mandatory parts of the directive. What are the things in the terminology of clause 63 which are
      "required to be disclosed by virtue of the directive"?
      Article 1 states that
      "the competent authorities of the Member States shall exchange"—
      that is mandatory—
      "any information that may enable them to effect a correct assessment of taxes on income and on capital."
      Article 3 states that
      "they shall regularly exchange the information…without prior request."
      They "shall" do that: so that is a requirement; no request has to be made. They are to do it in "categories of cases" which are
      "determined under the consultation procedure"
      in article 9. The hon. Member for Swindon was perfectly right in saying that obligations are to be created and defined not by this instrument itself but by things done under this instrument which will in no way formally be brought to the know
      1854
      ledge of this House, let alone of the taxpayers of this country and their advisers. So there is to be regular exchange, and that is mandatory, too.
      Then article 4 states that
      "The competent authority…shall without prior request forward the information referred to in Article 1 (1)…in the following circumstances".
      Those are then set out. I shall not quote them all. The first is that the competent authority
      "has grounds for supposing that there may be a loss of tax in the other Member State".
      So, if there are "grounds for supposing", then, without prior request, it is mandatory in those circumstances for the information to be given. "We think it is quite possible that taxpayer X may be liable to more tax in France or Luxembourg than he is paying. Send his file." That is not voluntary. It is a requirement. No doubt it will apply presently to Athens, presently to Lisbon, presently to Madrid, and presently to Ankara. The files will be going further and further afield.
      Mr. Ian Gow: Valetta?
      Mr. Powell: Oh, dear, I did not know about that. It gets worse and worse, Mr. Deputy Speaker, but I do not want to pile on the horror. It is bad enough that our tax files should go across the Channel and that there should be a requirement for the transfretation of our income tax papers.
      Mr. Hugh Dykes: There is no such word.
      Mr. Powell: No such word as "transfretation"? If the hon. Member wishes to be well employed during the drier parts of my speech, he may consult the full Oxford Dictionary, where he will find "transfrctation" all right.
      9.0 p.m.
      But once again the warning of the hon. Member for Swindon comes in point. We may think that we know the total number of circumstances in which it will be compulsory, without request, to send the file. I use the term "send the file" as a shorthand expression for giving the information. Not at all. The "competent authorities", when they get their heads together under the consultation procedure in article 9, may extend the exchange

      1855
      of information provided for to cases other than those specified therein. So there is no limit to the circumstances in which it is requisite for this information to be sent from this country to the other countries of the Community.
      We are, however, provided with certain conditions in which the information may be refused.
      Mr. Dykes: Does not the right hon. Gentleman agree that all that he has just described with the same language, terms and procedures, happens already under the existing procedures of double taxation relief agreements?
      Mr. Powell: It does not happen, as the hon. Gentleman will discover if he reads the report of the Committee of another place and the evidence which it took on this directive. He will find there clearly set out the circumstances in which this goes beyond what is done under the double taxation agreements. By the way I should be grateful if, in his winding-up speech, the Financial Secretary could explain the way in which double taxation agreements are accommodated with the confidentiality requirements of the Taxes Management Act of 1970. It may be that there has been a provision somewhere which automatically scoops up all the double taxation Acts and removes the safeguard of the 1970 Act. That is a point which it would be helpful if the Financial Secretary mentioned.
      Since the hon. Member for Harrow, East (Mr. Dykes) raised it, he may be interested to know that the spontaneous provision of information in certain cases—those are the cases to which I referred—is not provided for under the double taxation arrangements. The double taxation arrangements are narrowly concerned with the affairs of cases where relief is claimed by a taxpayer under those arrangements and where, of course, the relevant information in both countries must be made available. This is a very different matter. As the hon. Member for Swindon said, this is the beginning of a joint taxation system and administration in the EEC as between ourselves and the other countries of the Community.
      There are quite a number of provisions in this directive which are permissive, which include the word "may" and not
      1856
      the word "shall". I think that the Financial Secretary ought to say clearly to the House whether he regards this directive as binding only in so far as it contains the terminology "shall", and not binding in so far as it contains the terminology "may". I ask him that particularly because of that extraordinary word, "preclude", to which I drew attention at the beginning, in the terms of this clause, which states:
      "No obligation as to secrecy…shall preclude the Commissioners of Inland Revenue…from disclosing information".
      I am inclined to construe that as meaning that the Government regard the directive as binding upon this country not only in its mandatory portions but in its permissive portions. They want to be able to act in accordance with the permissive parts of the directive as well, and they want to be able to show our masters in Brussels, for it must be remembered that this work has to be shown up. By the end of the year we must turn this in at Brussels, to prove that we have done what is required of us.
      I believe the reason for that word "preclude" is so that the Government will be able to tell the Community that they will be able to fulfil not only the mandatory but the optional portions of the directive, because they have framed the clause so cunningly with the word "preclude"—perhaps someone thought that the House of Commons might not notice it. "We shall do all that is required of us by the directive", they will say, "and the Inland Revenue will not be precluded by the conditions of confidentiality from transferring the information. That is the reason why we have gone to all this trouble, instead of simply making the actual requirements part of the law, with which, automatically, it would then be proper for the Inland Revenue to comply".
      Since this is an unprecedented provision, it was right that it should be examined, even on Report, textually and carefully and, indeed, that we should have a much more careful exposition of what is meant by this instrument which is now written into our own statute book. We have been used for a long time to legislation by reference, and we have complained about it for a long time. But this is legislation by reference to a non-statute, the outlandish description of

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      which is actually written into the clause and printed in the margin of the Bill.
      Mr, Douglas Jay: May I ask the right hon. Gentleman a question at that point, because I think that he was a member of the Standing Committee and I was not? The clause provides that the Commissioners are empowered to disclose to the competent authorities of another member State any information required to be so disclosed by virtue of the directive of the Council of the European Communities dated 19th December 1977, no. 77/799. Supposing that directive were to be amended—or perhaps I should say "revised". Would the altered conditions of the directive automatically constitute an obligation under this clause, or would it be a different directive in those circumstances? I think that we should be sure about that, otherwise we are handing a complete blank cheque to the Commission to do anything that it likes.
      Mr. Powell: I am sure that the Financial Secretary has taken note of that question and will answer it. But, at any rate, when we come to the next directive—the one for VAT—I have no doubt that we should, putting it in the conditional, require another clause.
      I repeat, I believe that we are entitled to look at this provision with extreme care because we are creating a most important precedent. But we are also entitled to look at it at large. After all, we are legislating for the taxation of the people who sent us here. To legislate for taxation is the reason why we are sent here and why we have our other powers. So this is at the heart of our quality as Members of Parliament and as a House of Commons.
      We are duty bound to ask ourselves whether we ought to enact tinder these vague and unlimited terms the disclosure to the tax authorities of other countries of information obtained under the authority of this House from persons under the jurisdiction of this House—information which we would not dream of allowing to be communicated to another branch of the Administration. If the answer is that those who sent us here do not expect it of us and were not warned that we should authorise that
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      disclosure of their affairs, we ought not to do it. That is a matter which is unaffected by any argument about treaties, directives, and the rest of it.
      We have a plain and simple duty to those from whom we derive our powers to tax and our powers to legislate. That duty is inconsistent with allowing this clause to remain in the Bill.
      Mr. J. W. Rooker: In principle, I am in favour of somethting like clause 3. However, I am glad that I have listened to the speeches of my hon. Friend the Member for Swindon (Mr. Stoddart) and the right hon. Member for Down, South (Mr. Powell). I depart from the speech of the right hon. Member for Down, South on a matter of principle. I am not in favour of the closed tax system, which mitigates against most of my constituents who are not fiddling their taxes.
      I want the tax system to be far more open. I do not see why tax returns should not be made available as public documents. I know that that would upset Conservatives, and I know that the paper work would be massive, but at least it would be one way of ensuring that the system was open and people paid their proper dues. It would have a self-regulating effect on tax abuse and tax avoidance. It works quite well in other countries, so why should it not work here?
      This applies equally to companies. I have not read the Committee proceedings on this matter; the House will know that I was prevented from serving on the Committee this year. If there is a means under Common Market legislation of making sure that multinational companies do not run not around the world, playing off one Government aginst another, in order to lessen their tax liabilities, and if advantage comes as a byproduct of being in the EEC, we should use it and get the full benefit from it.
      I quote one example. It concerns the multinational company of Hoover Ltd. This is a very large American-controlled multinational. In its 1976 accounts there was a note in small print at the foot of page 19 which said:
      "Hoover Ltd's taxation liabilities for a number of years have not yet been agreed due to discussions with the Inland Revenue regarding the pricing of export sales."

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      It so happens that Hoover Ltd. has overseas associated companies in Belgium, France, Germany, Holland and Italy—all EEC member States. Clearly, someone in the Inland Revenue has discovered that Hoover has been fiddling transfer prices. Of course, it is able to do this as a multinational with overseas associated companies and overseas subsidiaries.
      I do not know yet whether the company's discussions with the Inland Revenue were completed. My right hon. Friends on the Treasury Bench are prevented from knowing any details of particular companies' taxation affairs—which is ludicrous in the extreme—so there is no real way of finding out whether this matter has been resolved. If my right hon. Friend the Financial Secretary can convince me that clause 63 as amended would obviate the sort of delay that has taken place in the case of Hoover and that we could go in straight away without any of the barriers that are put up at present. it would convince me that my original idea was right—that I am basically in favour of clause 63.
      There are other matters that need illuminating. One is the question of the parts of the United Kingdom—or I consider them so—that are not member States of the EEC. I refer, of course, to the Isle of Man and the Channel Islands. The more that clauses like clause 63 are enacted, the more it will put the onus and the pressure on the Isle of Man or Jersey and Guernsey to become real tax havens—much more so than they are at present. They will also be tax havens for other EEC States. Presumably the Germans and the Dutch who have been fiddling their taxes will not like the operation of this directive as it affects them in their own States and it will seek to bolster up the economies of these offshore islands.
      My right hon. Friend and I had correspondence earlier this year about this matter, particularly in relation to the Irish banks. I do not sort out the Irish banks particularly, because there are other banks operating in this country that are controlled from outside the United Kingdom and have a branch here. It is possible for United Kingdom citizens to walk into those banks, open an account and ask for the account to be kept outside the United Kingdom, so that the interest that may accrue on those accounts is not auto
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      matically disclosed to the United Kingdom Inland Revenue.
      Of course, if those people do not fill in their tax returns accurately, which by law they are supposed to do, there is no way of finding out how much money has accrued in interest through these various bank accounts, whether they be in other Common Market countries or in the Channel Islands. This aspect of the matter has not been adequately tackled by the clause, and I hope that my right hon. Friend will at least allude to it in winding up the debate.
      9.15 p.m.
      This is not an unimportant matter. The more complicated the tax law becomes and the more we are caught in the trap of having to slip Common Market directives into Finance Bills, at the fag end, usually—last year there was another example concerning membership subscriptions to trade unions and professional bodies, which caused considerable discussion in Committee, when it was slipped in by a schedule; and the right hon. Member for Down, South says that this will happen with VAT again next year—the more difficult it will be for us to represent our constituents in their individual dealings with the Inland Revenue.
      I say that only because I have examples of the constituent who has a major tax problem because of a business problem. But like the constituents of many of my hon. Friends, the overwhelming majority of my constituents do not have overseas bank accounts and do not arrange their affairs so that the German, Dutch and other tax authorities might be inclined to make inquiries of our Inland Revenue. It is not such a matter.
      This concerns the "sharks". My hon. Friend the Member for Swindon says that they will get off. Frankly, if they are to get off, I do not know why we are here debating the clause. Unless the Treasury Bench can convince us that the purpose of this provision is to catch the sharks, clearly it is totally unfair and it is a waste of the time of the House to be making it anyway.
      But the sharks must be caught. The abuse within the tax system is something that we do not debate enough in the House. Some Opposition Members make constant imputations against the social security system, but the tax system and all

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      the allowances within it provide a social security system for companies which do not pay their rightful taxes, and the same applies in relation to well-heeled individuals. It is exactly the same argument.
      Mr. Martin Flannery: Is the hon. Member for Aberdeen, South (Mr. Sproat), who always raises social security matters, present in the Chamber now?
      Mr. Rooker: I take the point that my hon. Friend makes. The hon. Member for Aberdeen, South (Mr. Sproat) is, once again, missing during a debate on taxation, as he always is. However, anything that operates in the Common Market to catch these sharks must be good and must be welcomed. Therefore, in principle I agree with it.
      Mrs. Audrey Wise: Does my hon. Friend agree, however, that the best way of dealing with multinationals is to disclose the information to the workers concerned? Would not that be far more effective, because tax authorities might well not recognise a transfer pricing arrangement if it were before their eyes, because they lack the technical knowledge to do so, whereas information disclosed to workers would surely be by far the most effective method.
      Mr. Rooker: My hon. Friend is perfctly right. We should be debating and enacting the proposals in the 1974 Labour Party manifestos to deal with multinational corporations. Quite clearly, those were on the agenda. They are still on the agenda. Unfortunately and tragically, they are not in a Bill that is before the House.
      But my hon. Friend is right. The workers can recognise the little tricks and fiddles that companies get up to, because the workers are dealing with the paper work and they know what is happening within their companies. This is particularly so in the organised white-collar sector in private industry. Some 10 or 15 years ago it was not well organised in terms of trade unions, but these days the trade unions, such as APEX and ASTMS in particular—which has a first-class record in these matters—are educating their members on what to look
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      for, so that we can spot what companies are up to.
      Far be it for me to say that we can rely on the Commissioners of Inland Revenue. Every time anyone refers me to the Commissioners of Inland Revenue and says that one can trust them and rely upon them, I am reminded of the fact that Mr. John Poulson was a commissioner of the Inland Revenue. For me, that is the end of the argument. That one factor always remains uppermost in my mind. Therefore, I do not have the same confidence in that sector of the establishment as apparently other hon. Members have.
      Let me deal with the point about competent authorities. I am well aware that the matter is well defined in the directive, but I do not want us to get into a position such as that enjoyed in Richard Nixon's days in the United States. We all know that anybody in that country who was suspected of being a dissident or who might cause a spot of bother was subject to investigation by the Inland Revenue services. I do not want that to happen here. I am in favour of opening up the tax system for everybody, not for the secret few who pull the levers of power and wish to put pressure on those who may be knocking the system.
      I believe that there is a danger in the way this provision is worded. There is something to stop the authorities in this country examining the files of, for example, my hon. Friend the Member for Keighley (Mr. Cryer). I refer to my hon. Friend, who, as we all know, is Under-Secretary of State for Industry, because I see that he is sitting on the Government Back Benches. This argument could also apply to my hon. Friend the Member for Sowerby (Mr. Madden), who is a genuine Back Bencher. However, there is nothing to stop the authorities in this country asking competent authorities abroad to obtain details relating to somebody in this country.
      There is nothing to stop MI5, MI6 or DI6—I do not know which it is, but they are the ones we are not allowed to debate or ask questions about—from asking a competent tax authority in Germany to make inquiries about somebody in this country. That can happen by using this sub-contracting clause.
      Mr. Christopher Price: In a curious sense, the clause is a mirror image of the freedom of information legislation mentioned by the Prime Minister at Question Time today, which, he said, he had not the slightest intention of enacting.
      Mr. Rooker: I heard my right hon. Friend the Prime Minister make that remark. When I heard that statement on the radio, I became even more convinced that Prime Minister's Question Time should not be recorded live.
      My hon. Friend makes a valid point. That danger exists. Treasury Ministers do not know what the secret service gets up to. They have not been told the name of the company which has perpetrated the £200 million rip-off as a result of an artificial tax scheme. The fact that the Inland Revenue will not tell them the name of the company is an outrage.
      With that example before us, they cannot convince me that they are 100 per cent. sure about what the security services get up to when using this type of provision. I know that this is a danger, and I am arguing against my own case. I am in the classic position that the more I speak, the more difficult it is for me to decide how to vote. I am seeking to make the point that I have an open mind on this subject, unlike the other 500 hon. Members who are not present. There are those of us who come to listen to these debates so that we may have a valid idea of what we are doing on this important provision. This matter is being brought up on a Thursday, it is a matter of supreme substance and it might well have gone through "on the nod". However, I shall resume my seat before I get into more trouble. I shall listen to the rest of the debate and make my decision later.
      Mr. Rifkind: The clause in its present form shows a glaring gap in the procedures applied to EEC legislation. It seeks to implement, for all practical purposes, a European directive. An hon. Member who wishes to know what he is approving has no way of knowing, from an examination of this legislation, what is involved in the directive. I make no comments on the merits of the directive, but surely the least that we should require is that when a clause in a United King
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      dom Bill seeks to give legal effect to an EEC directive, that directive should appear somewhere in the Bill, at least as a schedule, so that hon. Members, without too much difficulty, can find out what they are being asked to implement.
      When I first took an interest in this matter it took me some months to get a copy of the directive. That is not a satisfactory way of going about our proceedings. It has nothing to do with the merits of the issue, but it means that it is difficult for hon. Members who wish to take an interest in these matters, and those who may only now wish to understand what is involved, to appreciate the problems.
      Mr. Nick Budgen: Surely it is much more serious than that. What about the position of the taxpayer? An hon. Member has an opportunity of getting the document, but a taxpayer has no such opportunity.
      Mr. Rifkind: I do not entirely agree with my hon. Friend. A taxpayer can get the document. The point is that the House is being asked to give legal effect to a directive, but it is not easy to find what we have to give legal effect to. That situation could be changed without great difficulty, and I hope that the Government will consider the desirability of changing it in the near future.
      I cannot agree with the interpretation of the right hon. Member for Down, South (Mr. Powell) of the effect of the clause. The Opposition amendments are those that I moved in Committee. I am aware of the necessity and desirability of ensuring the the rights that will be available under the directive should be restricted to the legitimate purposes for which the directive seeks the assistance of member States.
      The right hon. Memeber painted a rather terrifying picture of confidential tax documents flying across the face of Europe. Tax documents will be made available to Paris, Bonn, Rome and possibly to Ankara and Madrid, but they will also be coming in the reverse direction—to London. The question is not simply that British tax documents may be flying around the Continent, but whether, in a Community that will continue to exist—whether the right hon. Member for Down, South and others like

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      it or not—it is reasonable or unreasonable that there should be facilities for exchanging tax information in order to pursue the common objective of preventing tax evasion. I do not believe that that is an unreasonable objective, and in so far as the directive seeks that objective it is not objectionable.
      Reference has been made to double taxation agreements. By chance, the United Kingdom already has such agreements with every other member of the EEC and, to a large extent, those agreements already provide for the exchange of such information. In certain technical ways, there are differences. The process is not spontaneous, as is the method provided for, in some respects, by the directive, but the basic principle that tax documents will go from the United Kingdom to other States in the EEC and to other parts of the world is not an extraordinary new principle.
      Mr. Jay: If the hon. Gentleman were right in thinking that all that is to be done under the clause can be done already through double taxation arrangements, what is the necessity for the clause?
      Mr. Rifkind: Although the United Kingdom has double taxation agreements with other member States of the EEC, that does not necessarily apply to all the members of the Community. The directive is an EEC document and although, to a substantial extent, it is unnecessary in the United Kingdom, it is not unnecessary if we are trying to get a common agreement among the States of the EEC.
      I did not suggest that there was no difference between the double taxation agreements and the provisions of the directive. I said that, to a large extent, the powers provided in the directive already exist for the United Kingdom in the double taxation agreements. This was confirmed by the Financial Secretary, who told me recently:
      "The information which Clause 62 would enable the Inland Revenue to disclose to the competent authorities of the other member countries of the EEC is very largely information which they are able already to disclose to the competent authorities of the countries with which the United Kingdom has agreements for the relief of double taxation … The United Kingdom has such agreements with all the other EEC member countries."—[Official Report, 3rd May 1978; Vol. 949, c. 194.]
      To a large extent—I put it no higher than that—we already provide that in
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      formation, and no sacred principle is being breached. We are not providing for the first time that the tax documents of British citizens will be leaving our shores for tax purposes; that already happens, not just with the EEC, but with the tens of countries around the globe with whom we have double taxation agreements. It is wrong to suggest that this is a fundamental breach of the rights of the citizens which has never before been contemplated.
      Not only has it been contemplated before; it has been done, without a squeak of protest from anyone. Indeed, there should not have been any protests, because it is a reasonable, civilised and sensible approach to the mutual tax arrangements of the countries concerned.
      9.30 p.m.
      I turn to the specific point in respect of which I share the criticisms of many hon. Members who have expressed their views both in Standing Committee and on the Floor of the House. It is desirable that there should be an EEC directive to enable the transfer of information between member States and the Community. However, every precaution should be taken to ensure that the information that is provided to other member States should, first, have the same degree of confidentiality that that information would have in the United Kingdom, and, secondly, be capable of being used only for tax purposes or for purposes of litigation related to fiscal matters.
      It was on those two aspects that I tabled amendments in Standing Committee. At that stage the Government were hostile to the proposition. They said that it was not necessary. They said that it was pointless. They said that the confidentiality presently provided was satisfactory, and that there was no problem and no cause for concern.
      The House will be able to imagine my surprise and amusement when the amendments on Report were tabled and I found on the Order Paper an amendment that had exactly the same effect as my amendments—in other words, to ensure that any information provided would have the same degree of confidentiality.
      I am not certain why the Financial Secretary was unable to accept the drafting of the original amendment that we debated in Committee, but I am delighted

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      that the Government are to accept the effect of that amendment. That marks significant progress. That is all the more reason why we should be disappointed and the House concerned that, as yet, the Government have not accepted the second branch of the argument. In some respects it is an even more important point of principle. It is one that should concern hon. Members on both sides of the Chamber irrespective of their attitude towards British membership of the Community. I am a strong supporter of British membership and I do not want to reduce or modify it in any way.
      So far the Government have not announced any acceptance of the second objective, which is to ensure that any information provided under the directive should not be capable of being used for purposes other than taxation or litigation related to taxation. On first glance at the directive it seems that our concern on this issue is unnecessary and that we are creating false alarms. For example, one section of article 7(1) declares that information provided
      "shall in no circumstances be used other than for taxation purposes or in connection with judicial proceedings or administrative proceedings involving sanctions undertaken with view to, or in relation to, the making or reviewing of tax assessment."
      That is categoric and specific. If that were all that was to be found in the directive, there would be no need for amendment no. 9. However, the sad fact is that if we turn to the next page, to article 7(3), we find that it is stated:
      "Notwithstanding paragraph 1"—
      that is the paragraph that I have quoted—
      "the competent authorities of the member states providing the information may permit it to be used for other purposes in the requesting state, if, under the legislation of the informing state, the information could, in similar circumstances, be used in the informing state for similar purposes."
      That is rather complicated, but the article is providing that if, for example, in the United Kingdom the Commissioners of the Inland Revenue are permitted to allow information provided for tax purposes to be used other than for tax purposes they may give permission to the other European state also to use information provided for other tax purposes.
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      In that respect the article goes way beyond the double taxation agreements that have been arranged with any other States as far as I am aware. In answer to a Question that I put to the Financial Secretary on the scope and extent of double taxation agreements with EEC States he replied on 17th May:
      "The agreements vary to some extent but at the widest"—
      that is the crucial phrase—
      "they limit the exchange of information to that necessary for carrying out the law relating to the taxes which are the subject of the relevant agreement."—[Official Report, 17th May 1978; Vol. 950, c. 230.]
      That is satisfactory and desirable, but that is not the position with the EEC directive. The question becomes: can the United Kingdom Commissioners of Inland Revenue at present allow information that they receive to be used in the United Kingdom for other tax or related tax matters?
      Mr. Bryan Gould: Is there not a further point that makes the argument for the amendment even stronger—that it is at least arguable that the clause does not incorporate the directive? It simply defines the information which is exempt from the requirement of confidentiality by reference to the directive. If that is what the clause does, it follows that the provisions, conditions and safeguards provided for in the directive will not be part of the domestic law and therefore will have to be dealt with separately.
      Mr. Rifkind: To a large extent I agree with the hon. Gentleman. He is correct in saying that the clause refers only to issues of confidentiality. It makes no reference to the purposes for which the information may be used. The information that is provided, given the amendment to be accepted by the Government, must have the same degree of confidentiality. But nothing that has yet been accepted by the Government or that is in the clause in any way limits the purposes for which confidential information may be used.
      The point that I was about to make when the hon. Member for Southampton, Test (Mr. Gould) intervened was that at present the United Kingdom Commissioners of Inland Revenue may in

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      certain limited circumstances make information available other than for tax matters. I understand that they can make information available both to the Customs and Excise and to the Department of Health and Social Security.
      These are very restricted and strictly controlled matters. However, the principle exists. Therefore, it is possible that the United Kingdom Commissioners of Inland Revenue might have the power, though they might choose not to use it, to permit tax information sent to a member state to be used other than for tax matters. Would it be obnoxious if they used that power? Whether or not it is obnoxious in terms of the general principle involved, in my view it goes beyond this directive.
      The right hon. Member for Down, South is not very impressed with or concerned about the contents of the preamble to the directive, but I think that it is legitimate to look at the preamble to ensure that the powers granted by the House do not go beyond the purpose of the directive.
      The preamble states, as one of the purposes of the directive:
      "whereas it is therefore necessary that the Member States receiving such information should not use it, without the authorisation of the Member State supplying it, other than for the purposes of taxation or to facilitate legal proceedings for failure to observe the tax laws of the receiving State".
      In other words, the purpose of the directive is limited to the objective of preventing tax evasion and of providing information to that end. Therefore, even though the Government believe that the Commissioners of Inland Revenue would not wish to use the power for that purpose, it is right and proper for the House to introduce the safeguard proposed to amendment no. 9 to ensure that there is no doubt on the matter.
      We know that the Government believe amendment no. 8 to be unnecessary, but they have agreed that it should be included. On the same basis, for the avoidance of doubt, there is an overwhelming argument for including amendment no. 9. The Government concede that no harm would be done. At least it is an unnecessary amendment; at most it will be an important provision for the protection of the citizen.
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      Certain hon. Members on both sides of the House are using this debate to restate their basic hostility towards or, indeed, support for our membership and development of the Community in one or other direction. It is legitimate for them to do that. But, even for those of us who are strong supporters of British membership of the Community and who do not believe that the debate should be about the fact of our continued membership, that is no reason why we should not ensure that, when information that is relevant to the personal affairs of our fellow citizens is legitimately and rightly provided to other member States, we impose such safeguards as are consistent with our obligations to honour the commitments that have been entered into with the other member States—safeguards that do not infringe, inhibit or prevent any of the legitimate purposes for which the directive has been established, and which will at least ensure that there is no abuse of the directive and no danger of improper use of information which is private to the citizen and which is provided under the directive.
      I hope that whatever hon. Members think about the Community they will agree that this amendment is a useful, desirable and helpful addition to the Bill.
      Mr. John Cronin: The hon. Member for Edinburgh, Pent-lands (Mr. Rifkind) made an interesting and well-informed speech. My only criticism is that it lacked the desirable quality of brevity. Many hon. Members are anxious to return to their constituencies as soon as possible. I propose to co-operate with that wish by being as brief as possible—briefer than the subject deserves.
      My hon. Friend the Member for Swindon (Mr. Stoddart) and others have done a useful service by drawing this matter to our attention. It is most undesirable that there should be any move to give to the EEC Commission or Council powers which they do not already possess. It is particularly important that there should be no move towards any form of federalism.
      The EEC is unpopular, and rightly so. The EEC budget is a complete shambles, the common agricultural policy is a laughing stock throughout Europe and

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      it is necessary that there should be stringent reforms in the near future. Any attempt to give extra powers to the EEC without careful scrutiny should not be tolerated. I hope that my right hon. Friend the Financial Secretary will give a detailed explanation of the effect of clause 63. I hope he will assure us that it is not an attempt to move towards a form of joint taxation system in the EEC.
      What criterion should we use when examining the clause? The obvious criterion is that of the national interest alone. It would be most undesirable if this clause or similar legislation were used for the purpose of fighting the old battles, which are long finished, about whether Britain should be in the EEC. The right hon. Member for Down, South (Mr. Powell) suggested that the old battles were still in his mind.
      There is no escape from the fact that tax avoidance and evasion is occurring on a large scale through the vehicle of European countries or the Channel Islands and the Irish Republic. This must be stopped. We owe it to our constituents to put an end to tax avoidance and evasion as far as is possible. Anything which is gained by tax avoiders and evaders comes out of the pockets of our constituents and of all of us. We must examine the problem carefully.
      Mr. Budgen: Does the hon. Member agree that if the House decides to do away with the whole principle of confidentiality, it should be done directly and openly after proper and full debate and not by a side wind?
      Mr. Cronin: We are considering the matter openly. That is why there are so many hon. Members in the Chamber.
      Not only are multinational companies evading and avoiding tax on a large scale, but companies that trade only in the United Kingdom are avoiding tax. Private individuals are doing the same thing on a large scale, either directly in European countries or through intermediate countries.
      The main objects of the directive are desirable. Article 1 deals with the exchange of information which will help in the collection of taxes. It is in the interests of us all that anything that makes the collection of taxes more efficient should be encouraged.
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      The other highly important section of the directive is that which provides that the competent authorities, without request, should forward information to other countries where it appears that the other countries are losing tax that they should receive. This is the most important part of the directive for stopping the evasion and avoidance of tax among the various European countries, and it should be welcomed.
      The directive is a desirable move towards the more efficient collection of taxes. It will benefit this country and is. therefore, in the national interest. We should have from the Financial Secretary, however, a careful and detailed explanation of how it will work.
      9.45 p.m.
      Mr. Dykes: Partly because of the quality of the speech by my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) and partly because of the way he outlined his misgivings on the potential use of exchanged information, I do not need to go into detail on this issue. It is a matter that we should deal with carefully. There is a clash of sentiments and views on each side of the House on the clause which transcends the by now historical and time-honoured views that are held about the rights or wrongs of membership of the EEC.
      Although there appears to be a general wish to retain confidentiality, there is something to be said for the opening remarks by the hon. Member for Birmingham, Perry Barr (Mr. Rooker)—I hope do not embarrass or discomfort him by saying so—that, if we switched completely to an open tax system in which tax figures were published for individuals, companies and all tax-paying entities, this would create a different position which in due course might command public support.
      It is reasonable, however, that we should garner the impression that the 'overwhelming majority of the public, even if they are worried about tax avoidance and evasion by companies or individuals, would none the less continue to support the principle of confidentiality. Therefore, hon. Members should be satisfied to the extent that clause 63 can adequately cover that principle and provide within reasonable, known and agreed procedures among the member States a legitimate exchange of information

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      when the fiscal authorities of member States need it to ensure that proper taxes are paid at proper rates in the proper legal manner.
      It is not necessary, therefore, for us to go back to the fundamental debates about whether we should be a member of the Community—the kind of thing that the right hon. Member for Down, South (Mr. Powell) with monotonous repetition, but with great skill and adroit speeches, does repeatedly. However, I believe that he does the House and the country a disservice in raising unnecessary fears and in espousing excessively alarmist arguments about the implications of our membership in ail sorts of spheres.
      We knew, as the country knew—the referendum result endorsed it—that by joining the Community many legislative proposals would come along of which at that stage we know nothing. But we knew that they would be within the treaty framework, safeguarded by the interrelationship of the institutions and with the final legal protection of the European Court as the ultimate court of interpretation—
      Mr. Gow: But not this House.
      Mr. Dykes: This House is able to exercise its will in giving Ministers proper guidance and advice in advance of Community decisions. That would happen if only the Government organised the scrutiny procedure properly on all aspects of Community legislation. It is a pity that that is not tackled, as the House would then be doing its job more efficiently and to the satisfaction of the public. We know that these procedures are abortive because the Executive lacks the will to put them fully into practice in a way which would please hon. Members, irrespective of our views on the Common Market.
      Like my hon. Friend the Member for Pentlands, and not having been a member of the Committee, I ask the Financial Secretary, seriously to consider adopting amendments nos. 8 and 9. Together with the original clause and the coincidence of the Government's Amendment no. 98 on reciprocal confidentiality, they would provide the essential safeguards that we need to make the clause effective for the public and to provide the proper reciprocal tax information-sharing
      1874
      that we need throughout the Community and not only bilaterally between member States which happen to have mutual tax treaties. I reiterate that plea and hope that the Financial Secretary will satisfy the House on a very strong demand which comes from the Government side as well as from this side.
      I would apologise to the hon. Member for Swindon (Mr. Stoddart) if he were here for the fact that I was not present for his initial remarks, but I think that I heard most of his speech. I heard him say that the United Kingdom would be sent to the European Court, that a dreadful fate would befall us and that you. Mr. Speaker, might be threatened with the court passing sentence on you. I could go into more lurid detail, but I deliberately refrain.
      However, the hon. Member also wilfully misled the House and the public—I do not like to use that phrase, but it is what he did—because he did not finish up with the obvious accompaniment that taking a member State to the European Court because the Commission or, in certain limited circumstances, the Council of Ministers would feel that it was in breach of an agreed piece of Community legislation, passed and ratified by all the member States, would mean that the European Court would consider all the factors, including the relationship of that member State's own domestic legislation to the agreed Community instrument. There is no way in which the hon. Member could anticipate the court's judgment in those circumstances.
      The public should be given the proper information on what the European Court means—namely, that it provides protection for the public throughout the member States, so that Community law can be legally and properly upheld. It would therefore be entirely wrong for any hon. Member to assume that the European Court would automatically come down, almost without considering the case, on the side of the Commission and against the member State. It could work the other way round as well.
      In that connection, one would have to bear in mind that the original legislation had been agreed by the supreme legislative body in the Community, the Council of Ministers, empowered by the Governments of the member States. That, too,

      1875
      provides the initial step in the legislative procedure of the Community which in tax and other legislation eminently satisfies the British public. It is a great shame that it does not satisfy the right hon. Members for Battersea, North (Mr. Jay) and Down, South.
      Mr. Gow: The amendments and the clause raise the whole issue of the relationship of this House and the Government to the European Economic Community. In Committee the following question was put to the Financial Secretary:
      "Will the right hon. Gentleman explain one point which is crucial to the vote that we shall be taking shortly? In the view of the Government, what would be the consequence for the United Kingdom Government and the United Kingdom Parliament if this Committee, and, later, the House, were to remove Clause 62 from the Bill?"
      I should explain that the clause was then clause 62, although it is now clause 63. The Financial Secretary replied:
      "We should be in breach of our obligations and would be taken to the European Court in due course."—[Official Report, Standing Committee A, 21st June 1978; c. 1653.]
      I wish to challenge that proposition. I wish to differentiate between legislation which comes from Brussels, which in the Government's view is automatically the law of this country, and directives issued from Brussels, which require further legislation by this House. Clearly, in the Government's view the directive that we are seeking to enact in our law is not one that has effect without further legislation by this House. If the Government disagreed with that proposition the clause would be unnecessary.
      Article 12 of the directive provides:
      "Member States shall bring into force the necessary laws, regulations and administrative provisions in order to comply with this Directive not later than 1 January 1979 and shall forthwith communicate them to the Commission."
      That is the final article, although one may read on to the terrifying last words:
      "This Directive is addressed to the Member States. Done at Brussels, 19 December 1977."
      Nevertheless, the Government, in interpreting the directive as being obligatory on them, have involved themselves in a paradox, because the clause is the subject of an amendment by the Government themselves. By tabling an amendment they are acknowledging their own power
      1876
      to legislate the form in which effect is given to the directive.
      But there is another matter to which I hope the Financial Secretary will address his mind. In my submission, the penultimate paragraph of the preamble means that it is not obligatory on the Government to implement the directive in our Finance Bill. It says:
      "Whereas a Member State which is called upon to carry out enquiries or to provide information shall have the right to refuse to do so where its laws or administrative practices prevent its tax administration from carrying out these enquiries or from collecting or using this information for its own purposes, or where the provision of such information would be contrary to public policy or would lead to the disclosure of a commercial, industrial or professional secret or of a commercial process, or"—
      these are the words that I want to emphasise—
      "where the Member State for which the information is intended is unable for practical or legal reasons to provide similar information".
      the directive is not obligatory. I do not believe that it is obligatory on the Government to enforce the directive. If the clause were removed from the Bill, in the Government's view we should be taken before the European Court. If that should happen, so be it. Nothing more underlines the surrender of the power of this House over taxation, over fiscal legislation, than the Government's attitude and the inclusion of the clause.
      That is why I support the amendment in the name of the right hon. Member for Battersea, North (Mr. Jay). If we remove the clause, no violence will be done to our own fiscal legislation, and no violence will be done to the fiscal procedures of the Community. What we shall achieve if we remove it is the assertion of the supremacy of this House over fiscal and taxation matters. That is why I shall vote for the right hon. Gentleman's amendment.
      10.0 p.m.
      Mr. Peter Brooke: In the context of what I sometimes have to listen to in this House, there is an element of irony in the Member of Parliament representing the City rising to defend the Government over a clause relating to tax integrity. My hon. Friend the Member for Harrow, East (Mr. Dykes) referred to the paradox and the eddies that flow across the House

      1877
      tonight in discussing the clause. Labour Members below the Gangway are frequent in their references to the multinationals and their iniquities. The hon. Member for Birmingham, Perry Barr (Mr. Rooker) referred to them this evening.
      I recall, before coming to this House, listening six or seven years ago to the American ambassador to OECD addressing an audience in Brussels in which he explained that OECD had looked, through a committee of the member States, at the problem of tax evasion by multinational companies within the OECD countries. He said that those member States had come to the conclusion, through that committee, that there was no need for multinational legislation and that national legislation was perfectly sufficient.
      For those who are informed about these matters, there is keen awareness of the fact that teams of executives from the Inland Revenue go out to work with the IRS in Washington on matters relating to multinational companies around the world. It is an irony that the clause under discussion should be attacked by some Labour Members in the terms in which it has been. It is ironic for me to be defending the Government on a matter of tax integrity. I reiterate the words used by the Chief Secretary last night when he quoted the fanciful figure of £200 million. There are times when I think that all tax evasion and all tax avoidance are thought to take place in my constituency. Ultimately someone else pays. I am delighted that, through a clause like this, the system is being tightened up.
      Mr. Robert Sheldon: Before replying to the detailed comments and the main arguments of the debate, there were two questions put to me with which I can deal at once. The right hon. Member for Down, South (Mr. Powell) asked about double taxation agreements and how they provided the means of disclosing taxation information to other countries. The basic legislative arrangement that allows this is section 518 of the Taxes Act 1970, which allows the Revenue to disclose information under double taxation agreements.
      My right hon. Friend the Member for Battersea, North (Mr. Jay) asked about the directives. The directives could be amended only by a new directive, and
      1878
      legislation would then be needed to implement the new directive. The tears that my right hon. Friend has in this respect are not justified.
      My hon. Friend the Member for Swindon (Mr. Stoddart), in a well-researched and at times amusing speech, dealt with the problems that he saw arising from the merging of our tax system into a Community system. This was one of his major worries as I understood it. We are at the final stages of proceedings on a Finance Bill. The problems of achieving a comprehensive approach, even in our own legislation, and the problems that we have in dealing with these matters are nothing by comparison with the task of harmonisation. Even if the political will was immense, the task would be enormous. I do not believe that the worries of my hon. Friend the Member for Swindon or of my hon. Friend the Member for Loughborough (Mr. Cronin) concerned problems which we shall have to face for many years to come, if ever.
      The hon. Member for Edinburgh, Pent-lands (Mr. Rifkind) was concerned about what he called legislation by reference. He thought of this as something fairly new. There are a number of precedents for this. There is one which he may recall and which arose as recently as last year. Section 11 of the Finance Act 1977 was, almost identically, a piece of legislation by reference. There is nothing particularly new about this, although I understand the hon. Gentleman's concern about certain other aspects of the legislation.
      My hon. Friend the Member for Swindon argued that this is only the beginning of a number of other measures which we shall need to be considering, and which follow on from the clause. He cited value added tax and the directive which has been issued concerning that tax. The United Kingdom has reserved its position on this, and there will be further opportunity to examine the question at a later stage if it proceeds any further.
      The right hon. Member for Down, South made his most important comment, I thought, when he expressed the fear that there would be an exchange of information without prior request, and that as a result of this the taxpayer would not know what was happening to information concerning his tax affairs. The right

      1879
      hon. Gentleman saw the possibility of tax files being spread throughout Europe. This point was partly answered by the hon. Member for Pentlands, who pointed out that there is a two-way trade in this—
      Mr. Powell: That is confirmation.
      Mr. Sheldon: —and that there are advantages coming to us. The right hon. Gentleman referred to what he saw as the position of the United Kingdom taxpayer who might, as a result of this legislation, have to pay more tax in France. The right hon. Gentleman put this forward as something that he dreaded on behalf of his constituents. I must say to those Conservative Members who keep complaining about the high levels of taxation in this country and who compare them with the more modest levels of taxation as they see them in France that it would appear that there is probably more tax to be gained by this country, and, therefore, more value to be obtained by us, if what they say is true, from the implementation of this piece of legislation.
      Mr. John Lee: Will my right hon. Friend go a little further? Is it, then, to be the Government's policy, as a kind of palliative reciprocal gesture, to indent for information about taxpayers whom they suspect to be defaulting abroad, as a sort of sweetener? The right hon. Member for Down, South (Mr. Powell), I think, muttered that it was confirmatory of his objection. It seems to me that that is the case.
      Mr. Sheldon: I shall be dealing with these matters later on in my remarks.
      Perhaps I may now deal with what the hon. Member for Pentlands said. He was particularly concerned about amendment no. 9. He recognised that amendment no. 8 is largely, although not entirely, met by Government amendment no. 98. Amendment no. 98 makes it clear that the Inland Revenue is not authorised to disclose the information unless it is satisfied that the tax authorities of the other member States are bound by or have undertaken to observe rules of confidentiality with respect to the information which are not less strict than those applying to it in the United Kingdom. Frankly, I believe, as I said in Committee, that this is not necessary, that this is included
      1880
      within the directive and that the natural attitude of those preparing legislation is that they would usually prefer not to have two pieces of legislation saying much the same thing, because essentially when other words are used they are capable of misinterpretation.
      My understanding is quite clear that in amendment no. 98 we are doing no more than to repeat the provisions that are in the directive itself. But I believe it is right that we should clarify those points on which there was considerable concern, and amendment no. 98, as I have indicated, was put down for this reason.
      Mr. Gould: Is my right hon. Friend arguing that clause 63 incorporates the whole directive? If that is the case, will he explain how clause 63 achieves that?
      Mr. Sheldon: Clause 63 implements the directive in the same way as section 11 of last year's Finance Act implemented the recovery of Customs and Excise duties under another directive. We have carried out the same sort of legislative operation.
      The hon. Member for Pentlands, in speaking to amendment no. 9, felt that the directive was not sufficiently clear on this matter. He wanted the directive in certain cases to allow the receiving tax authority to go outside these limits if the providing tax authority consented. I see that the hon. Gentleman nods approval, because that is in the directive and it is in his amendment. I am happy to accept that particular amendment. [HON. MEMBERS: "Ah."] As I said before, in the same way as amendment no. 98 meets the same points as were put in the directive, so I believe that amendment no. 9 covers the same points as are also in the directive. If it is the wish of the House that this should be made crystal clear, I am happy to do so. I do not believe that it is necessary. I see certain problems in duplicating legislation, but if that is the wish of the House I am happy to accept that particular view.
      The most important points which I should like to deal with were those put by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker). He said that multinationals were very powerful, in many cases more powerful than some of the nation States. They are able to set criteria which, in certain cases, certain

      1881
      countries have to accept or even compete against. The particular problem which my hon. Friend outlined is a problem for those who want to control the extent of tax avoidance and tax evasion, because this is becoming international and companies are already international, both in their operations and in their facilities, in regard to being able to make use of these particular channels.
      It is wholly advantageous, wherever we can, to set up such a procedure. It need not be confined to the Community. If a proposal comes before us so that we can have a wider group of nations acting together to implement the kind of regulation about which we are now talking, so that there can be a wider exchange of information dealing with those taxes which are being evaded and avoided, I believe that that is wholly desirable and acceptable. In our debates yesterday, when we were talking about tax avoidance and not tax evasion, we accepted retrospection—something which this House does with a great deal of distaste. We accepted that after a very long debate. Here we have tax evasion, and we are trying to stop it by exchanging information. It is surprising that certain of my hon. Friends and certain hon. Members cannot find it within their power to extend this provision so that we can obtain the information which we believe will be very valuable. Because of that, I believe that we should accept the clause and amendment no. 98.
      Mr. Jay: Before my right hon. Friend sits down, can he answer one question? Is the effect of the clause confined to tax payments by multinational companies, or does it also affect individual taxpayers?
      Mr. Peter Rees: I almost hesitate to intervene, since the debate has now narrowed into a rather partisan dispute between the Financial Secretary and his right hon. and hon. Friends. It has been an interesting, unusual and wide debate. It has been interesting for Conservative Members to observe the dislike of Labour Members of the EEC and our membership of it, tempered by their detestation of tax avoidance and tax evasion. It will be interesting to see which sentiments come uppermost if the House divides on the clause. The ambivalence was most notable in the speech of the hon. Member for Birmingham, Perry Barr (Mr.
      1882
      Rooker), whose absence from our debates in Standing Committee we regretted greatly, because he would have made a very special and original contribution.
      On this occasion we are considering how far we are required by our obligations under the directive to enact this clause and how far the provisions of the directive oblige us to breach a long established principle of confidentiality between the Inland Revenue and the taxpayer.
      10.15 p.m.
      I do not think that it was necessary to embark upon a wide debate on our obligations or the consequences of our membership of the EEC. At certain points, Mr. Speaker, there were even speculations about your own future. I am happy to see you here and in good health, and I am sure that we shall rally round you if there should be any question of your being dragged to Tower Hill, or to some equivalent place. I do not think that that arises on the debate on this clause.
      Although I am a convinced adherent of our membership of the EEC, I find that the pretext for the enactment of the directive a little specious. I am not persuaded that the practices of tax evasion and tax avoidance extending across the frontiers of member States will be liable to bring about distortion from capital movements and conditions of competition.
      I wonder whether the Financial Secretary stood out with sufficient robustness against the other members of the Council of Ministers in defending British interests on this matter. But, again, perhaps this is not the moment to examine too closely the role played by the right hon. Gentleman. He may be under certain pressure from his right hon. and hon. Friends in that regard, and I have no wish to make his position more difficult than it is at present.
      However we stand in our regard for the EEC, we are entitled to consider whether the directive is best implemented by this clause. We are entitled to consider whether the clause does not go a little too wide and whether its scope should not be narrowed.
      The House will recognise that it is a very long established principle of our fiscal code that what is disclosed by a taxpayer to the Inland Revenue is a matter of complete confidence. With one

      1883
      or two very slight exceptions, which my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) ventilated and in so doing did the House a great service, there is absolute confidentiality. This is embodied in the oath that members of the Board of Inland Revenue and inspectors of taxes take when they assume office, as the right hon. Member for Down, South (Mr. Powell) pointed out.
      It was because the Opposition felt that the clause went a little wide and that in a certain regard information which had been given in confidence to the Inland Revenue might be disclosed for purposes which went beyond mere matters of tax in the countries concerned that in Committee we tabled and debated with some vigour the two amendments which have been reproduced on today's Notice Paper. The Financial Secretary resisted those two amendments bitterly with a wealth of specious argument. Fortunately wiser counsels have prevailed and, having put down amendment no. 98, which reproduces in every particular the provisions of amendment no. 8, we are happy that the right hon. Gentleman has recognised the force of our arguments.
      But that did not entirely meet our objections. We feel that if any information is to be passed over, it must be only for the specific purposes of collecting or determining tax in the countries concerned. There is a respectable precedent for that in the double tax conventions which have been negotiated on our behalf by Administrations of various complexions. This point has been amply made in the amendment moved by my hon. Friend the Member for Pentlands and at least this has been accepted, if somewhat grudgingly, by the Financial Secretary. Therefore, perhaps the Financial Secretary has gone far enough to meet the specific fiscal points.
      The hon. Member for Swindon (Mr. Stoddart) touched on the wider, more fundamental objection to the clause. He sees it as an advance in surrendering our sovereignty. This was echoed by my hon. Friend the Member for Eastbourne (Mr. Gow), whose views are well known.
      I do not believe that in enacting this clause we shall surrender one whit of fiscal sovereignty. It is just a matter of passing over information. By our amendments, we have narrowed the clause and we are happy that the information passed
      1884
      will be strictly confined and obligations will be imposed on the recipient country.
      I believe that we are honour bound to discharge the obligations assumed for us—perhaps a little carelessly and heedlessly—by the Financial Secretary. But in his muddling way he is trying to do his best for the country. Therefore, I leave it to his right hon. and hon. Friends to determine whether he has failed in his duty.
      National honour and, indeed, perhaps national interest say that we should attempt to discharge the obligations that the Financial Secretary has assumed for us by making us adherents to this directive. Having achieved what we set out to do in amendments nos. 9 and 98, we on this side of the House shall give him modest encouragement in his battles ahead with his hon. Friends.
      Mr. Jay: I rise briefly because the Financial Secretary did not answer my question. I wanted to know whether the clause would in effect apply only to the multinationals, about which he talked a lot, or to ordinary individual taxpayers as well. He did not reply and therefore I assume that it applies to the generality of taxpayers and not just to the multinationals, which are a red herring in this debate.
      I welcome the amendments moved by both the Government and the Opposition, but I hope that hon. Members will realise that these amendments do not take us very far. They require the Inland Revenue to obtain undertakings from the tax authorities of other countries. This House can put a legal obligation on the Inland Revenue but it cannot put a legal obligation on the tax authorities of other countries to carry out the undertakings that they have given. Therefore, it does not impress me very much.
      There is one outstanding point that no one has mentioned yet in the debate. It is still the legal position that the Inland Revenue cannot disclose the particulars of an individual's tax affairs, even to the Chancellor of the Exchequer or Treasury Ministers. Unless my right hon. Friend denies this, I shall assume that it is true. It has always been the case since income tax was first introduced and, as far as I know, it is still the case. Now it is proposed that the Inland Revenue should

      1885
      hand over details of individual taxpayers' affairs to foreign tax authorities when it cannot hand them over to the Chancellor of the Exchequer in this country. I do not think that any case has been made
      out for that proposition and therefore I hope that the House will reject it.
      Question put, That the amendment be made:
      The House divided: Ayes 81, Noes 209.

      Mahon, Simon

      Rees, Rt Hon Merlyn (Leeds S)

      Thomas, Jeffrey (Abertillery)

      Mallalieu, J. P. W.

      Renton, Rt Hon Sir D. (Hunts)

      Thomas, Mike (Newcastle E)

      Marshall, Dr Edmund (Goole)

      Rifkind, Malcolm

      Tinn, James

      Marshall, Jim (Leicester S)

      Roberts, Albert (Normanton)

      Tomlinson, John

      Meyer, Sir Anthony

      Robertson, George (Hamilton)

      Tomney, Frank

      Millan, Rt Hon Bruce

      Roderick, Caerwyn

      Urwin, T. W.

      Mills, Peter

      Rodgers, Rt Hon William (Stockton)

      Varley, Rt Hon Eric G.

      Miscampbell, Norman

      Rooker, J. W.

      Walker, Harold (Doncaster)

      Mitchell, R. C. (Soton, Itchen)

      Roper, John

      Walker, Terry (Kingswood)

      Morris, Alfred (Wythenshawe)

      Rose, Paul B.

      Ward, Michael

      Morris, Rt Hon J. (Aberavon)

      Ross, Stephen (Isle of Wight)

      Watkinson, John

      Moyle, Rt. Hon. Roland

      Ross, Rt Hon W. (Kilmarnock)

      Weetch, Ken

      Mulley, Rt Hon Frederick

      Rowlands, Ted

      Weitzman, David

      Murray, Rt Hon Ronald King

      Ryman, John

      Wellbeloved, James

      Newton, Tony

      Sandelson, Neville

      White, Frank R. (Bury)

      Noble, Mike

      Scott, Nicholas

      White, James (Pollok)

      Oakes, Gordon

      Sever, John

      Whitehead, Phillip

      Ogden, Eric

      Shaw, Arnold (Ilford South)

      Whitlock, William

      O'Halloran, Michael

      Sheldon, Rt Hon Robert

      Willey, Rt Hon Frederick

      Orme, Rt Hon Stanley

      Shore, Rt Hon Peter

      Williams, Rt Hon Alan (Swansea W)

      Ovenden, John

      Silkin, Rt Hon John (Deptford)

      Williams, Rt Hon Shirley (Hertford)

      Owen, Rt Hon Dr David

      Silkin, Rt Hon S. C. (Dulwich)

      Wilson, William (Coventry SE)

      Padley, Walter

      Smith, Cyril (Rochdale)

      Wood, Rt Hon Richard

      Palmer, Arthur

      Smith, Rt. Hon. John (N Lanarkshire)

      Woodall, Alec

      Pardoe, John

      Snape, Peter

      Woof, Robert

      Park, George

      Stallard, A. W.

      Wrigglesworth, Ian

      Parker, John

      Steel, Rt Hon David

      Young, David (Bolton E)

      Pendry, Tom

      Stewart, Rt Hon M. (Fulham)

      Penhaligon, David

      Stott, Roger

      TELLERS FOR THE NOES:

      Phipps, Dr Colin

      Strang, Gavin

      Prescott, John

      Summerskill, Hon Dr Shirley

      Mr. Donald Coleman and

      Price, William (Rugby)

      Taylor, Mrs Ann (Bolton W)

      Mr. James Hamilton.

      Radice, Giles

      Question accordingly negatived.
      Amendments made: No. 98, in page 56, line 33, at end insert—
      '(2) Neither the Commissioners nor an authorised officer shall disclose any information in pursuance of the said Directive unless satisfied that the competent authorities of the other State are bound by, or have undertaken to observe, rules of confidentiality with respect to the information which are not less strict than those applying to it in the United Kingdom.'.—[Mr. Bates.]
      No. 9, in page 56, line 33, at end insert—
      'Nothing in this section shall permit the Commissioners of Inland Revenue or an authorised officer of those Commissioners to authorise the use of information disclosed by virtue of the said Directive other than for the purposes of taxation or to facilitate legal proceedings for failure to observe the tax laws of the receiving state.'.—[Mr. Peter Rees.]

    Schedule 11

      CUSTOMS AND EXCISE CONSOLIDATION AMENDMENTS
      Amendment made: No. 185, in page 86, line 42, at end insert—
      "25. In section 5 of the Import Duties Act 1958 (reliefs from import duties) after subsection (1) there shall be inserted the following subsection:—
      "(1A) In this section and in section 6 below 'import duty' includes duty charged under the Customs Duties (Dumping and Subsidies) Act 1969 and under section 6(1) of the Finance Act 1978".
      26. In section 13(4) of the Import Duties Act 1958 and in section 15(2) of the Customs Duties (Dumping and Subsidies) Act 1969 (beginning of 28 day period for orders), for the words "twenty-eight days after" there shall be substituted the words "the period of 28 days beginning with".'.—[Mr. Robert Sheldon.]

    Clause 66

      SHORT TITLE, INTERPRETATION, CONSTRUCTION AND REPEALS
      Amendment made: No. 132, in page 57, line 21, after 'Part I', insert—
      '(except sections (Vehicles excise duty: Great Britain) and (Vehicles excise duty: Northern Ireland)'.—[Mr. Bates.]

    New Schedule

      RELIEF FOR GAINS LESS THAN £9,500
      Preliminary
      1. In this Schedule references to any subsections not otherwise identified are references to subsections of section 36 of this Act.
      Husband and wife
      2.—(1) For any year of assessment during which a married woman is living with her husband subsections (1) to (4) shall apply to them as if the amounts of £1,000, £5,000 and £600 were divided between them—

      (a) in proportion to their respective taxable amounts for that year (disregarding for this purpose paragraphs (a) and (b) of subsection (4)); or

      1889

      (b) where the aggregate of those amounts does not exceed £1,000 and allowable losses accruing to either of them in a previous year are carried forward from that year, in such other proportion as they may agree.

      (2) Sub-paragraph (1) above shall also apply for any year of assessment during a part of which (being a part beginning with 6th April) a married woman is living with her husband but—

      (a) her taxable amount for that year shall not include chargeable gains or allowable losses accruing to her in the remainder of the year and

      (b) subsection (1) to (4) shall apply to her (without the modificatin in sub-paragraph (1) above) for the remainder of the year as if it were a separate year of assessment.

      3.—(1) For any year of assessment during which or during a part of which (being a part beginning with 6th April) the individual is a married man whose wife is living with him and in relation to whom paragraph 3(1) of Schedule 10 to the Finance Act 1965 applies subsection (7) shall apply as if—

      (a) the chargeable gains accruing to him in the year included those accruing to her in the year or the part of the year; and

      (b) all the disposals of assets made by her in the year or the part of the year were made by him.

      (2) Subsection (7) shall not apply for any year of assessment during which or during a part of which (being a part beginning with 6th April)—

      (a) the individual is a married man whose wife is living with him hut in relation to whom the said paragraph 3(1) does not apply; or

      (b) the individual is a married woman living with her husband.

      Personal representatives
      4. For the year of assessment in which an individual dies and for the two next following years of assessment, subsections (1) to (4) and (7) shall apply to his personal representatives as they apply to an individual.
      Trustees
      5.—(1) For any year of assessment during the whole or part of which settled property is held on trusts which secure that, during the lifetime of a mentally disabled person or a person in receipt of attendance allowance, any

      Division No. 270]

      AYES

      [10.37 p.m.

      Adley, Robert

      Biggs-Davison, John

      Burden, F. A.

      Aitken, Jonathan

      Body, Richard

      Butler, Adam (Bosworth)

      Alison, Michael

      Boscawen, Hon Robert

      Carlisle, Mark

      Amery, Rt Hon Julian

      Bottomley, Peter

      Chalker, Mrs Lynda

      Atkins, Rt Hon H. (Spelthorne)

      Bowden, A. (Brighton, Kemptown)

      Channon, Paul

      Atkinson, David (B'mouth, East)

      Boyson, Dr Rhodes (Brent)

      Churchill, W. S.

      Awdry, Daniel

      Braine, Sir Bernard

      Clark, Alan (Plymouth, Sutton)

      Bain, Mrs Margaret

      Brittan, Leon

      Clarke, Kenneth (Rushcliffe)

      Baker, Kenneth

      Brocklebank-Fowler, C.

      Cooke, Robert (Bristol W)

      Banks, Robert

      Brooke, Hon Peter

      Cope,John

      Bell, Ronald

      Brotherton, Michael

      Cormack, Patrick

      Bendall, Vivian

      Brown, Sir Edward (Bath)

      Costain, A. P.

      Bennett, Sir Frederic (Torbay)

      Bryan, Sir Paul

      Craig, Rt Hon W. (Belfast E)

      Bennett, Dr Reginald (Fareham)

      Buck, Antony

      Crowder, F. P.

      Berry, Hon Anthony

      Budgen, Nick

      Dean, Paul (N Somerset)

      Biffen, John

      Bulmer, Esmond

      Dodsworth, Geoffrey

      of the property which is applied, and any income arising from the property, is applied only or mainly for the benefit of that person, subsections (1) to (4) and (7) shall apply to the trustees of the settlement as they apply to an individual.
      (2) In this paragraph "mentally disabled person" means a person who by reason of mental disorder within the meaning of the Mental Health Act 1959 is incapable of administering his property or managing his affairs and "attendance allowance" means an allowance under section 35 of the Social Security Act 1975 or the Social Security (Northern Ireland) Act 1975.
      6.—(1) For any year of assessment during the whole or part of which any property is settled property, not being a year of assessment for which paragraph 5(1) above applies, subsections (1) to (4) and (7) shall apply to the trustees of a settlement as they apply to an individual but with the following modifications.
      (2) In subsections (1), (4) and (7) for "£1,000" there shall be substituted "£500".
      (3) For subsections (2) and (3) there shall he substituted—
      "(2) If an individual's taxable amount for a year of assessment exceeds £500 the amount of capital gains tax to which he is chargeable for that year shall not exceed one-half ot the excess."
      (4) In subsection (7) for "£5,000" there shall be substituted "£2,500".
      (5) This paragraph applies where the settlement was made before 7th June 1978.'.—[Mr. Bates.]
      Brought up, and read the First and Second time.
      Amendment (c) proposed to the proposed schedule, to leave out
      'Where the settlement was made before June 1978'
      and insert
      'Whenever the settlement was made'.—[Mr. Lawson.]
      Question put, That the amendment made:—
      The House divided: Ayes 241, Noes 257.

      Drayson, Burnaby

      King, Tom (Bridgwater)

      Renton, Tim (Mid-Sussex)

      Durant, Tony

      Kitson, Sir Timothy

      Rhodes James, R.

      Dykes, Hugh

      Knight, Mrs Jill

      Rhys Williams, Sir Brandon

      Eden, Rt Hon Sir John

      Knox, David

      Ridley, Hon Nicholas

      Edwards, Nicholas (Pembroke)

      Lamont, Norman

      Ridsdale, Julian

      Elliott, Sir William

      Langford-Holt, Sir John

      Rifkind, Malcolm

      Emery, Peter

      Latham, Michael (Melton)

      Roberts, Wyn (Conway)

      Eyre, Reginald

      Lawrence, Ivan

      Rodgers, Sir John (Sevenoaks)

      Fairbairn, Nicholas

      Lawson, Nigel

      Rossi, Hugh (Hornsey)

      Farr, John

      Le Marchant, Spencer

      Rost, Peter (SE Derbyshire)

      Fell, Anthony

      Lester, Jim (Beeston)

      Royle, Sir Anthony

      Finsberg, Geoffrey

      Lloyd, Ian

      Sainsbury, Tim

      Fisher, Sir Nigel

      Loveridge, John

      St. John-Stevas, Norman

      Fletcher-Cooke, Charles

      Luce, Richard

      Scott, Nicholas

      Fookes, Miss Janet

      McCrindle, Robert

      Scott-Hopkins, James

      Forman, Nigel

      Macfarlane, Neil

      Shaw, Giles (Pudsey)

      Fox, Marcus

      MacGregor, John

      Shaw, Michael (Scarborough)

      Galbraith Hon T. G. D.

      MacKay, Andrew (Stechford)

      Shelton, William (Streatham)

      Gardiner, George (Reigate)

      Macmillan, Rt Hon M. (Farnham)

      Shepherd, Colin

      Gardner, Edward (S Fylde)

      McNair-Wilson, M. (Newbury)

      Shersby, Michael

      Gilmour, Rt Hon Sir Ian (Chesham)

      McNair-Wilson, P. (New Forest)

      Sims, Roger

      Glyn, Dr Alan

      Madel, David

      Sinclair, Sir George

      Godber, Rt Hon Joseph

      Marshall, Michael (Arundel)

      Skeet, T. H. H.

      Goodhart, Philip

      Marten, Neil

      Smith, Dudley (Warwick)

      Goodlad, Alastair

      Mates, Michael

      Smith, Timothy John (Ashfield)

      Gorst, John

      Mather, Carol

      Speed, Keith

      Gow, Ian (Eastbourne)

      Maude, Angus

      Spence, John

      Gower, Sir Raymond (Barry)

      Maudling, Rt Hon Reginald

      Spicer, Jim (W Dorset)

      Grant, Anthony (Harrow C)

      Maxwell-Hyslop, Robin

      Spicer, Michael (S Worcester)

      Grieve, Percy

      Mayhew, Patrick

      Sproat, Iain

      Griffiths, Eldon

      Meyer, Sir Anthony

      Stainton, Keith

      Grylls, Michael

      Miller, Hal (Bromsgrove)

      Stanbrook, Ivor

      Hail-Davis, A. G. F

      Mills, Peter

      Stanley, John

      Hamilton, Archibald (Epsom & Ewell)

      Miscampbell, Norman

      Steen, Arthory (Wavertree)

      Hamilton, Michael (Salisbury)

      Mitchell, David (Basingstoke)

      Stewart, Rt Hon Donald

      Hampson, Dr Keith

      Moate, Roger

      Stewart, Ian (Hitchin)

      Hannam, John

      Moore, John (Croydon C)

      Stokes, John

      Harrison, Col Sir Harwood (Eye)

      More, Jasper (Ludlow)

      Stradling Thomas, J.

      Harvie Anderson, Rt Hon Miss

      Morgan, Geraint

      Tapsell, Peter

      Haselhurst, Alan

      Morgan-Giles, Rear-Admiral

      Tebbit, Norman

      Hastings, Stephen

      Morris, Michael (Northampton S)

      Temple-Morris, Peter

      Havers, Rt Hon Sir Michael

      Morrison, Charles (Devizes)

      Thatcher, Rt Hon Margaret

      Hawkins, Paul

      Morrison, Hon Peter (Chester)

      Thomas, Rt Hon P. (Hendon S)

      Hayhoe, Barney

      Neave, Airey

      Townsend, Cyril D.

      Higgins. Terence L.

      Nelson, Anthony

      Trotter, Neville

      Hodgson, Robin

      Neubert, Michael

      van Straubenzee, W. R.

      Holland, Philip

      Newton, Tony

      Vaughan, Dr Gerard

      Hordern, Peter

      Normanton, Tom

      Viggers, Peter

      Howell, David (Guildford)

      Nott, John

      Wakeham, John

      Howell, Ralph (North Norfolk)

      Onslow, Cranley

      Walder, David (Clitheroe)

      Hunt, David (Wirral)

      Osborn, John

      Walker, Rt Hon P. (Worcester)

      Hunt, John (Ravensbourne)

      Page, John (Harrow West)

      Walker-Smith, Rt Hon Sir Derek

      Hurd, Douglas

      Page, Rt Hon R. Graham (Crosby)

      Walters, Dennis

      Hutchison, Michael Clark

      Page, Richard (Workington)

      Warren, Kenneth

      Irving, Charles (Cheltenham)

      Parkinson, Cecil

      Weatherill, Bernard

      James, David

      Pattle, Geoffrey

      Wells, John

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

      Percival, Ian

      Whitney, Raymond

      Jessel, Toby

      Peyton, Rt Hon John

      Wiggin, Jerry

      Johnson Smith, G. (E. Grinstead)

      Pink, R. Bonner

      Wilson, Gordon (Dundee E)

      Jones, Arthur (Daventry)

      Prentice, Rt Hon Reg

      Winterton, Nicholas

      Jopling, Michael

      Price, David (Eastleigh)

      Wood, Rt Hon Richard

      Joseph. Rt Hon Sir Keith

      Raison, Timothy

      Kellett-Bowman, Mrs Elaine

      Rathbone, Tim

      TELLERS FOR THE AYES:

      Kilfedder, James

      Rees, Peter (Dover & Deal)

      Sir George Young and

      Kimball, Marcus

      Reid, George

      Lord James Douglas Hamilton

      King, Evelyn (South Dorset)

      Renton, Rt Hon Sir D. (Hunts)

      NOES

      Abse, Leo

      Boothroyd, Miss Betty

      Carter-Jones, Lewis

      Anderson, Donald

      Bottomley, Rt Hon Arthur

      Cartwright, John

      Archer, Rt Hon Peter

      Boyden, James (Bish Auck)

      Castle, Rt Hon Barbara

      Armstrong, Ernest

      Bradley, Tom

      Clemitson, Ivor

      Ashley, Jack

      Bray, Dr Jeremy

      Cocks, Rt Hon Michael (Bristol S)

      Atkins, Ronald (Preston N)

      Brown, Hugh D. (Provan)

      Coleman, Donald

      Atkinson, Norman (H'gey, Tott'ham)

      Brown, Robert C. (Newcastle W)

      Cook, Robin F. (Edin C)

      Bagier, Gordon A. T.

      Brown, Ronald (Hackney S)

      Corbett, Robin

      Barnett, Guy (Greenwich)

      Buchan, Norman

      Cowans, Harry

      Barnett, Rt Hon Joel (Heywood)

      Buchanan, Richard

      Cox, Thomas (Tooting)

      Bates, Alt

      Callaghan, Rt Hon J. (Cardiff SE)

      Craigen, Jim (Maryhill)

      Bean, R. E.

      Callaghan, Jim (Middleton & P)

      Crawshaw, Richard

      Bidwell, Sydney

      Campbell, Ian

      Cronin, John

      Bishop, Rt Hon Edward

      Canavan, Dennis

      Crowther, Stan (Rotherham)

      Blenkinsop, Arthur

      Carmichael, Neil

      Cryer, Bob

      Booth, Rt Hon Albert

      Carter, Ray

      Cunningham, G. (Islington S)

      1892

      1893

      Cunningham, Dr J. (Whiteh)

      Jones, Alec (Rhondda)

      Robertson, George (Hamilton)

      Davidson, Arthur

      Jones, Dan (Burnley)

      Robinson, Geoffrey

      Davies, Bryan (Enfield N)

      Judd, Frank

      Roderick, Caerwyn

      Davies, Rt Hon Denzil

      Kerr, Russell

      Rodgers, George (Chorley)

      Davies, Ifor (Gower)

      Kinnock, Neil

      Rodgers, Rt Hon William (Stockton)

      Davis, Clinton (Hackney C)

      Lambie, David

      Rooker, J. W.

      Deakins, Eric

      Lamond, James

      Roper, John

      de Freitas, Rt Hon Sir Geoffrey

      Latham, Arthur (Paddington)

      Rose, Paul B.

      Dell, Rt Hon Edmund

      Leadbitter, Ted

      Ross, Stephen (Isle of Wight)

      Dempsey, James

      Lee, John

      Ross, Rt Hon W. (Kilmarnock)

      Dewar, Donald

      Lestor, Miss John (Eton & Slough)

      Rowlands, Ted

      Dormand, J. D.

      Lever, Rt Hon Harold

      Ryman, John

      Douglas-Mann, Bruce

      Lewis, Ron (Carlisle)

      Sandelson, Neville

      Dunnett, Jack

      Loyden, Eddie

      Sever, John

      Dunwoody, Mrs Gwyneth

      Luard, Evan

      Shaw, Arnold (Ilford South)

      Eadie, Alex

      Lyon, Alexander (York)

      Sheldon, Rt Hon Robert

      Edwards, Robert (Wolv SE)

      Lyons, Edward (Bradford W)

      Shore, Rt Hon Peter

      Ellis, John (Brigg & Scun)

      Mabon, Rt Hon Dr J. Dickson

      Short, Mrs Renée (Wolv NE)

      Ellis, Tom (Wrexham)

      McCartney, Hugh

      Silkin, Rt Hon John (Deptford)

      English, Michael

      McDonald, Dr Oonagh

      Silkin, Rt Hon S. C. (Dulwich)

      Evans, Fred (Caerphilly)

      McElhone, Frank

      Silverman, Julius

      Evans, Ioan (Aberdare)

      MacFarquhar, Roderick

      Skinner, Dennis

      Evans, John (Newton)

      McGuire, Michael (Ince)

      Smith, John (N Lanarkshire)

      Ewing, Harry (Stirling)

      MacKenzie, Rt Hon Gregor

      Snape, Peter

      Faulds, Andrew

      McMillan, Tom (Glasgow C)

      Spearing, Nigel

      Fernyhough, Rt Hon E.

      McNamara, Kevin

      Spriggs, Leslie

      Fitch, Alan (Wigan)

      Madden, Max

      Stallard, A. W.

      Flannery, Martin

      Magee, Bryan

      Steel, Rt Hon David

      Fletcher, Ted (Darlington)

      Mahon, Simon

      Stewart, Rt Hon M. (Fulham)

      Ford, Ben

      Mallalieu, J. P. W.

      Stoddart, David

      Fowler, Gerald (The Wrekin)

      Marshall, Dr Edmund (Goole)

      Stott, Roger

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

      Marshall, Jim (Leicester S)

      Strang, Gavin

      Freeson, Rt Hon Reginald

      Maynard, Miss Joan

      Summerskill, Hon Dr Shirley

      Freud, Clement

      Meacher, Michael

      Taylor, Mrs Ann (Bolton W)

      Garrett, John (Norwich S)

      Mikardo, Ian

      Thomas, Dafydd (Merioneth)

      Garrett, W. E. (Wallsend)

      Millan, Rt Hon Bruce

      Thomas, Jeffrey (Abertillery)

      George, Bruce

      Miller, Dr M. S. (E Kilbride)

      Thomas, Mike (Newcastle E)

      Gilbert, Rt Hon Dr John

      Mitchell, Austin (Grimsby)

      Thomas, Ron (Bristol NW)

      Ginsburg, David

      Mitchell, R. C. (Soton, Itchen)

      Thorne, Stan (Preston South)

      Golding, John

      Molloy, William

      Tilley, John

      Gould, Bryan

      Morris, Alfred (Wythenshawe)

      Tinn, James

      Grant, John (Islington C)

      Morris, Rt Hon J. (Aberavon)

      Tomlinson, John

      Grocott, Bruce

      Moyle, Roland

      Tomney, Frank

      Hamilton, James (Bothwell)

      Mulley, Rt Hon Frederick

      Torney, Tom

      Hamilton, W. W. (Central Fife)

      Murray, Rt Hon Ronald King

      Urwin, T. W.

      Hardy, Peter

      Newens, Stanley

      Varley, Rt Hon Eric G.

      Harrison, Rt Hon Walter

      Noble, Mike

      Walker, Harold (Doncaster)

      Hart, Rt Hon Judith

      Oakes, Gordon

      Walker, Terry (Kingswood)

      Healey, Rt Hon Denis

      Ogden, Eric

      Ward, Michael

      Heffer, Eric S.

      O'Halloran, Michael

      Watkins, David

      Hooley, Frank

      Orme, Rt Hon Stanley

      Watkinson, John

      Horam, John

      Ovenden, John

      Weetch, Ken

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

      Owen, Rt Hon Dr David

      Weitzman, David

      Howells, Geraint (Cardigan)

      Padley, Walter

      Wellbeloved, James

      Hoyle, Doug (Nelson)

      Palmer, Arthur

      White, Frank R. (Bury)

      Huckfield, Les

      Pardoe, John

      White, James (Pollok)

      Hughes, Mark (Durham)

      Park, George

      Whitehead, Phillip

      Hughes, Robert (Aberdeen N)

      Parker, John

      Whitlock, William

      Hughes, Roy (Newport)

      Parry, Robert

      Willey, Rt Hon Frederick

      Hunter, Adam

      Pavitt, Laurie

      Williams, Rt Hon Alan (Swansea W)

      Irvine, Rt Hon Sir A. (Edge Hill)

      Pendry, Tom

      Williams, Rt Hon Shirley (Hertford)

      Irving, Rt Hon S. (Dartford)

      Penhaligon, David

      Wilson, William (Coventry SE)

      Jackson, Miss Margaret (Lincoln)

      Phipps, Dr Colin

      Wise, Mrs Audrey

      Janner, Greville

      Prescott, John

      Woodall, Alec

      Jay, Rt Hon Douglas

      Price, C. (Lewisham W)

      Woof, Robert

      Jeger, Mrs Lena

      Price, William (Rugby)

      Wrigglesworth, Ian

      Jenkins, Hugh (Putney)

      Radice, Giles

      Young, David (Bolton E)

      John Brynmor

      Rees, Rt Hon Merlyn (Leeds S)

      Johnson, James (Hull West)

      Richardson, Miss Jo

      TELLERS FOR THE NOES:

      Johnson, Walter (Derby S)

      Roberts, Albert (Normanton)

      Mr. Ted Graham and

      Johnston, Russell (Inverness)

      Roberts, Gwilym (Cannock)

      Mr. Joseph Dean.

      Question accordingly negatived.
      Schedule agreed to, and added to the Bill.

    Schedule 12

      REPEALS
      Amendments made: No. 133, in page 88, line 19, at end insert—
      '1972 c. 41 The Finance Act 1972. Section 128(1).'.
      No. 134, in page 88, line 24, at end insert—
      '1976 c. 40. The Finance Act 1976. Section 13'.
      No. 135, in page 88, line 27, at end insert—
      'The repeals in the Finance Act 1972 and the Finance Act 1976 take effect on 1st December 1978'.
      No. 97, in page 89, line 4, column 3, at beginning insert—
      'In section 12 the word "female" wherever it occurs.
      In section 13(a) the words "mother or other".
      Section 18(3) and (4).'
      No. 26, in page 90, line 16, at end insert—
      '1966 c. 18. The Finance Act 1966. In Schedule 10, paragraph 2(3).'.
      No. 27, in page 91, line 1, after 'in', insert 'the Finance Act 1966'.—[Mr. Bates.]
      Motion made, and Question proposed, That the Bill be now read the Third time.
      10.53 p.m.
      Mr. Lawson: It is certainly encouraging to have such a full House at such a late hour on the Third Reading of the Bill after the long hours we have spent on it in Standing Committee and on Report. In many ways it has been a historic Finance Bill, not merely because it is the last such Bill of a dying Parliament and of a dying. Government but because this is a Bill which began with the basic rate of income tax at 34 per cent. and in which it now stands at 33 per cent.
      Never before have an Opposition succeeded in bringing down the basic rate of income tax. In addition to that profound and unprecedented change, it is worth recalling that we also succeeded in raising the thresholds of the higher rates of tax by £1,000 in deference not merely to the needs of the country and the wishes of the people but to the expressed desire of the Chancellor of the Duchy of Lancaster, who had pointed out how grossly exorbit
      1896
      ant were our high rates of tax and how they needed to be reduced at the earliest opportunity. We took that opportunity.
      Those important and unprecedented changes followed the changes which the Opposition forced in last year's Finance Bill, when we substantially raised, and indexed, the thresholds—another historic event. The two Finance Bills together have undergone changes which I think no Finance Bills have undergone before.
      There have also, this year, been a large number of minor changes of significance, in addition to the two major ones I have mentioned. Two Opposition amendments were accepted by the Government in Committee, and one Opposition new clause and two amendments were accepted on Report—one of them in the debate which has just ended. One Government new clause was added in Committee and 13 on Report, of which 11 were in response to points we pressed in Committee. No fewer than 87 Government amendments were introduced on Repoirt, of which the overwhelming majority were in fulfilment of commitments made to the Opposition in Committee.
      That, of course, is why we have Committee stages, but it is a remarkable fact, and very rare, that over 100 clauses and amendments have been added and made to the Bill in response to pressure from the Opposition. Thus we have succeeded in improving the Bill far beyond what is appreciated outside the House.
      We have also seen, as we have become accustomed to seeing in the summer months in recent years, the eruption of a major financial crisis, with bank rate hoisted to 10 per cent. and a savage curb on bank lending—all the usual paraphernalia of the credit squeeze in response to a financial crisis caused by the Government's improvidence. This crisis came at a time which, with curious accuracy, punctured the myth that all is well with the economy.
      Indeed, the Prime Minister still likes to tell his audiences at home that all is well but he tells a different story in Bremen and other places abroad. There he says that the British economy is so weak that we cannot join with our Community partners unless they give us handouts. He goes with a begging bowl, complaining about the weakness of the same

      1897
      British economy whose strength he seeks to parade in this Chamber. Regrettably, it is the account the right hon. Gentleman gives overseas which is the truthful picture.
      Today marks the end of an era—an era of four years, 14 Budgets and six Finance Bills, which together have done untold damage to the economy, to industry, to commerce, to firms, to farms and, above all perhaps, to the individual's will to work, on which so much else depends.
      We have been able to mitigate some of the worst evils of tht past two years, but to set the country on the right fiscal course something more than a new clause will be needed: it will need a new Government. Fortunately, we shall not now have long to wait. Fortunately, it is to that new Government that responsibility for next years' Finance Bill will fall.
      11.0 p.m.
      Mr. Gow: The Finance Bill 1978, shortly to become the Finance Act 1978, is the least damaging of all the Finance Bills and Finance Acts which have been produced since March 1974. The country may well be wondering why it is infinitely less damaging to the country than all its five predecessors. There should be an unseen attender at these debates. As I almost hear by hon. Friend the Member for Blaby (Mr. Lawson) saying sotto voce, it is to Dr. Johannes Witteveen that we owe a great deal of the credit for the comparative mildness of this Finance Bill.
      The International Monetary Fund imposed last year, and is imposing this year, a limit on our borrowing requirement of £8,500 million. It is a limit which I regard as dangerously high, but just think, Mr. Deputy Speaker, what the Financial Secretary would have done if it had not been for Dr. Johannes Witteveen. Beside the right hon. Gentleman's bed, underneath the pillow of the Chancellor of the Exchequer, there should be a mini-photograph of the good doctor. It is to that doctor that the British people tonight should be giving a vote of thanks.
      But it is not only to the good doctor. He has the main honours, but there is another reason why this Finance Bill is the least damaging of all those that have
      1898
      appeared from the Treasury Bench. The harsh logic of parliamentary arithmetic has compelled the Government to introduce this year a Finance Bill less damaging than all the others.
      Perhaps we may rehearse some of the concessions which have been wrung from the Government by the arguments of my right hon. and hon. Friends upon our Front Bench. Only three of them it is true, but three of the most distinguished, are upon our Front Bench tonight. The concessions are due to the arguments and the skill of my hon. Friend the Member for Blaby, my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) and my hon. Friend the Member for Horncastle (Mr. Tapsell). We must, of course, also include my hon. Friend the Member for Norfolk, South (Mr. MacGregor), without whose encouragement, skill and disciplinary powers upstairs in Committee we would not have wrung all the other concessions from the Treasury Bench. It is perhaps to him that a special tribute is due.
      Whom do we find confronting us? If you glance upon the Government Front Bench, Mr. Deputy Speaker, whom will you see? You see an hon. Member who is not yet a Lord Commissioner of the Treasury. He is an unpaid Whip. [HON. MEMBERS: "He is paid."] I apologise.
      Mr. Alf Bates: I am merely underpaid.
      Mr. Gow: Is not this an occasion? For the first time from the Government Front Bench we have heard the Whip addressing the House. Not upstairs in Committee but now, on Third Reading, we have an intervention—and upon what subject? He says that he is underpaid. He is not alone in that.
      One of the extraordinary paradoxes we have seen in past months is that the Labour Party and Her Majesty's Ministers have been arguing that we should be holding down wages. That is why the Whip is underpaid. It is why others are underpaid. During the four years when the Financial Secretary has been at Treasury Chambers we have found that an increasing number of our citizens have been underpaid. When the Government Whip intervened and claimed that he was being underpaid, he was merely echoing the view held by an increasing number of our fellow citizens.

      1899
      If you behold the Financial Secretary, Mr. Deputy Speaker, you will understand the concessions which have been wrung as a result of the arguments deployed by my right hon. and hon. Friends. We have had a series of confessions that that which the Government produced in 1974, 1975, 1976 and 1977 was wrong. In this Finance Bill we have had a profound and unprecedented confession of past errors.
      What have we seen? We have seen relief for bad debts for the purposes of value added tax, for which my right hon. and hon. Friends have been pressing. We have seen the Government acquiescent in a reduction in the basic rate of tax from 34 per cent. to 33 per cent., for which my right bon. and hon. Friends have been pressing. We have seen maintenance payments for wives or ex-wives treated no longer as unearned income but as earned income, for which my right hon. and hon. Friends have been pressing. We have seen taxation relief for farmers, for which my right hon. and hon. Friends have been pressing. We have seen capital tax allowances for hotels, for which my hon. Friend the Member for Christchurch and Lymington (Mr. Adley) has been pressing. We have seen reductions and reliefs in capital gains tax, for which my right hon. and hon. Friends have been pressing. We have seen reliefs from capital transfer tax, for which my right hon. and hon. Friends have been pressing.
      All this has come about because over the past four years the Treasury Bench, reluctantly and without any enthusiasm, has been persuaded by the arguments of my right hon. and hon. Friends. That is why, as we come to the final chapter of this Bill, those of us upon the Opposition Back Benches are entitled to take pride in those who sit momentarily upon the Opposition Front Bench but who, in a few months' time, will be seated upon the Treasury Bench.
      11.8 p.m.
      Mr. Graham Page: As the speech of my hon. Friend the Member for Eastbourne (Mr. Gow) has shown, at this stage in the process of a Bill we are apt to look at the Bill through rose-tinted spectacles because we have suffered through the Committee and Report stages. The lenses of those rose-tinted spectacles are, on one side, the affliction of legislation
      1900
      which we have gone through with Treasury Ministers, so much so that one feels a sense of brotherly affection for them. Through that lens of the spectacles, I thank the Treasury Ministers for the patience and courtesy shown to us on the Opposition Back Benches whenever we have sought to intervene.
      The other rose-tinted lens is represented by the innumerable concessions, listed so well by my hon. Friend the Member for Eastbourne (Mr. Gow), which have been given to the Opposition throughout the Bill—the innumerable amendments for the good which have been made to the Bill through pressure from the Opposition.
      But, no matter about these rose-tinted spectacles which are apt to make the Bill look a rather nice one, it is a terrible Bill, Mr. Deputy Speaker, and for one reason. It has set a precedent for retrospective legislation which has never before been seen in this Parliament—not just retrospective legislation to the date when an intention has been announced by a Government but going back to a date long before a Government have announced their intentions, so that the subject could not possibly know that he is doing wrong.
      If this is to be a precedent for future legislation, should any Socialist Government come back to office for any length of time—which heaven forbid!—the Bill will go down as the most disastrous piece of legislation that we have allowed to go through this Parliament. To force through Parliament retrospection of that sort is an act of arrogant government and stinks of unconstitutional dictatorship.
      11.11 p.m.
      Mr. Vivian Bendall: I rise rather sadly tonight, Mr. Deputy Speaker, as my maiden speech in this House was during the first debates on the Budget, back in April. At that time I was rather heartened by the fact that the Government looked upon the youth of the country and upon small business men as people whom they believed should and could be helped in the present situation.
      In the last few weeks we have seen the youth of this country, many of whom will leave school very soon, denied employment because of the 1½ per cent. increase in the employers' contribution. Many young people who will be seeking employment in the next few weeks may

      1901
      well be denied that employment because of what has happened in the Budget.
      The Government have said that they will help the small employer, but yet again we have seen that the employers' contribution is likely to put further small employers out of business. It must never be forgotten that they are still the largest group of employers of labour within our nation today.
      As a newly elected and younger Member of the House I find this very sad, because I believe that this country, with its youth, has a great future. I believe that, if encouraged and given the right incentive, the youth can play a part in the future of this nation.
      11.13 p.m.
      Mr. Nicholas Fairbairn: There is one point that I want to make, Mr. Deputy Speaker upon the Bill. The national debt, as I understand it, was created in the year 1694. Two hundred and eighty years later, in 1974, after two and a half centuries of war and two world wars, it had reached £40,000 million. But it took only four years of this god-forsaken, dreadful Government to double it. It is now £80,000 million.
      Tell that to the country. Tell it to the individuals with whom the Socialists are allegedly so concerned. I happen to represent, applying the arithmetic to my constituents, one-thousandth of the people of this country, because there are 35 million voters and I have 35,000 people in my constituency who are entitled to vote
      Mr. Joseph Dean: That is very small.
      Mr. Fairbairn: It is very small.
      Mr. Dean: A parish council.
      Mr. Fairbairn: Indeed, a parish council. But I also happen to represent those who live in an area of 8,000 square miles, which is one and a half times the size of Northern Ireland. Before Labour Members make silly remarks let them reflect on that.
      But thank God that I represent those people. I represent one-thousandth of the people of this country. So we can say to ourselves a very simple thing when we
      1902
      look at the debts which this Government have accumulated. The public sector borrowing requirement is £23 million a day—£1 million an hour with a lunch break. For my constituency, that represents £1,000 a hour. Last year, with all their genius and excellence, and with all that they arranged for the Jubilee event, the Government managed by charity to accumulate £14,000. On the extravagance of this god-forsaken Government, we would have run out of money at 3 o'clock on 1st January.
      That is the extent of the ill health of the financial situation of the country. The Government have doubled the debt. That will be on our children and our grandchildren. It means £1,000 an hour for my constituency, £1 million an hour for the country—let every man, women and child remember that—in addition to tax and unemployment. Let anyone who votes for the Third Reading of the Bill condemn the fruitfulness of those who have achieved such a silly state in our finances.
      11.17 p.m.
      Mr. Nicholas Winterton: I shall be brief. I have listened to a great deal of the debate which has taken place on this important Finance Bill. We have heard the Government claim credit for many of the things which have been done to bring a better life for industry and for the ordinary man and woman. What we have not heard until tonight—from my hon. Friends the Members for Blaby (Mr. Lawson) and for Eastbourne (Mr. Gow)—is that some of the good things which have been produced in this Finance Bill have not been at the desire or the wish of the Government of the country—a Socialist Government—but have been brought about by the tenacious debating skill of the Conservative shadow Treasury team, and a very talented team it is.
      We hear a lot from "Sunny Jim" about the achievements of this Government. Perhaps they will at last tell the nation the truth. The only things which have come out of this Government and which are any good have been produced by the skill and the tenacious debating ability of the Conservative Opposition.
      No Liberal Member is here tonight to debate this Third Reading, yet the media have said time and again that it was because of the Liberals that the national

      1903
      insurance surcharge was reduced from 2½ per cent. to 1½ per cent. There are only 13 Liberal Members, and there will be a lot fewer after the next General Election. But there are 280-plus Conservative Members. It was the vote of the Conservative majority which produced that reduction. Of course there should have been no increase at all, because, as my hon. Friend the Member for Ilford, North (Mr. Bendall) pointed out, this will be a deterrent to employment. This Government are responsible for the worst level of unemployment for about 40 years. That is the truth of Socialism.
      My goodness, I think that the Financial Secretary must have been wrung into his seat on the Treasury Bench by the amendments which have been won by the Conservative Opposition and the concessions that have been made. I hope that he will admit the ability of the Conservative Opposition and the concessions which the Government have been forced to make. But will he also talk about the highest level of unemployment and the doubling of food prices, because that is the record of Socialism? I hope that he will offer a word of apology to the House and, through it, to the people for the purgatory which his Government have produced, because Socialism does not work.
      This Finance Bill is not what the Opposition would have wished, but it is a lot better than many people hoped. If, however, the people thing that they have had a glimmer of hope from this Finance Bill, they have a great deal to look forward to when they have a Conservative Government later this year. We shall give the people the freedom and the encouragement that they want. We shall return, under a Conservative Government and with Conservative philosophies, to a free, prosperous and responsible nation.
      11.20 p.m.
      Mr. Robert Sheldon: The right hon. Member for Crosby (Mr. Page) talked about the affection that spreads through all parts of the House as a result of our experiences in Finance Bill Committee. Right hon. and hon. Members who have shared these sleepness nights share this affection. But I always find it surprising to see how many right hon. and hon. Members queue up for the rack year after year. There never seems to be any shortage of volunteers.
      1904
      The hon. Member for Blaby (Mr. Lawson) called this a historic Finance Bill. One of my interests during recesses is reading bits of history. I do not think that this part of history is one to which I should turn readily, and those who come after us will have rather peculiar tastes if they look to our debates on Finance Bills for their entertainment.
      The reduction in the basic rate of income tax from 34 per cent to 33 per cent., which, after all, was the major change in the Finance Bill as it went through the Committee and the House, and the increase in the higher rates of thresholds were the achievements of the Opposition, although they paid a heavy price for them. The price they paid was the national insurance surcharge, which is by no means as good a method of raising revenue as the income tax, and there are some hon. Members of Conservative persuasion who are beginning to believe that.
      But a number of Opposition amendments succeeded. I know that it is the standard practice of all Oppositions at all times to claim many and important successes, and that at all times it is the attitude of the Government to take a rather relaxed view about these exaggerated claims. Governments understand all too well in our democratic House the necessary and frequent frustrations of Oppositions, and those who have shared the frustrations should be tolerant in understanding the problems.
      I note the changes which we have been happy to agree, but I also note the shape of the Bill as it has emerged, compared with what it was originally. One has only to analyse the changes which have been made to get matters into perspective.
      The hon. Member for Blaby talked about crises. It is the stock in trade of any Opposition to do that. However, gilt sales are well ahead for the year. Inflation is falling pleasantly. The growth in the economy is moderate, but I would not want to see it more than moderate because I believe that it must never be allowed to get out of hand. Production is rising, again moderately. We see small, steady improvements. We seem to he doing better than the forecasts in the Financial Statement and Budget Report for which I am responsible. We see the Finance Bill against the background of

      1905
      the country's generally improving financial position.
      Opposition Members have had the pleasure of examining our proposals and making the changes which we have been happy to accept in the main. I should like to refer to what we have done for small businesses and to the increases in child benefit and their consequentials for child tax allowances, which I believe are valuable improvements. There was also the concession on taxation of maintenance payments, which I particularly welcome because I have always felt that there was a really genuine grievance not in the grievance not in the theory of the scheme but in the way it worked in practice. I was very happy to be associated with that change. I should also like to mention the tax reliefs for profit-sharing schemes. Those who witnessed the long discussions that took place on that matter will realise that the scheme we finally came up with provides a useful framework for a fascinating experiment. It will be very interesting to see how industry uses these schemes. They could be very important or just a passing phase. It is up to industry to decide for itself. Those, like me, who believe that the major problems of industry must be solved by industry itself will look forward very much to seeing what happens.
      Mr. Fairbairn: Can the Minister tell us whether it is true or false that this Government have doubled our national debt while they have been in office?
      Mr. Sheldon: I must say that among the many indicators that I look at regularly in order to see how the economy and industry are faring, this is not the major one that concerns me. Therefore, I do not happen to have the figures with me, and on this occasion I do not think it is worth troubling my assistants for the answer.
      There are a number of things that one can say about the passage of this Finance Bill. Generally, however, we have had good-tempered debates. If hon. Members visit Somerset House, they will find copies of all the Finance Bills and also a mass of descriptions and explanatory notes on these Acts. If hon. Members look at the Finance Bill files they will see that the last century occupies only half of these. It is only when one looks at the
      1906
      last 10 or 15 years—not just the last four years—that one realises that the way in which we organise these matters may not be ideal.
      This Bill should have had a more difficult passage than it received. This is not because of its content—I believe that is admirable—but because of the parliamentary situation. In bringing this legislation to its satisfactory conclusion, we should therefore record our debt to our Whips. We should also record a debt to the Opposition Whips. Both of these hon. Gentleman achieved the highest reputation among the members of the Committee, and I take pleasure in recording this.
      The measures that we have brought forward are valuable, and I ask all hon. Members present to give the Bill an enthusiastic and unanimous Third Reading.
      Question put and agreed to.
      Bill accordingly read the third time and passed.

MARINE OIL POLLUTION
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bates.]
11.28 p.m.
Mr. Robert Adley: I turn from the problems of the national financial scene to a problem that is worrying many people almost as much—that of oil pollution at sea.
This is worry enough for those of us who represent coastal constituencies. It is a double worry when, off those coasts of our constituencies, oil has been discovered under the sea. In the case of south-east Dorset and south-west Hampshire we also have onshore oil as a potential threat.
Worry turns to fear when one considers the events of the last two and a half years—the "Urquiola" affair in La Coruna; the Ekofisk blow-out in the North Sea; and, more recently, the "Amoco Cadiz" and "Eleni V" disasters, with their tragic consequences. There was also a less-heralded event in southern England when there was a leak in the pipeline from Southampton Water to London. Subsequently electronic testing showed that there were 90 faults in

1907
that single pipeline. So it is not surprising that people are alarmed at what could happen if these disasters strike near at home.
There has been widespread dissatisfaction with the way in which the Government handled the "Eleni V" affair. The Minister will know that there was widespread alarm at the implications of the "Amoco Cadiz" affair off the Brittany coast. We all know the phrase about Nero fiddling while Rome burned. It has looked to many people—the Select Committee on Science and Technology heard this yesterday from the county council representatives in East Anglia—that Her Majesty's Government appeared to dither over the case of the "Eleni V". While Governments dither, the oil industry relentlessly pursues its interests, sometimes with apparent disregard for the interests of the people whose livelihoods can be affected, particularly fishermen.
One of the points that I wish to make in my case tonight is that so many Government Departments are involved that the oil industry seems willing and able to pursue its own interests in the knowledge that whilst the Departments decide amongst themselves which is responsible, the industry does what it wants to do. We had an example recently in the English Channel, where BP and Gulf have been carrying out a seismic survey. They have caused considerable damage to lobster pots and fishermen's nets. The fishermen are ostensibly looked after by the Ministry of Agriculture, Fisheries and Food, whilst the oil companies are responsible to the Department of Energy.
I want to quote briefly from one or two letters that I have received from different Ministers, to illustrate the point that I am making. The Minister of State, Ministry of Agriculture, Fisheries and Food wrote to me on 9th June as follows:
"Although John Silkin has no formal statutory obligations or authority for dealing with such matters, the good offices of our Sea Fisheries Inspectorate have been used in order to bring the fishing and oil interests together. I am glad to say that by working quietly behind the scenes the Inspectorate has already achieved some measure of success in cooling the temperature."
It should not be necessary to have to work to bring the fishing and oil interests
1908
together. The Minister of State went on to say:
"Immediately the local Inspectorate had heard of BP's activities they contacted my officials in London."
My contention is that if the oil companies had been observing the law, the fishing interests would have known beforehand what was going on, because the Petroleum (Production) Regulations 1976, schedule 5, paragraph 23, state:
"The Licensee shall not carry out any operations authorised by this licence in or about the licensed area in such manner as to interfere unjustifiably with navigation or fishing in the waters of the licensed area or with the conservation of the living resources of the sea."
There is one of numerous examples that I could give where interdepartmental split responsibility has caused a great deal of unhappiness and discontent. Whilst the Ministry of Agriculture, Fisheries and Food and the Department of Energy have been trying to find out what has been going on, BP and Gulf have been having a ball in the English Channel.
The Under-Secretary himself wrote to me on 16th June. He always tells us—we accept this—that he and the Government have overall responsibility for oil pollution matters. But in correspondence concerned with the situation in the Channel, he said:
"I am sorry that the Department of Trade's limited powers in this area do not allow us to take account of the interests of the fishing industry, other than to safeguard the navigation of their vessels."
That is quite unsatisfactory.
In the limited time available, I cannot possibly read out all the different ministerial responsibilities of Trade, Agriculture, Defence, Energy, Environment, Home Office and Industry which illustrate the point that I am trying to make. I take just one small item. The Ministry of Agriculture, Fisheries and Food is responsible for licensing chemical dispersants, but the Department of Industry is responsible for providing research on these dispersants. There are numerous other similar examples that one could give.
I have not taken an interest in this matter just recently, as the Minister will know. In fact, over two years ago I took a director of a company in my constituency to see one of the then Ministers at the Department of Industry because

1909
he needed further assistance from that Department with his oil mop device, which is able to lift oil off water. In spite of persistent questioning, it has taken over two years for Warren Springs laboratory finally to get round to testing this oil mop device at sea. The oceangoing test has just taken place and I am delighted to say that it looks as though the device will be every bit as successful as we all believed it would be two years ago. This device, manufactured in my constituency, can have inestimable environmental advantages and can, I believe, bring tremendous economic advantages to the United Kingdom.
But the pressures from outside this country to steal our technology are well known. In the case of the oil mop device, when I went with my constituent to La Coruna I was confronted by some fairly ruthless people, and it was quite clear to me that if this country does not develop its own technology and keep it for itself, others will snatch it from us.
I was disgusted when I found that a Mr. Wayment, who had been working for the Department of Industry and who had been most unhelpful, had subsequently gone off and worked for an American competitor of the company in my constituency and had taken with him all the technology which he acquired when he was working at the Department of Industry. This is the sort of international competition and tactics that we have to face.
Having had a glimpse under the blanket of the tactics of the oil companies, I want to take a moment to examine the activities of Lloyd's and the insurance side of the oil pollution business. Oil insurance is very big business, and the Minister, amongst his many responsibilities, is responsible for insurance. It is estimated that the "Amoco Cadiz" catastrophe will cost the French authorities about £60 million. In this country, if we have a problem like the problem of the "Amoco Cadiz" I have no doubt that Lloyd's will very quickly pay out the money owing to the oil companies and tanker owners.
In my inquisitiveness I wrote to the chairman of Lloyd's on 4th April and asked him:
"Can you tell me what, if any, checks you make on the proficiency, qualifications and behaviour of the crews on oil tankers before you
1910
are willing to pay out insurance money? It is felt in some quarters that Liberian-registered tankers with a multinational crew are less likely to observe proper navigational rules than those observed by a British crew in a British ship and I would very much welcome your views on this point."
I was somewhat surprised to receive a reply from the deputy chairman of Lloyd's telling me:
"Underwriters have no control over the proficiency, qualifications, and behaviour of crews on oil tankers. This is the responsibility of the Classification Societies and the Governments of the Countries in which the vessels are registered."
That is not a satisfactory situation. If one drives one's Mini along Whitehall and knocks into a bollard I have no doubt that the insurance company concerned will ask many searching questions about one's licence, insurance, tax and test certificate. It seems to me that there is rather less concern on the part of Lloyd's about paying out insurance premiums to the "drivers"—if I may refer to them thus—of 250,000-ton tankers than there is about Mini drivers driving up and down Whitehall.
I know that the Minister is looking forward to presenting us at some stage with a merchant shipping Bill. Eighty per cent. of the accidents at sea are caused through human error, and I certainly hope that we shall be ratifying the IMCO convention, which was agreed last Friday, because the question of competence is of very great concern.
Competence, however, is only one of the problems. The threat that our coastline faces is not just a threat of incompetence; it is a threat that is aggravated by the sometimes ruthless and aggressive and acquisitive actions of the oil companies themselves. I am not satisfied that the Government possess adequate machinery or powers to deal with the situation, so, in the few remaining minutes that I have I want to put to the Minister an eight-point plan.
Oil pollution ruthlessly threatens the livelihood of people everywhere, and also the environment. Ruthless action is therefore needed. We cannot wait for world-wide agreement. The EEC should act, because it offers a clearly defined areas in which inter-governmental action is possible.
In my eight-point "EEC Oil Charter" I want to ensure that the principle "The

1911
polluter pays" becomes a reality. Failing speedy EEC agreement, Her Majesty's Government should act alone, now.
First, I want to see all oil companies world-wide registered in a special category before they can trade in the United Kingdom or the EEC. I call this the A list.
Secondly, all oil-carrying ships and their owning companies should be registered in a special category, which I call the B list.
Thirdly, the carriage of oil at sea within EEC territorial waters should be restricted to companies registered on the A list, in ships registered on the B list.
Fourthly, all companies on the A list to indemnify Governments whose territorial waters they enter against all costs of environmental pollution caused by collision or other source of pollution, such as washing tanks at sea.
Fifthly, an indemnity or oil fund to cover these anti-pollution costs should be financed by companies on the A list and held and administered by EEC sources. These funds should be available to Governments for research into anti-pollution devices, including the provision of standby tugs with anti-pollution devices aboard.
Sixthly, all companies on the B list should notify Her Majesty's Government of the competence of all senior crew who will be in charge of ships on the B list.
Seventhly, no tanker insurance should be provided by companies trading in insurance in EEC, unless clause 6 is fulfilled.
Eighthly, in the event of oil spillage at sea, the Government of the territorial waters concerned should have immediate call on the funds provided under clause 5 of my charter, such funds to be made available by the Government to local authorities or whoever is responsible for clearing oil from land or sea; and it shall be the responsibility of the relevant oil company immediately to refinance the oil fund after an accident involving its oil.
At the moment we merely pay lip service to the principle "The polluter pays". The ACOPS report, published in May this year, produced a whole series of interesting information. It said that all com
1912
pensation depends on identifying the source of the pollution, but ACOPS states that in most instances the source of pollution cannot be traced. Thus, Government adherence to "The polluter pays" principle often carries little weight in practice. This seems to me to be a strong reason for suggesting that the strongest possible restriction should be placed on oil tankers entering our territorial waters.
If only registered tankers were allowed, perhaps we could do something about recovering the costs from previously unidentified pollution—the unglamorous pollution about which we hear little, but which is a constant scourge.
I referred earlier to the French Senate. In The Guardian of 1st July there was a very interesting report on the French Senate committee which was looking into the "Amoco Cadiz" affair. The report said that
"proper control of pollution in the Channel could only be done with an investment of about £600 million, according to the Senate, which recommended that the prefect should have a fleet of helicopters, tugs, anti-pollution vessels and new radar systems under his control. It suggested that other European countries and petrol companies should help finance an anti-pollution plan."
The next disaster may be tomorrow's headline. The time to act is now. Prevention is better than cure. We cannot wait for the merchant shipping Bill, with which I am not satisfied anyway because the proportion of the Bill that deals with oil pollution is minimal. We have interdepartmental muddle and uncertainty characterised by the "Eleni V" affair. It is 11 long years since "Torrey Canyon". I ask the Minister "When shall we ever learn?"
11.44 p.m.
The Under-Secretary of State for Trade (Mr. Clinton Davis): The hon. Member for Christchurch and Lymington (Mr. Adley), in a brief period, has raised a number of headline points, but I suspect that he has not done much research. He referred in the first place to the desirability of implementing the merchant shipping Bill. In his peroration, he said that he disagreed with the legislation and had doubts about it. The Government have every intention, as is exemplified by the fact that we introduced a White Paper to which the merchant shipping Bill was annexed, of implementing the Bill.

1913
It is to the discredit of the Opposition that their trade spokesman yesterday denounced the need for the Bill and said that a Conservative Government—if, by some mischance, they were elected—would not introduce that legislation. He was running completely counter to the wishes of the whole shipping industry—owners and trade unions alike—and counter to the interests of the countless people who have contributed to the working party reports on pilotage, discipline, the employment of Asian seafarers, and so on. That shows the degree of responsibility of the Opposition.
This is not a satisfactory opportunity for discussing the pros and cons of the Government's actions over the "Eleni V". The matter is being considered by a Select Committee, to which my right hon. Friend the Secretary of State for Trade and I have given evidence.
I wish to rebut some of the hon. Gentleman's general allegations. It is easy to throw out such allegations in an Adjournment debate—wholly irresponsibly, wholly disregarding the available evidence, and claiming that the Government are to blame. Others will be able to pass a more authoritative judgment than can the hon. Gentleman, whose judgments in the House can scarcely bear the scrutiny of being authoritative in general terms.
Mr. Adley: Will the Minister give way?
Mr. Davis: No. The hon. Gentleman has had his go. I cannot cover all the ground that he covered, and I do not propose to deal with matters affecting fisheries, but I or one of my colleagues will write to him on that.
Although I have been given only short notice, I shall try to deal with the specific points that the hon. Gentleman raised at the end of his speech. I agree that the primary emphasis must be on the prevention of pollution, and my worry about the hon. Gentleman's proposals is that, in practice, they would have little regard to that consideration. We are determined that the United Kingdom should continue to play a leading role in the search for effective measures to reduce oil pollution from ships, but we must recognise that our coast may be polluted by vessels of any nation, not just by those trading with
1914
Europe or ourselves. The problem can therefore be dealt with only on an international basis. If we are to avoid the anarchy of conflicting national requirements, that is the route that we have to travel. We have therefore directed our main efforts to action in IMCO, but there are no easy solutions. We need more dedication to resolve these problems through the international community than has been evident for a number of years.
There have been a number of important advances this year alone. In January, the 1969 amendments to the international convention on the prevention of pollution of the sea by oil, 1954 finally came into force internationally, and the amended convention lays down discharge standards which, if universally adopted, should substantially eliminate oil pollution as a result of routine ships' operations. It is worth noting that the adoption of these standards was made possible by the development, largely at the initiative of our own oil industry, of the "load-on-top" system.
In February, agreement was reached at the IMCO conference on tanker safety and pollution prevention requiring all tankers of 10,000 gross tons and above to have two separately operable remote steering gear systems. All such ships will also have to be fitted with at least two independent radars. In addition, more frequent inspection of the equipment of all tankers will be required. All this should significantly improve safety. Furthermore, important agreements were reached to deal with operational oil pollution by adopting requirements for segregated balance tanks and crude oil washing.
Safety depends largely on the human factor. It is with that in mind that IMCO organised a conference in London on the training and certification of seafarers during June and this month. The conference led to the adoption of the first international convention on standards of training, certification and watchkeeping for seafarers. Following a proposal by the United Kingdom Government, the conference developed and incorporated in the convention regulations and recommendations dealing with the special training of masters, officers and ratings of oil, chemical and liquefied gas tankers, which we shall ratify at the earliest opportunity.

1915
We are also in the final stages of a joint study with France on a system of movements reporting by certain vessels carrying dangerous cargoes in bulk as they pass through traffic separation schemes in the Channel. That will have to be subject to international agreement through IMCO.
Reaching agreements on conventions and protocols is one thing, but they have to be brought into effect. It is encouraging that IMCO has now agreed on establishing a number of target dates. That should expedite implementation.
We have already ratified the 1974 safety of life at sea convention. Last month the Government published a White Paper to which the merchant shipping bill was annexed. We propose to see that implemented as soon as possible so that we can ratify international requirements much more speedily. The hon. Gentleman and his party do not want the Bill to see the light of day.
The North Sea states memorandum of understanding is important, but the hon. Gentleman did not mention that. It is designed to exert control procedures over the standards of merchant ships visiting the ports of the countries concerned. It came into force on 1st July. It covers both safety conventions agreed under IMCO and a series of conventions dealing with crew matters agreed under the auspices of the ILO.
Much has been achieved, but I agree that much more remains to be done, especially in bringing agreements into operation and enforcing them. We shall play our full part in that process.
I know that the hon. Gentleman has been much concerned about the mechanical recovery of oil. We have relied on the use of dispersants in dealing with pollution at sea because so far that has been seen to be the only method proven to be generally reliable and effective in the often turbulent waters around our coasts. There are other methods. There are booms and mechanical recovery systems. Warren Springs laboratory has been evaluating the more promising items of recovery equipment over the past two years. It is developing a system of its own design for use in the open sea. As the hon. Gentleman said, it is showing encouraging results. I shall not deal with
1916
the specific recovery method that he has mentioned.
I turn to the specific proposals that the hon. Gentleman made. I doubt whether I shall be able to complete my consideration of them this evening. He has taken the trouble to devise a charter. It is not my intention to pour cold water on the proposals. However, there is a danger of heightening expectations with ideas that in practice may be unworkable.
The hon. Gentleman has suggested unilateral action. Prima facie, that is attractive, but in practice I do not believe that it will work. What is more important, unilateral action would diminish the authority of IMCO. It would thereby diminish the ability of the international community to devise and enforce international legislation, which I believe is the only effective way of doing something about the problems that concern the hon. Gentleman. Ships not visiting our ports or those of the EEC but using the waters of the North Sea, the Atlantic and the English Channel would be unaffected by the proposals that he has put forward.
Mr. Adley: No, they would not be unaffected.
Mr. Davis: Further, some of the hon. Gentleman's proposals interfere with the right of innocent passage. Has he considered the repercussions? Has he considered what effect it might have on our own vessels, which provide a livelihood for a substantial number of British seamen? That is a factor that I, as a Minister, have to take into account.
What would be the repercussions of the hon. Gentleman's proposals on the rest of our industry? Surely we must gauge that too. His proposals ignore the situation of North Sea States that are not within the EEC.
I suggest that the hon. Gentleman's proposals ignore the degree of international co-operation already existing, as exemplified by the North Sea States memorandum of understanding. It ignores the work that has been done through IMCO which is continuing and has had particular stimulus this year. It ignores the degree of Anglo-French co-operation, following "Amoco Cadiz", which introduced positive proposals. It ignores the Bonn agreement among a number of

1917
nations in Europe, providing for assistance in time of emergency and for the exchange of information. It ignores the degree of anti-pollution work that has already been undertaken, in particular through IMCO and the certification of training of seafarers' conference—a monumentally important conference. It ignores the compensation provisions that exist and that would be improved by the coming into effect of the 1971 fund convention, expected shortly to come into effect. It ignores the fact that accidents occur to vessels when crews are already thought to be competent and whose certificates of competence would undoubtedly satisfy the hon. Gentleman's requirements as set out in paragraph 6.
I submit that none of the proposals, save perhaps those in paragraph 6, which are indefinite in any event, has a direct bearing on accident avoidance. That is the factor that is uppermost in the minds of all responsible Governments and has been uppermost in their minds, as exemplified by the February, June and July conferences that have taken place through IMCO.
I concede that we have a great deal to learn. That is why the Government are engaged in their own internal stocktaking at the moment. That is why many organisations are deeply concerned to learn lessons from "Amoco Cadiz" and "Eleni V". That is absolutely right. We do not have, and I doubt whether we shall have, complete answers to these problems. There is always room for improvement. If the Government have made mistakes, they will not be afraid of admitting them, because improvement is essential.
I believe that to reduce the authority of the organisation which, above all others, is able to introduce the international requirements, without which we
1918
cannot take effective action and which would be the corollary of unilateral action, which the hon. Gentleman is at least in part advocating, would be a very dangerous step. It is one of the reasons why we urged the United States not to take unilateral action—a judgment which they accepted at the February conference of IMCO.
I believe that it is dangerous simply to talk in general terms, as the hon. Gentleman has done, although no doubt with the best intentions in the world. It heightens people's expectations that there are ready solutions available. There are not ready solutions available. We have to work and to research carefully. We have to do this assiduously and in co-operation with the oil companies, the shipping industry and the trade unions concerned, because they have a valuable contribution to make in all these matters. It is not good enough, in my judgment, to make generalisations and, indeed, condemnations as the hon. Gentleman has done, unfortunately without adequate research.
The hon. Gentleman was right about insurance. I have a responsibility in that matter. I am concerned about the role of the oil companies in chartering ships. But I am not prepared to condemn them without giving them an opporunity to answer the allegations that are frequently and generally made. I said to the House not long ago that I was proposing to call the oil companies in for a discussion so that I could hear what they have to say—
The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.
Adjourned accordingly at two minutes to Twelve o'clock.

NORTHERN IRELAND
  Prisoners and Prisons
  Prisoners and Prisons
  Community Leaders (Meetings)
  Community Leaders (Meetings)
  Political Talks
  Political Talks
  Security
  Security
  Trade Unions
  Trade Unions
  Industrial Investment
  Industrial Investment
  Belfast Redevelopment (Area No. 31)
  Belfast Redevelopment (Area No. 31)
  Belmont House
  Belmont House
SCOTLAND
  Mr. D. C. Anderson
  Mr. D. C. Anderson
  Control of Pollution Act 1974
  Control of Pollution Act 1974
  Scottish Development Agency (Tenants' Debts)
  Scottish Development Agency (Tenants' Debts)
  Scottish Development Agency (Accounts)
  Scottish Development Agency (Accounts)
  Port Dundas (Housing)
  Port Dundas (Housing)
  Strathclyde (Sheltered Workshop)
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Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Norwich.

THE CIVIL SERVICE: MANPOWER REDUCTION
Viscount HANWORTH: 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 consider as an alternative to arbitrary cuts in Civil Service manpower a simplifying of the systems of taxation and of social welfare benefits which require ever greater numbers of staff to administer them.
The LORD PRIVY SEAL (Lord Peart): My Lords, I have sympathy with the assumptions which lie behind the noble Viscount's Question. Arbitrary cuts—particularly across-the-board reductions without reference to priorities—are not the answer. The Civil Service must be adequately staffed to meet the demands made on it. I believe that the right approach is to keep the administrative cost of government under continuous review, and in particular to search out possibilities for the simplification and improvement of systems and procedures. The four Departments—Inland Revenue, Department of Health and Social Security, Department of Employment, Customs and Excise—directly concerned with the administration of taxation and social welfare benefits keep under review both the structure and the systems of operation with economy and efficiency very much in mind. Major reviews are mounted from time to time in which the Civil Service Department participates.
Viscount HANWORTH: My Lords, I thank the noble Lord for that reply. Is he aware that there are 50 or so different types of cash benefit for the disabled,
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and is this a satisfactory situation? Secondly, can he confirm that the take-up of special benefits is something less than 50 per cent.?
Lord PEART: My Lords, we are certainly aware of the complexity of the system of benefits for the disabled, and of the difficulties which this may cause to some of them. The Government's strategy, though, has been to provide benefits for the most severely handicapped, and for those who have an inability to work, to walk or to look after themselves. I think that a simpler system would involve very substantial additional expenditure or produce rougher justice. But we are looking at this matter and, naturally, if we can simplify the system action will be taken. On the second question about the appallingly poor take-up of benefits, the take-up of benefits generally is in the range of 75 to 80 per cent.
Lord MOLSON: My Lords, will the noble Lord the Leader of the House agree that, in the case of Governments of both Parties, the obsession with trying to do exactly the right thing in individual cases results in a complication of administration, which inevitably means an immense increase in Civil Service obligations which is quite out of proportion to any real improvement that results from it? I ask this question from no Party point of view, because I consider that my own Party is equally reprehensible in this matter.
Lord PEART: My Lords, I accept what the noble Lord has said. On the other hand, I am now responsible for the Civil Service and am anxious that we simplfy matters and ease the administrative burden. That must be our aim. We have achieved success in this, and have even had a reduction in manpower of about 12,000 over the last two years.
Viscount MASSEREENE and FERRARD: My Lords, is the noble Lord the Leader of the House aware that employees claiming sickness benefit always have to wait for certainly three weeks, and often six weeks, and that, if they do not have a kind employer, that can cause hardship? Is the noble Lord further aware that I believe a lot of difficulty is

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caused by the fact that there are inexperienced staff dealing with these matters, some of whom have very little knowledge of English?
Lord PEART: My Lords, I know that there is sometimes a problem, but I would not say that the staff are inexperienced. They are very good staff. But if we wanted to have further surveillance that would mean more manpower, and I thought that the Party opposite was for reducing the numbers of civil servants and expenditure.
Lord HARMAR-NICHOLLS: My Lords, cannot the noble Lord make a small beginning by dispensing with outside political advisers who now figure on the Civil Service List, but make no contribution to the national good?
Lord PEART: That is another matter, my Lords. But the noble Lord knows that there are political advisers even under a Conservative Administration.
Lord BANKS: My Lords, can the noble Lord say whether there has been any recent joint investigation by the Departments to which he referred in his original Answer today into the possibility of introducing a tax credit scheme?
Lord PEART: My Lords, that is another matter. It is one which we shall note, but we have made no decision on that at all.
Lord SANDYS: My Lords, I wonder whether the noble Lord the Leader of the House can give us any idea of the ratio of manpower and wages to the amount of benefits dispensed, because it is a very large sum of money. If the noble Lord does not have the information with him, will he perhaps be able to obtain it?
Lord PEART: Yes, my Lords. I will see whether I can get a figure. I do not have one now, but I will certainly go into this.
Lord LEATHERLAND: My Lords, has my noble friend paid any attention to the size of the staff of the Inland Revenue Department, and can he perhaps cut down some of the staff in that Department? Their letters seem to come far too promptly.
Lord PEART: My Lords, I think that the Inland Revenue is a very efficient Department. I had the honour and privilege of being their guest at a conference a year ago, and had discussions with them. I think that we are well served by the people in that Department.
Lord MURRAY of GRAVESEND: My Lords, is my noble friend aware that some of us are concerned that the least well-off in the community are the least articulate? Any cuts in the service would hit them hard, and some of us would condemn it.
Lord PEART: Yes, my Lords. I believe that there is quite a lot in what my noble friend has said.

STONEHENGE: WORKING PARTY REPORT
3.17 p.m.
Baroness VICKERS: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when the working party concerning Stonehenge is likely to report.
The PARLIAMENTARY UNDER-SECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk): My Lords, the working party, which is considering problems likely to arise at the monument in the longer term, is expected to report in the autumn.
Baroness VICKERS: My Lords, may I ask the noble Baroness whether any meeting has been held since last January? If not, may I ask her whether the working party will be able to report in time? The local inhabitants are getting very worried about this monument. It was granted to the nation under a deed of gift, on condition that it should be open to the general public. I am wondering whether this matter will be able to be reported upon when the noble Baroness brings the report to the House, and whether we shall have an opportunity to debate it.
Baroness BIRK: My Lords, I think that the noble Baroness is getting confused

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between the terms of reference of the working party and the immediate events at Stonehenge now. I set up the working party over a year ago to look at the long-term effects of visitors on the monument. The intention is to look 15 or 20 years ahead and to consider the facilities to be provided in the long term for visitors and traffic and parking arrangements. One of the reasons it has been so difficult to arrange meetings is because a great number of people from the county council, the local council, the tourist board and the National Trust are involved, and it is extremely difficult to get them together. However, a draft report is now being prepared. A meeting should take place in September, when the report should be put to the working party. The other matters to which the noble Baroness has referred are day-to-day administrative matters which are not the concern of this working party.
Viscount ECCLES: My Lords, I live even nearer to Stonehenge than the noble Baroness who asked the Question. I wonder whether the Minister would agree that when 10,000 people visit a beauty spot it is no longer a beauty spot. What can the local people do about it?
Baroness BIRK: My Lords, this is the problem. That is why we have had to make different arrangements, to prevent people from going right in among the stones. However, there is also an experimental arrangement, which I believe is working very well, whereby people can walk around the monument and at two points come very close to the stones. That is what is happening now. I believe that there is some confusion between the present arrangements and the work of the working party, which is concerned purely with long term arrangements.
Viscount MOUNTGARRET: My Lords, may I ask the noble Baroness whether she is aware that the main working party at Stonehenge completed their job fairly satisfactorily about 2,500 years ago?

BELIZE: NEGOTIATIONS WITH GUATEMALA
3.17 p.m.
Baroness VICKERS: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government, in view of the recent speech of the new President of Guatemala concerning Belize, whether arrangements will be made to find a solution in regard to the future of that country, and whether the Government of Belize will be invited to be represented at any conference that may be arranged between Her Majesty's Government and that of Guatemala.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, it is hoped that an early start can be made to our negotiations with the new Guatemalan Administration. The Belize Government and Opposition will be represented at all our negotiations with the Guatemalans. Any settlement would have to prove acceptable to the people of Belize.
Baroness VICKERS: My Lords, I should like to thank the noble Lord very sincerely for that reply; it is the best I have had regarding Belize for many a long day. Can the Minister assure me that the Government will not do away with any land? The Guatemalans have a very adequate road down to Belize port, which they can use at present. May I ask the Minister whether he will look into the affairs of this colony? When I was there some years ago, I found that a mental hospital was in very bad condition. I have been tackling the Government about it ever since and have tried to get them to improve it. I have just received a letter from the Minister of State in which he says that the hospital has now collapsed. Fortunately, no patients were injured; they have been moved to the new youth centre. Can the Minister say when the new accommodation will be built?
Lord GORONWY-ROBERTS: My Lords, as we have said, we exclude no possibilities which might lead to a peaceful settlement. We have made it clear that to achieve this aim we are prepared to give aid to assist economic development—and, indeed, social development, as mentioned by the noble Baroness—in both Belize and Guatemala.
Baroness ELLES: My Lords, can the Minister assure the House that, despite plans for economic and social assistance after the granting of independence to Belize, the Government are doing all that they can now to ensure that the economic and social development of the country is pursued? There seems to be an idea that the Government are very keen to get rid of their dependencies in order to give economic aid afterwards. I should like to have an assurance from the Government that such aid is being given now and that it will continue to be given during the negotiations.
Lord GORONWY-ROBERTS: Yes, certainly, my Lords. I take full note of what the noble Baroness has said. Anxious as we are to advance Belize on a firm and secure basis to independence, and anxious as we are in doing so to assist and aid them, as well as Guatemala, in the post-independence period, we should certainly not slacken our efforts to build up the country as best we can in the phase leading up to independence.
Lord REIGATE: My Lords, may I ask the noble Lord whether we shall be represented diplomatically in Guatemala?
Lord GORONWY-ROBERTS: Yes, certainly, my Lords.
Lord BROCKWAY: My Lords, the Minister said that the people of Belize would be consulted. May I ask the Minister if it has yet been decided whether this shall be by vote of the Assembly or by referendum?
Lord GORONWY-ROBERTS: My Lords, the intention is that when there is a proposal for agreement, first, it should be acceptable to the people of Belize as well as to the people of Guatemala; and the people of Belize will be consulted by referendum.

THREE-DAY WEEK
3.20 p.m.
Lord SHINWELL: 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 intend to adopt the three-day week.
Lord WALLACE of COSLANY: No, my Lords.
Lord SHINWELL: My Lords, I should like to thank my noble friend for that Answer. But does he recall that the three-day week was largely inevitable because of confrontation by the Government led by Mr. Heath with a section of the trade union movement? Now that Mr. Heath—against whom I am far from imputing sinister motives, but who is inclined to be rather inflexible and has fixed ideas—has made peace with Mrs. Thatcher, he might in co-operation with her seek to introduce legislation of a similar kind if there should be an electoral misfortune in the country, and I should like to know whether we have any safe-guards against a disaster of that kind?
Lord WALLACE of COSLANY: My Lords, far from trying to assist this recently arranged love affair, I would say that the only safeguard we have is to make sure that that lot do not get back again.
Lord ROCHESTER: My Lords, on a somewhat more serious note, will the noble Lord agree that, since all past experience has shown that when there are reductions in the length of the normal working week overtime is not reduced, it accordingly follows that if inflation, productivity and, in the long run, employment prospects are not to get even worse, trade unions should be prepared to accept corresponding reductions in hourly rates of pay?
Lord WALLACE of COSLANY: My Lords, this is a very complicated subject, as the noble Lord knows only too well from his great experience. It is a subject which we are carefully studying. A cut in working hours which really created new jobs would be worth considering, and of course the wage question would have to be taken into account. We must have regard to the effect on costs, otherwise more jobs might be lost than created. Reductions in overtime from the present high level might be a first priority.
Lord SHINWELL: My Lords, recently it has been alleged that with a three-day

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week we can produce as much as in a full working week, and even more. So can my noble friend explain why the Conservative Government did not continue with the operation?
Lord WALLACE of COSLANY: My Lords, conceivably there were other reasons why they did not do so. Immediately following the three-day week and the problems we had, the Government of that day ran away and left us with a legacy of inflation of 15 per cent., rapidly rising, and the biggest trade deficit left by any Government to another.
Baroness ELLES: My Lords, does not the answer lie in the fact that the Labour Party came into Government, brought back the five-day week, and still produced as little as had been produced in the three-day week?
Lord WALLACE of COSLANY: My Lords, I am sorry to have to cross swords with the noble Baroness, but, comparing like with like, the total output as measured by real gross domestic product today is higher than it was in the first quarter of 1974 by about 5 per cent.
Viscount MASSEREENE and FERRARD: My Lords, would the noble Lord not agree that a three-day week in agriculture would be absolutely farcical because one would have to have double staff and double housing? Livestock has to be looked after daily, apart from the vagaries of the weather. With due respect to the noble Lord, I think it is a most silly question.
Lord WALLACE of COSLANY: My Lords, I would not disagree with the noble Viscount. It might be that the farmer's wife who works a seven-day week without trade union recognition would probably have to fill in the other days for him.
Lord HAWKE: My Lords, is it not true that we are so desperately short of skilled labour in almost every industry in the country that we could not possibly afford to have people working only three days a week?
Lord WALLACE of COSLANY: My Lords, the problem of shortage of skilled
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labour is with us, and we are doing our best to train skilled labour. We accept that there is a shortage and we must get more skilled labour into industry in order to increase our output.
Lord LEATHERLAND: My Lords, is it the intention of the Government to introduce a three-day week in this House?
Lord WALLACE of COSLANY: My Lords, I cannot take account of the hopeful desires of my noble friend, who apparently requires a rest. That position rests with other channels and with my immediate chief, who is sitting too close to me for comfort.

DINNERS
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House may I remind noble Lords that dinners are available this evening.

BUSINESS OF THE HOUSE
Lord PEART: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That Standing Order No. 37 (Arrangement of the Order Paper) be suspended until the Summer Recess so far as is necessary to give the Government power to arrange the order of business; and that Standing Order No. 43 (No two stages of a Bill to be taken on one day) be suspended for the same period.—(Lord Peart.)
On Question, Motion agreed to.

STATE IMMUNITY BILL [H.L.]
3.26 p.m.
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I beg to move that the Commons Amendment be now considered.
Moved, That the Commons Amendment be now considered.—(The Lord Chancellor.)
On Question, Motion agreed to.

COMMONS AMENDMENT TO ONE OF THE LORDS AMENDMENTS TO ONE OF THE COMMONS AMENDMENTS
[References are to Bill No. 100 as first printed or the Commons]
Original Commons Amendment:
Clause 23, page 14, line 1, leave out subsection (3) and insert—
'(3) Subject to subsection (3A) below, Parts I and II of this Act do not apply to proceedings in respect of matters that occurred before the date of the coming into force of this Act and, in particular, sections 3, 4 and 9 do not apply in the case of any transaction, contract or arbitration agreement entered into before that date.
(3A) Sections 2 and 12 above apply to any proceedings instituted after the coming into force of this Act.'
Lords Amendment:
In subsection (3), line 4, leave out 3, 4 and 9 do not apply in the case of any' and insert '2(2), 3, 4 and 9 do not apply in the case of any written agreement'.
The Commons agree to this Amendment to their Amendment and propose the following Amendment thereto:
Line 2, leave out from '2(2)' to the end of line 3 and insert 'and 13(3) do not apply to any prior agreement, and sections 3, 4 and 9 do not apply to any'.
The LORD CHANCELLOR: My Lords, I beg to move that the House doth agree with the Commons in their Amendment to the Lords Amendment to the Commons Amendment. This Amendment relates to Amendments that were moved by the noble Baroness, Lady Elles, with a view to ensuring that none of the provisions of this Bill should have retro-spective effect. It is consequential on the previous Lords Amendment to include a reference to Section 2(2) in Clause 23(3), which provides what transitional impact the Act is to have on contracts, and the effect of this Amendment is to add Section 13(3) to the list. Clause 13(3) covers another class of prior agreement covering submission to execution, which had been overlooked. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(The Lord Chancellor.)
Baroness ELLES: My Lords, on behalf of my noble friends, I should like to express our gratitude to the noble and learned Lord on the Woolsack. We have, of course, no objection to this Amendment.
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I regard it purely as a consequential Amendment to the Amendments that we have already debated through the many stages of this Bill. I hope now that we have the Bill right, and that it will serve a useful purpose in the commercial transactions of individuals and foreign States. I beg to support the Amendment.
The LORD CHANCELLOR: My Lords, I should like to express my gratitude to the noble Baroness for her considerable assistance on this highly technical Bill.
On Question, Motion agreed to.

WALES BILL
3.29 p.m.
Read 3a, with the Amendments.
Clause 16 [Subject committees]:
Baroness ELLES Baroness ELLES moved Amendment No. 1:
Page 9, line 5, at end insert—
("Provided that no committee shall be appointed with functions not relating to matters with respect to which the powers of the Assembly are exercisable.").
The noble Baroness said: My Lords, if I may say so, this is really a final probing Amendment, and I will state straight away that we have no wish to press this Amendment unless something untoward comes up in an explanation from the noble and learned Lord or whoever answers on behalf of Her Majesty's Government.
The Amendment has been tabled again because the Amendment introduced by the Government on the Report stage of the Bill modified and widened the power of the Assembly in its statutory rights to set up committees by the words, "the area of government". Obviously, as my noble friend Lord Elton pointed out at the time, this can also be interpreted very widely and covers a much broader field of activity than the original wording of the Bill, which restricted the rights of the Assembly to set up committees within the terms of certain clauses in the Bill.
The point of our Amendment, which we did not pursue at the time—and I should like to make this perfectly clear—was of

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course to ensure that the Welsh Assembly should be precluded from appointing a committee which might cover matters relating to functions and powers which have not been devolved to the Welsh Assembly. I wanted to take the opportunity of making it quite clear that it is perfectly understandable that any committee set up will discuss any matters which it wishes to discuss; the fact that the committee is not called the European committee, or whatever it is, will not preclude it from discussing matters brought to its attention. All we want to ensure is that particular committees are not set up to deal with functions and powers which are outside the devolved matters for the Welsh Assembly.
I particularly wanted to emphasise this matter because of a statement made by the right honourable gentleman Mr. Enoch Powell in another place in a debate on a similar Amendment during the recent stages of the Scotland Bill. He suggested that the fact that the Assembly—he was then talking about the Scottish Assembly—had the right to set up committees which covered areas of government which were devolved precluded by silence the right to set up other committees. The Minister who replied, Mr. Millan (in col. 836 of the Official Report for 7th July), did of course say that Mr. Powell's interpretation was wrong and the fact that there was no specific right for the Assembly to set up committees covering matters which were not devolved did not actually exclude that.
I wondered whether I could have a statement from the Government saying that this is the correct interpretation also in respect of the Welsh Assembly. We are, of course, not satisfied if this is the right interpretation, but nevertheless I think it is right that this matter should he clarified before the Bill leaves this House. One of the reasons why I do not think it right that we should vote on this particular Amendment is that a similar Amendment was voted on in another place in relation to the Scotland Bill, and was defeated. But I would be grateful for an interpretation from the Government on this particular matter. I beg to move.
The LORD CHANCELLOR: My Lords, I am grateful to the noble Baroness for having made it quite clear that in
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moving the Amendment she is not seeking to restrict discussion and debate in the Assembly and its committees to the functions that are to he devolved. Clearly, that would be not possible, nor indeed desirable. At an earlier stage the noble Baroness feared that without an Amendment of this kind there would be "an absolute proliferation of committees" involving great expense. I suggest that it is unreasonable to indicate or to forecast that the Assembly will rush into the appointment of a vast array of committees regardless of expense. Its Members will be those who have been brought up politically in Wales, and the Welsh are, if I may say so, politically mature people. It is very unlikely that they would proliferate a large number of committees just for the fun of it or in the hope of extending the functions which are attributed to them in the Bill. It surely must be left to the Assembly itself to decide, for example, whether it wants separate committees for the countryside, for ancient monuments, and for historical buildings and tourism, or whether one committee might effectively deal with all those functions in those three areas together.
In exercising its functions the Assembly and its committees will be bound to be concerned with developments and proposals on functions which the Assembly is not to exercise. Proposals for legislation at Westminster are a clear example. An Assembly committee on housing will need to consider the Government's proposals for new housing legislation which might well affect the Assembly's responsibility. If this Amendment were accepted, the effect might well be that such a committee's terms of reference could not extend to consideration of that kind of matter, although I think it is implied in what the noble Baroness said at the beginning of her speech that in practice the committee should be free to discuss policy in relation to such a matter and to consider those proposals.
I think that it would be wrong explicitly to prohibit the Assembly from appointing a committee, even though it might seek to do so, to consider, for example, the problems of school-leavers in Wales, the level and effect of unemployment, and matters of that kind. I think it would be wrong to restrict this democratic Assembly in its power to appoint committees to

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consider those matters. Accordingly, I submit that this provision really is impracticable and an unreasonable limitation on the workings of a democratic Assembly.
Baroness ELLES: My Lords, I thank the noble and learned Lord for that explanation. I hope that what he has said will act as a guideline to the Welsh Assembly when setting up its committees, and that it will confine the committees established and appointed to the matters which have been devolved to them. The functions of this new body should be made clear to the people of Wales; it should be clear what actions of government they are in fact performing. They already have three other levels of government. It must be made quite clear what are the functions of the Welsh Assembly. Probably one of the ways in which that will be understood by the Welsh people will be by the committees set up and the work done by the committees.
The LORD CHANCELLOR: My Lords, I hope I have not misled the noble Baroness into thinking that it will not be possible for the Assembly to bring into being committees to consider non-devolved matters, without, of course, having any power or function in regard to them. I think I made that clear earlier.
Baroness ELLES: My Lords, I thank the noble and learned Lord for that addendum, if I may call it that, because it does fill out even more what the words "areas of government" really mean; they are obviously very widely drawn. Nevertheless, I think we have gone into this matter far enough. I am sure the Welsh Assembly, if it is set up, will be a reasonable body and will conduct itself in a reasonable manner. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 76 [Interpretation]:
3.38 p.m.
Baroness STEDMAN Baroness STEDMAN moved Amendments Nos. 2, 3, 4 and 5:
Page 32, line 2, leave out from ("to") to end of line 3 and insert ("carry on any")
Page 32, line 7, after ("Office") insert (", the British Railways Board")
Page 32, line 7, leave out lines 8 to 10 and insert ("but subject to subsection (4) below")
Page 32, line 24, leave out from beginning to ("shall") in line 26 and insert—
("(4) The Secretary of State may by order provide that any persons specified in the order shall be treated as being, or as ceasing to be, excepted statutory undertakers for the purposes of this Act or for such of those purposes as may be so specified; and a statutory instrument made under this subsection").
The noble Baroness said: My Lords, I hope it will be for the convenience of your Lordships' House if we take Amendments Nos. 2, 3, 4 and 5 together because all of them concern the definition of "excepted statutory undertakers" in Clause 76. As we explained during Report stage, we wish to get the definition in Clause 76 as precise as possible, but at the end of the day we still need the flexibility of an order-making provision to add or subtract from the definition. The Amendments we now propose are similar to those which we tabled on Report stage but then withdrew to allow an opportunity for general debate. I hope they now show a slight improvement.
The Amendments have four purposes. First, they exclude from the definition bodies which are empowered to "construct" or "work" but not to "carry on" the various undertakings listed in subsection (1). Secondly, the Amendments recast the definition so that the British Railways Board is now included by name rather than by general reference to railway and light railway undertakers. This means that if, for example, a passenger transport executive were to run a light railway in Wales they would not thereby become an excepted statutory undertaker. Thirdly, the Amendments enable the Secretary of State by order to subtract from the definition as well as to add to it. We explained on Report stage why we thought this flexibility was needed, and I think that that explanation was accepted.
Fourthly, we have tried to take some account of the concern of the noble Lord, Lord Elton, as to presentation. As I understand it, he thought it odd that an order-making power should be inserted in the sentence which defines excepted statutory undertakers. Our previous Amendment would have compounded that oddity.

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But our new Amendment separates the order-making power from the definition in subsection (1) and places it at what we hope the noble Lord will consider a more respectable distance in subsection (4). I beg to move.
Lord ELTON: My Lords, who would suppose that three short words could contain so much meaning! It is a fascinating occupation on this Bench to anticipate, if one can, which alter ego of the noble and learned Lord will emanate from the Front Bench. I noticed a certain hesitation in his own choice also, but I felicitate the noble Baroness, Lady Stedman, on her choice and seize this opportunity—although it is being ahead of the game, but I fear that on the appropriate day the opportunity will not present itself to me and I am anxious to show the goodwill that exists between the Front Benches—to congratulate the noble Baroness on her birthday, which I understand will be tomorrow. From her expression I see that she perhaps did not wish to be reminded of it, in which case I apologise. However, I assure her that the days of that apprehension are not yet appropriate!
The noble Baroness has kindly returned to a matter with which we had difficulty during the Report stage and has grouped Amendments Nos. 2 to 5 together. It is worth mentioning in passing, without rancour but for note for future occasions, that I cannot recall throughout our discussions on this Bill having had notice of any proposed groupings of Amendments, which I have always had as regards other Bills. Moreover, in Committee, when I drew this matter to the attention of the Government Front Bench, I was told that in future we would be given notice. This particular grouping is a very obvious one. I have no complaint, and we have had no difficulty, but to be given notice is a useful practice which should continue.
We then come to the clarification of definition and the inclusion of the power to subtract from the list of definitions, as well as the power to make additions to the list, of those bodies which qualify as excepted statutory undertakings. I have no quarrel with that, and I think that I made my wry comments on the elasticity of this provision, which is phenomenal, at an earlier stage. I notice that the noble Baroness
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has made, or her advisers have made, a courteous, but minimal, move towards distancing the power from the clause. I think that it is unusual, and perhaps in drafting terms inelegant, to have a power inserted in a clause which calls itself a clause for definition. It is, in fact, a clause for another purpose, and it seems to me that there might usefully be added a little note in the margin where the clause and its purpose are named. However, that, of course, is not the subject of debate here because it is only an annotation as regards the Bill and not the Bill itself. I hope that what I have said is noted. We have no objection to the Amendment.
Lord LLOYD of KILGERRAN: My Lords, may I also take this opportunity to congratulate the noble Baroness and to support what the noble Lord, Lord Elton, has said. No doubt the noble Baroness will be thanking the noble Lord, Lord Elton, for what may be considered to be some kind of birthday present—tomorrow at least, according to the usual channels, there will not be so many probing Amendments to keep her busy; she will have a free day. However, in seriousness, I should like to support what the noble Baroness said about Amendment No. 3 because that seems to me to be a helpful Amendment.
On Question, Amendments agreed to.
Schedule 2 [Existing statutory functions]:
3.45 p.m.
Lord ELTON Lord ELTON moved Amendment Nos. 6 and 7:
Page 41, column 2, leave out lines 33 to 35.
Page 41, line 37, leave out ("that Act") and insert ("the Education Act 1944 (c. 31)").
The noble Lord said: My Lords, this pair of Amendments are the fruit of a long exchange between the noble Lord and myself partly across the Floor of the House, partly through the post and even, at one stage, on the telephone. It really comes down to the following. The entry referred to in Amendment No. 6 in lines 33 to 35 of column 2 on page 41, was apparently a necessary paver to an Amendment which we shall be discussing later as regards Schedule 11.
Very briefly, it was apparent to my untutored eye that if we provided a power

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for the Secretary of State in Schedule 11 as an addition to a Bill which was devolved, and if we did not reserve that additional power in Schedule 2, then that, in itself, would become a power of the Welsh Assembly, and as the power was, in fact, the power for the Secretary of State to act in place of the Welsh Assembly, it would have been otiose.
However, it was explained that if on every occasion that this was necessary it was done, the length of the Bill would become inordinate, and if it were not done on any occasion the very uniformity of the omission of this entry in the Bill would be sufficient to make it clear to the courts that the reservation was intended, though not stated. I was anxious that the inclusion, on this solitary occasion, of a reservation should not invalidate that principle. I have been told that it is necessary to withdraw it because otherwise it would invalidate that principle. Therefore, Amendment No. 6 removes the unnecessary paving stone which might otherwise trip up the people walking across it.
Amendment No. 7 which is adjacent to Amendment No. 6 is, as your Lordships will see, a perfectly straightforward drafting Amendment. I am taking out the first reference to the 1944 Act in Schedule 2 and the subsequent references are to "that Act". The specific reference has to be inserted at the second point and, as it is being excised at the first, I beg to move.
The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Lord Donaldson of Kingsbridge): My Lords, I have nothing to add to the very clear explanation of the noble Lord, Lord Elton, and I am happy to accept both Amendments.
On Question, Amendments agreed to.
3.48 p.m.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 8:
Page 44, line 29, column 2, at end insert—
("The powers under section 29")
The noble Baroness said: My Lords, during Report stage the noble Lord, Lord Stanley of Alderley, and other noble Lords argued that we should reserve
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certain powers in Section 29 of the Rent (Agriculture) Act 1976, which deals with agricultural dwelling-house advisory committees. The Government's belief is that it is a matter of balance whether the powers in Section 29 are regarded as being of an agricultural or housing nature. However, if they are to be regarded as agricultural, our view is that all the powers in Section 29, and not just those in subsections (8) and (9)—as proposed by the noble Lord, Lord Stanley, on Report stage—should be reserved. There would be administrative awkwardness if the Government were to be responsible for directing the committees and regulating their procedure but not for other matters, such as the appointment of secretaries and the meeting of expenses.
During Report stage the noble Lord agreed to withdraw his Amendment on the understanding that the Government would table a more complete Amendment on Third Reading. This we have done, and I hope it is acceptable. It reserves all the powers under Section 29 of the 1976 Act so that the Assembly will now have no powers in respect of agricultural dwelling-house advisory committees. I beg to move.
Lord STANLEY of ALDERLEY: My Lords, I should like to thank the Government. I should also like to thank my noble friend Lord O'Hagan, and the noble Lord, Lord Collison, who helped to guide me in bowling a slightly straighter ball than I dreamt I was bowling. The Government have been very good to accept the Amendment and I thank them very much.
On Question, Amendment agreed to.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 9:
Page 44, line 43, at end insert—

("The Home Purchase Assistance and Housing Corporation Guarantee Act 1978 (c. 27) sections 1 and 2(2) to (4).

The functions under those sections so far as exercisable otherwise than in relation to advances to or loans by (the institutions specified in paragraphs 2, 3 and 5 of the Schedule.").

The noble Baroness said: My Lords, this Amendment devolves certain powers under the Home Purchase Assistance and

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Housing Corporation Guarantee Act 1978, which was very recently before this House. The Act provides special assistance for those saving to buy a home for the first time. The Act also increases the aggregate maximum amount of loans which may be guaranteed by the Housing Corporation under Section 10 of the Housing Act 1974.
The intention of the Amendment is that the Assembly should have for Wales the ministerial powers in the Act which deal with lending by certain bodies or groups of bodies in the public sector, including local authorities. All powers with respect to private sector lending are, however, to be reserved and will continue to be exercised by Ministers. These arrangements bring the new Act into line with the existing policy in the Wales Bill whereby the Assembly is to have wide powers in respect of housing, which is a subject primarily of concern to those people living in Wales, save for the important exclusion of the provision of finance by private financial institutions.
The ministerial powers to be devolved in relation to the public bodies in question include such matters as the power to prescribe price limits on property for which loans are sought and the minimum levels of savings to qualify. The Assembly will be responsible for making advances to lending bodies to pay for its part of the scheme. I beg to move.
On Question, Amendment agreed to.
3.51 p.m.
Lord SANDYS Lord SANDYS moved Amendment No. 10:
Schedule 2, page 47, line 9, column 2, at end insert—
("The functions under sections 29, 35, 36, 38, 39, 41 and 42 so far as relating to terms and conditions of service, appeals, pensions, gratuities or allowances payable on retirement or death, or compensation for loss of office or employment or loss or diminution of emoluments.").
The noble Lord said: My Lords, in this Amendment, we return to the problem of the remuneration of doctors, dentists, physicians and pharmacists. We discussed an Amendment very similar to this in Committee on Thursday, 15th June. At that time we were in some difficulty over the particular situation of remuneration of those concerned, and we return
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now to the same position, but with the Amendment altered to include the original drafting of the Bill when introduced on the first print of the Bill. In addition, there is the word "appeals". We believe that the addition of the word "appeals" to the Government's original drafting on the first print of the Bill will be satisfactory.
We have studied the reply made by the noble Lord, Lord Donaldson of Kings-bridge, at column 565 of the Official Report of 15th June and he made particular reference to this point. He said this:
"The entries in Part II of Schedule 2 in the publication print of the Bill for the sections named in this Amendment were designed to fulfil this policy in relation to general medical practitioners, dentists, opticians and pharmacists. But it became apparent that these entries in Part VI did not fulfil the Government's intent. The phraseology concerned could, in certain contexts, carry a much wider meaning than matters affecting remuneration and it could be construed to incorporate functions unassociated with remuneration but which are intimately concerned with the day-to-day running of the Health Service ".
That is the heart of the dilemma because, unhappily, the remuneration of those concerned and the functions of management are very closely related. We believe it to be very nearly impossible to separate those two. We have come as close to it as we believe possible and have included "appeals" because, in view of the fact that there will be a number of situations which will arise in this context, we believe that this is very necessary. I beg to move.
Lord DONALDSON of KINGSBRIDGE: My Lords, when we debated the Amendment to which the noble Lord referred in Committee, I made clear the Government's policy on this matter. There is no difference at all between the intentions behind this Amendment and those of the Government as to pay and related terms and conditions of service. We believe that they should remain the responsibility of the Government. We do, however, consider that some of the terms and conditions of service not related to pay should become the responsibility of the Assembly because their reservation could interfere with the Assembly's management of the Health Service in Wales. When the noble Lord, Lord Hill of Luton, in a very strong speech on this subject, asked, "Why not

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leave it as it was?", that was the answer; for as it was it did move these subsidiary elements, which are an essential part of administration, from the devolved people. Otherwise, I think that we are in total agreement.
The Government scheme, which I described in Committee, enables the Secretary of State to distinguish between the various terms and conditions of service and to issue directions in respect of those where pay and related matters predominate. I do not wish to detail your Lordships by restating what I said earlier. It is enough to say that it placed control for determining what functions related to remuneration in the hands of the Secretary of State, which, of course, is also the wish of the movers of the Amendment. It also allowed for the Assembly to run the Health Service as a coherent whole in the areas not directly affecting pay. This is what the Amendment interferes with. It also provided flexibility for the future. The scheme covered by the Amendment before your Lordships could create administrative problems; for example, in there being no clear line of demarcation between the Assembly's responsibilities and those of the Secretary of State; these in turn could lead to legal uncertainties as to the effect of the entry. As I have said, "terms and conditions of service" is a phrase which goes very wide indeed.
I think that I have said enough to make it clear that I do not feel that we can accept this Amendment. We believe that it confuses the issue and I very much hope that the noble Lord, Lord Sandys will not find it necessary to press it.
Lord LLOYD of KILGERRAN: My Lords, may I ask the Minister whether he is limiting his reply to the first part of this Amendment in so far as it relates to "terms and conditions of service"? The Amendment covers pensions, gratuities or allowances payable on retirement or death and certain other aspects of compensation. Does the noble Lord's answer cover all those aspects?—because as I understood him, he mentioned only the first part relating to terms and conditions of service.
Lord DONALDSON of KINGSBRIDGE: My Lords, with the leave of the House, we must not start a debate,
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but perhaps I might be allowed to answer this. The determination of what is relevant to the Secretary of State and what is relevant to the Assembly under the Bill as it stands is in the hands of the Secretary of State.
Lord SANDYS: My Lords, we return to a situation which is very largely unresolved because I think that the Government are as much in a dilemma as we are, though the noble Lord, Lord Donaldson of Kingsbridge, has repeated many of the arguments which he stated earlier. I think that he also added the arguments of his honourable friend Mr. Alec Jones at an earlier stage. It does not appear to me that this Amendment has the support of either the noble Lord, Lord Hill of Luton, or the noble Lord, Lord Porritt, and I should find it very difficult to press the Amendment at this stage. As this is the final stage at which we shall have an opportunity to make Amendments to the Bill, I feel that it is for the benefit of your Lordships if I withdraw the Amendment.
Amendment, by leave, withdrawn.
3.59 p.m.
Lord DONALDSON of KINGS-BRIDGE Lord DONALDSON of KINGS-BRIDGE moved Amendment No. 11:
Page 48, leave out lines 15 to 19.
The noble Lord said: My Lords, the noble Lord, Lord Sandys, has, I think, very wisely withdrawn his Amendment which dealt with the terms and conditions of service of medical practitioners, opticians, dentists and pharmacists. Throughout our deliberations on the Bill, the Government have sought to ensure that, when the Bill leaves this House for another place, it will do so in an internally consistent form. The purpose of the Amendment which I am now moving is to ensure that the terms and conditions of service of employed Health Service staff are brought into line with noble Lord's wishes in respect of medical practitioners, opticians, dentists and pharmacists. It is moved without predjuice to any action the Government may wish to take in another place. I beg to move.
Lord HILL of LUTON: My Lords, this Amendment does what was sought to be done at the Committee stage of the Bill, when the noble Lord was good

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enough to withdraw it for further consideration. Furthermore, he has been good enough to write a letter to me, and to others. It seems to me to go some way—indeed, a good way—but not quite far enough. The issue here must not be obscured; it is the issue that the level of consulatants, the requirements—clinical and other—for consultant status, and the mode of their employment, must not result in a lower standard of consultants in Wales as compared with the rest of this Island.
This is important to Wales and, although I am not going to elaborate the point, particularly to some areas of Wales, what is done here is to transfer from the Secretary of State to the Assembly, by means of regulation and otherwise, the responsibility of laying down the standards to be observed in the selection of consultatants, the procedure to be observed, and so on. This goes to the Assembly. Will the noble Lord give an assurance that this cannot, of itself, result in lower professional, clinical, or other requirements for the appointment of consultants in Wales than those which obtain today and those which obtain in the Island as a whole?
It is important to establish that, following the transfer of responsibility for the mode of appointment and the criteria to be applied to applicants, the transfer will still leave the Secretary of State, where necessary, in full authority over these items. I am a little puzzled because there was an associated Amendment at Committee stage which the noble Lord perhaps did not withdraw. I have not been able to find it in this complicated Bill. But if the noble Lord can give an assurance that this change, of itself, will not, and cannot, result in a different, lower level of standards for consultants, then it leaves me quite happy. This comparison between consultants and general practitioners, the common argument of the Amendment just withdrawn and the one that is now being moved, has left me a little puzzled. I should like, please, an assurance that there cannot as a result of this be a lowering of the requirements for consultant status and consultant and specialist appointments. That, no one here wants.
Lord SANDYS: My Lords, before the noble Lord, Lord Donaldson, replies,
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may I say that I hope he will be able to give what may be termed a very firm assurance in this particular regard, because we had a considerable debate on the particularly important matter of the maintenance of standards on 15th June. It is a matter which is regarded by the Government, the medical profession and all concerned as being of the first importance. At that particular time, we most strongly resisted the removal of these particular four lines, 15 to 19, on page 48. It appears that the noble Lord, Lord Hill of Luton, would accept this Amendment by the Government subject to an assurance. If an assurance can be given in very firm terms, then so be it, but if we feel that the assurance is of a different character I must advise the noble Lord that we may have to resist the Amendment.
Lord DONALDSON of KINGSBRIDGE: My Lords, I seem to be being bullied into saying something I might not think right, and the noble Lord will have no effect of that kind. I have not the slightest difficulty in giving this assurance. The intention of the Government, as I expressed it the last time we debated it, is exactly the same as that that the noble Lords, Lord Hill and Lord Sandys, have been speaking about. This Amendment, added to the absence of the noble Lord's Amendment, effects this, in the Government's opinion, effectively, and I give the fullest assurance that the result of passing this Bill in the present form will not involve any divagation of standards of the kind the noble Lord has feared.
Lord SANDYS: My Lords, the word "divagation" leaves me puzzled. It is not one which I think many of your Lordships have used in common parlance. Would the noble Lord accept a different word which perhaps he might be permitted, with the leave of the House, to add to his statement?
Lord DONALDSON of KINGSBRIDGE: My Lords, with the leave of the House, I will accept any word which has the same meaning. It means" an induced difference".
On Question, Amendment agreed to.
4.7 p.m.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 12:
Page 52, leave out lines 50 and 51 and insert—

(" The Commons Registration Act 1965 (c. 64) section 19.

The power to make regulations for the purposes specified in paragraphs (e) and (g) of subsection (1).").

The noble Baroness said: My Lords, in proposing the Government's Amendment, I should also like to speak to Amendment No. 13 in the name of the noble Lord, Lord Stanley of Alderley, since both concern the Commons Registration Act 1965. The Government's Amendment was originally tabled on Report stage, but was withdrawn following a misunderstanding as to its effect. I have subsequently written to the noble Lord, Lord Stanley, seeking to clear up this misunderstanding and also to answer some points about which he is concerned. For the benefit of those who have not had copies, perhaps I could repeat the substance of my letter for the record.
The effect of the Government's Amendment is to devolve the regulation-making powers in Section 19 of the 1965 Act except so far as they relate to the Commons Commissioners and the Church Commissioners. Following an earlier Committee stage debate, we now agree that these two matters are not apt for devolution. The powers under Section 17 of the Act, which again concerns the Commons Commissioners, are already reserved in the Bill as it stands and will remain reserved under our Amendment. Column 1 of the Amendment only relates to Section 19 of the Act, so powers under all other sections are reserved. In practice, the only ministerial powers under the Act which are not now spent or irrelevant are those in Sections 17 and 19.
Concern was expressed by the noble Lord, Lord Stanley, about the provision in Section 15 relating to the qialification of grazing rights on commons. As I said in my letter, this is the section which gives Parliament the power to determine the number of animals to which grazing rights apply, and because it is not a ministerial power it will not be devolved to the Assembly. Any doubt which might be in the noble Lord's mind as to this has, I hope, been entirely removed by our Amendment, which specifically limits the scope of devolution (in column 1) to the powers under Section 19.
The aspects of Section 19 which we propose to devolve relate, in broad terms,
1716
to the keeping of commons' registers by local authorities. The present regulations are in fact the same for England and for Wales. But subsection (4) already allows for the possibility of different regulations should circumstances require. It seems sensible to us that, should the need arise for different Welsh regulations, they should be made by the Assembly—which will be responsible for most other commons and local authority matters. I can hardly imagine that they will wish to make different regulations unless there is good cause. I might add—as again Lord Stanley has expressed concern on the matter—that the regulations cannot be used to redefine persons with an interest in common land.
I hope that what I have said will meet most of the noble Lord's concerns. We have tried to be flexible on the matter but we think his Amendment goes too far; its effect would be to reserve all aspects of Section 19 as well as Section 17, which would leave nothing devolved in the Act. I hope the Amendment will be acceptable and that, as a result of my explanation, the noble Lord will not press his at a later stage. I beg to move.
Lord STANLEY of ALDERLEY: My Lords, I am grateful to the noble Baroness for her letter and for putting it on the record; it will clear up all the points I asked. I do not want to belabour the point, but the noble Baroness said in in effect that it seemed unlikely the Welsh Assembly would want to make different regulations but that it should have the opportunity to do so if it wished. I still believe the Welsh Assembly could do this under Section 19(4), so it would be tidier to reserve both sections. Once again I get the impression that the only reason for exluding Section 19 is as a sop to the Welsh Assembly, with no real meaning. I am sorry to be ungracious about this because I realise I have been given something. I suppose that because they gave me twice as much as I asked for on my last Amendment they are going to give me only half as much on this one. The Government move in a most mysterious way, but I thank the noble Baroness.
On Question, Amendment agreed to.
[Amendment No. 13 not moved.]
4.12 p.m.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 14:
Page 54, line 38, at end insert—

("The Inner Urban Areas Act 1978 (c.) section 1, section 2(4)(b) as applied by section 9, section 3(2) as applied by section 5(3), sections 7, 8, 9(6) and 12, and paragraph 2 of the Schedule.").

The noble Baroness said: My Lords, this Amendment is the first of four Amendments which take account of the Inner Urban Areas Bill. This Bill received its Third Reading in your Lordships' House on 10th July and I am advised it is in order for the Wales Bill to refer to it. Reference is already contained in the Scotland Bill. The Government's approach is to devolve outright to the Assembly powers under the Inner Urban Areas Bill which are primarily environmental in nature and to reserve outright powers which are primarily industrial or commercial. This Amendment devolves to the Assembly powers in respect of specification of designated districts, loans for site preparation, and loans and grants for improving amenities, the entering into arrangements with local authorities and the adoption of local plans.
The Amendment also devolves powers in respect of the specification of special areas and the approval of improvement areas. But as these powers have industrial and commercial as well as environmental implications, later Amendments to Schedules 3 and 4, Nos. 19 and 20, will provide the ministerial protection. When we come to it, Amendment No. 28 to Schedule 11 will deal with powers under Clause 2 of the Bill, which again in certain cases have industrial and commercial implications. Powers of a purely industrial nature, such as those in Clause 3 relating to common ownership and co-operative enterprises, are to be reserved. I beg to move.
Lord ELTON: My Lords, as the noble Baroness pointed out, the Act to which the Bill refers has achieved its final form only in the last 72 hours. Therefore the Amendments drawn up for this Bill to meet its arrival have been on the Order Paper only briefly. Though I suppose I should apologise for not knowing about
1718
them, I need not apologise greatly because this is one of the exigencies of Parliamentary life. I hope therefore the noble Baroness will make a full explanation of each of the references to the Act as she comes across them in her long list of Amendments so that those who are concerned with the Act and have to apply it through this Bill will have some sort of guide to which they can refer. I make this plea because the normal function of Opposition is to raise objections and difficulties and appear to be difficult in Committee, and later to draw out from the Government the explanations which they might otherwise not get. In this case the responsibility rests only and squarely on the noble Baroness, and I hope she manages the task with her customary efficiency.
Baroness STEDMAN: My Lords, I was proposing to do just that for those reasons.
On Question, Amendment agreed to.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 15:
Page 55, column 2, leave out lines 20 to 26 and insert—

("The powers under section 111(2) so far as their exercise is incidental to functions which remain exercisable by a Minister of the Crown.").

The noble Baroness said: My Lords, this is a minor Amendment, the need for which was identified during Report stage. Section 111(2) of the Water Resources Act 1963 enables persons authorised by Ministers to enter upon land for the purposes of their functions. Section 112(4) concerns the settling of disputes relating to entry on the land of statutory water undertakers. At present the Bill devolves powers under these two provisions subject to an exclusion relating to the land of certain navigation authorities. The terms of the exclusion are inappropriate to the provisions to which they relate; they make little sense in the case of Section 111(2), and none at all in the case of Section 112(4). What is instead required is to ensure that Ministers as well as the Assembly are able to authorise entry on land after devolution for the purpose of carrying out the functions for which they are respectively responsible. That is what is achieved by the Amendment. I beg to move.
On Question, Amendment agreed to.
4.16 p.m.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 16:
Page 58, line 6, column 2, at end insert—

("The power under section 160 so far as exercisable for the purposes of section 5 of the Transport Act 1978 (c.)").

The noble Baroness said: My Lords, this is the first of two Amendments which take account of the Transport Bill. The other is Amendment No. 18. The Transport Bill has completed its Report stage in your Lordships' House, and I am advised that it is in order for the Wales Bill to refer to it. The Scotland Bill was similarly amended on Third Reading to deal with the Transport Bill. The changes made to the Transport Bill on its Report stage on Tuesday do not have any effect on the Government's Amendments to the Wales Bill. Most of the ministerial powers contained in the Transport Bill concern British Rail and the National Freight Corporation, and all these powers are to be reserved, as is already the case with similar powers in earlier legislation.
In these cases reservation can be achieved by silence. However, a technical problem is created by Clause 5 of the Transport Bill, which concerns community bus services. Subsection (5)(a) states that a driver must be a volunteer, and, if not the holder of a public service vehicle driver's licence, must fulfil such conditions as may be prescribed for drivers of community buses. It is wished to reserve this power of prescription in common with all matters concerning drivers' qualifications. But the actual power is technically not in Clause 5 of the Transport Bill but in Section 160 of the Road Traffic Act 1960, which at present is partly devolved in the entry in Schedule 2. It is therefore necessary to reserve Section 160 of the 1960 Act so far as it relates to Clause 5 of the Transport Bill. That is achieved by the Amendment. No other ministerial powers are contained in the parts of the Bill dealing with bus licensing, and the only power in the whole Bill which is appropriate for devolution is in Clause 3. We shall be coming to this shortly with an Amendment. I beg to move.
Lord O'HAGAN: My Lords, in language favoured by the noble Lord, Lord Donaldson of Kingsbridge, this topic is both inspissated and obfuscatory. I am
1720
afraid I cannot fully grasp what it is that the noble Baroness is trying to do. There is some anxiety among those concerned with what will happen to community buses under the Transport Bill—which is still a Bill and not yet an Act—in that those who are driving community buses may not have the qualifications which she described. Therefore, I was not entirely certain, when I accepted on a provisional basis the Amendments brought forward by the noble Baroness the other day, that this power was being maintained for the United Kingdom as a whole, let alone for Wales. I hope she will accept that there is some uncertainty in the minds of the Association of District Councils as to whether this power is being retained at all in its comprehensive form, let alone as to how it will be affected by devolution. Would the noble Baroness repeat, slightly more slowly, what she just said?
Baroness STEDMAN: My Lords, it sounds complicated because we are dealing not only with the Transport Bill but also with the references in the Transport Bill to the Road Traffic Act. What we are saying is that what we have said in the Transport Bill is that a driver must be a volunteer and, if not, he must be the holder of a public service vehicle driving licence. He must fulfil such conditions as may be prescribed for drivers of community buses. What we want to do is to reserve the power of prescription in common with all matters concerning drivers' qualifications so that the same rights will be administered nationally and will not be devolved to the Assembly. The actual power to which we are referring is not directly in the Transport Bill but indirectly in the Transport Bill because of the cross-reference to the Road Traffic Act, but I can assure the noble Lord that we are intending to maintain the standards that we have.
Lord O'HAGAN: My Lords, I am very grateful for that explanation, which means that it may well be necessary to put down a series of Amendments to the Transport Bill.
On Question, Amendment agreed to.
4.21 p.m.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 17:
Page 58, line 7, column 2, at beginning insert—

("The functions under sections 2, 3(2) and 4(2) so far as exercisable in relation to byelaws made by virtue of section 8 of the Civil Aviation Act 1978 (c. 8)").

The noble Baroness said: My Lords, at Report the Government brought forward Amendments to the Schedule 2 entry for the Civil Aviation Act 1971 to ensure that the Assembly would have no competence in respect of the control of aircraft noise. This Amendment before your Lordships is designed to achieve the same effect. The powers under Sections 2, 3(2) and 4(2) of the Civil Aviation Act 1978 are concerned with the making of by-laws in respect of Department of Trade, local authority and private aerodromes. The ministerial powers in relation to these by-laws are devolved to the Assembly in Schedule 2. But the Civil Aviation Act 1978 amends the powers in Sections 2, 53(2) and 4(2) so that they include the power to make by-laws for controlling the operation of aircraft for the purpose of limiting or mitigating the effect of noise, vibration and atmospheric pollution caused by aircraft using the aerodromes. These powers are not to be devolved to the Assembly. My Lords, I beg to move.
Lord O'HAGAN: My Lords, I have pursued this point throughout this Bill, and at a previous stage I inquired from the noble Baroness whether the Amendment brought forward by the Government at that time was restricted to pollution by noise, and she said it was. I now understand that the Assembly is to have powers to control other forms of pollution. I am not fully certain as to what is retained at the centre in the control of pollution by aircraft because, as we have discussed this in stages, I am afraid that I find it rather difficult to grasp the exact ambit which is now left to the Assembly and that which is left to the Department. Could the noble Baroness clarify that point?
Baroness STEDMAN: My Lords, not in any great detail because my recollection is the same as that of the noble Lord; we have gone over this matter in stages and one does not see it as a coherent whole at any one point of time. What we are doing with this Amendment is to include the powers to make by-laws for
1722
controlling the operation of the aircraft for the purpose of limiting or mitigating the effect of noise, vibration and the atmospheric pollution caused by aircraft and we are not devolving those powers to the Assembly. I think that was what the noble Lord was after in his earlier Amendments. He did not want those powers devolved to the Assembly; he wanted them to be kept on national standards.
On Question, Amendment agreed to.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 18:
Page 58, line 47, column 1, at end insert—

("The Transport Act 1978 (c.) section (5)(b).").

The noble Baroness said: My Lords, this is the second of the two Amendments dealing with the Transport Bill.
The only power to be devolved under this Bill is that in Clause 3. Subsection (5) enables the county councils to require information from public passenger undertakings when preparing or revising their public passenger transport plans. Subsection (5)(b) then provides that the Secretary of State may give directions as to the form and content of this information. This power of direction, since it is at the moment a ministerial power, is to be devolved to the Assembly as the Assembly will be responsible for most other matters relating to passenger transport planning. I beg to move.
Lord O'HAGAN: My Lords, I should have thought that this was a function wholly suitable for the Assembly to carry out if the Transport Bill becomes an Act.
On Question, Amendment agreed to.
Schedule 3 [Enactments conferring powers exercisable concurrently]:
Baroness STEDMAN Baroness STEDMAN moved Amendments Nos. 19 and 20:
Page 62, line 36, at end insert—
("The Inner Urban Areas Act 1978 (c.) paragraph 2 of the Schedule.").
Schedule 4, page 63, line 29, at end insert—

("The Inner Urban Areas Act 1978 (c.) section 8.

All powers under the section.").

The noble Baroness said: My Lords, it might be convenient to take together

1723
Amendment No. 19 and Amendment No. 20 to Schedule 4. Both concern powers under the Inner Urban Areas Bill which are devolved in Schedule 2. Special ministerial protections are required in Schedules 3 and 4 because in both cases the powers have industrial and commercial, as well as environmental, implications.
The first Amendment, No. 19, relates to the Schedule to the Inner Urban Areas Bill which enables a designated district authority to declare an area to be an improvement area. The Secretary of State has powers of veto and revocation under paragraph 2 of the Schedule. The Amendment to the Wales Bill makes these powers concurrent; that is, either the Secretary of State or the Assembly may prevent an area being declared an improvement area or require it to cease to be one. This reflects the fact that such areas qualify both for environmental grants and loans (in respect of which powers have been devolved) and for industrial and commercial grants (in respect of which powers are to he reserved).
The second Amendment relates to Clause 8 of the Inner Urban Areas Bill. This contains the power to specify an area as a special area to which the provisions for grants and loans under Clauses 9, 10 and 11 will apply. Some of these grants and loans are industrial and commercial in nature, and others concern devolved environmental and infrastructure matters. Accordingly, the devolution of the power to specify areas under Clause 8 is to be subject to ministerial consent. I beg to move.
Lord ELTON: My Lords, my earlier observations, of course, apply. I am very interested in the machinery by which we are doing this. I see that the Inner Urban Areas Bill has returned to the Commons amended. Can the noble Baroness tell us whether or not the series of Amendments she proposes—if there are others, or maybe there are only these two—will still be correctly drawn if the Amendments made in this place are accepted in another place. I do not wish to make a meal of this subject. I do not even know whether it is a precedent, and it would be interesting to know if it is a precedent, but one can see a situation developing, as my noble friend Lord O'Hagan has just said, where the inclusion of an Amendment in one Bill
1724
going through Parliament may change the course of another Bill going through Parliament. With the Bill with which he is concerned. the Transport Bill, there is an opportunity for that to be done, but there is no such opportunity in this case. If very briefly the noble Baroness could clarify to us the processes which are expected to be gone through in either eventuality, I should be grateful.
Baroness STEDMAN: My Lords, with the leave of the House, may I say that I am reasonably confident that these Amendments are drafted in the right way whatever may be the fate of the Bill before it gets back to us. So far as precedent is concerned, it is an interesting point that the noble Lord raises. I do not know, but I should like to know and, if I find out, I will certainly write to the noble Lord to tell him what the precedents are for it, but I cannot tell him at this point of time; I do not know of any.
Lord ELTON: My Lords, it is a dangerous precedent to create a precedent unknowingly.
On Question, Amendments agreed to.
4.29 p.m.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 21:
Page 67, leave out lines 16 to 20.
The noble Baroness said: My Lords, this Amendment is aimed at removing an impracticality from the Amendment to Schedule 8 which the noble Lord, Lord Middleton, carried on Report stage, and we have written to the noble Lord explaining our reasons. The noble Lord's Amendment introduced a procedure whereby a water authority may apply to the Secretary of State for him to intervene under Schedule 8. I do not want to discuss the merits of this procedure, which was the subject of a very long debate at Report stage. But, on reflection, we consider that one particular aspect of it creates a potentially very serious practical difficulty. Our Amendment is aimed only at removing this difficulty, so that we can return a workable Bill to another place.
What is now paragraph 11 of Schedule 8 provides that, where a water authority has applied to the Secretary of State to intervene, the exercise by the Assembly

1725
of the power to which the application for intervention relates should be superseded. The difficulty is that during the period when the Secretary of State is considering whether to intervene, neither he nor the Assembly will be able to exercise the power concerned; and in some cases it might be necessary for the Secretary of State to hold an inquiry to establish the facts before deciding whether to intervene. This could have serious repercussions where rapid action is required—for instance, if an order needs to be made under Section 2 of the Drought Act 1976—and it would also throw out the arrangements for statutory time limits which are contained in some of the provisions to which the intervention procedures apply. For this reason, I hope that your Lordships will accept the Government's Amendment. It will delete paragraph 11 of Schedule 8—which creates the difficulties I have outlined—but otherwise it will leave Lord Middleton's Amendment intact and it will return the Bill to another place in a workable condition. I beg to move.
Lord MIDDLETON: My Lords, as the noble Baroness has explained, what is now proposed appears to remove a chunk from the Amendment which the House agreed at Report stage. I believe that we were on common ground with the noble Baroness, but we hoped that where one of the water authorities which straddles the Welsh boundary was at variance with the Assembly over a matter concerning the national water policy, informal means could be found for resolving the matter. However, we felt very strongly that provision should be made in the Bill for a form of machinery; and that is what the earlier Amendment did. That being so, when the Amendment was being framed it was thought to be important that some provision should he made regarding what was to happen during the period when the Secretary of State was considering the application, so paragraph 11 was included. It provided that the powers to be exercised by the Assembly should be suspended, if for no other reason than that that might possibly serve to hasten the Secretary of State's consideration so that the matter could be resolved quickly.
I am grateful to the noble Baroness, who has written to me on this point,
1726
and I think I am persuaded that there are cases where there might well be a hiatus in government. I am a little surprised at the instance she quoted to me regarding the Drought Act, because this is a matter in which the water authority applies to the Secretary of State to take action where the general economy is in danger due to shortage of water, whereas, in this case, where a Welsh authority has exercised the powers, I very much doubt whether the Assembly would fail to act responsibly. We all think that the Assembly will act responsibly in all matters. I should have thought that here the intervention power would not be needed at all. We must accept that there might be occasions where government would be held up, hut the possibility is remote. I believe that the main effect of our Amendment is not gravely imparied, and so I advise my noble friends not to resist the present Amendment.
On Question, Amendment agreed to.
Schedule 11 [Amendments of Enactments]:
4.34 p.m.
Lord ELTON Lord ELTON moved Amendment No. 22:
Page 72, line 21, after ("(a)") insert ((Where the proposals under this section are made by a Welsh local education authority").
The noble Lord said: My Lords, the Amendment relates to the substance of Schedule 11 as it was amended at an earlier stage. The original Amendment imported into Schedule 11 two new subsections to the Education Act 1944, they being subsections (4A) and (4B) of Section 13 of the Act. The Amendment, as Amendment No. 108D, was carried on a Division on 14th of June—that is to say, almost exactly a month ago. On the evening of 10th of this month—three days ago—I received a long and technical reasoned objection to the whole concept of this Amendment from the noble Lord. Lord Donaldson of Kingsbridge, whom I assume will be replying today. Therefore, the time to meet these objections has been rather shorter than that which it took to prepare them.
I know that the noble Lord is still unhappy with the general principle of the Amendment as it may, or may not be,

1727
effective, but I shall leave it to him to say why, before in my reply, I say why I think his objections, if I have seized them correctly, are without force. However, there were a number of other objections which had force, and these are met in my Amendments Nos. 22 to 27. The first three of this set of Amendments (Nos. 22, 23, and 24) relate to page 72 of the Bill. They all relate to the new subsection (4A) of Section 13 of the Act of 1944, and I think it will be to the convenience of the House if I take them together.
The noble Lord's first objection was that the subsection as drafted went beyond the Long Title of the amending Bill, by reason of the fact that it applied to England as well as to Wales when it came to determining the proceedings of the Secretary of State. Although it did not alter the Secretary of State's power, it altered the proceedings, and, to be safe, I have met that by altering the wording at the beginning of subsection (4A). Therefore we propose to insert the words,
"Where the proposals under this section are made by a Welsh local education authority…".
That applies to the whole of the subsection, whereas, as drafted at present, the restriction to Wales does not occur until paragraph (c) of subsection (4A). Your Lordships will see that at paragraph (c) it is stated:
" where the functions of the Secretary of State under this section have been discharged by the Welsh Assembly …".
The force of that restriction is being removed from that part of the subsection to the beginning of the subsection. That therefore renders necessary as a consequential Amendment, Amendment No. 24, which removes the reference to Wales which presently appears at the place referred to in the Amendment.
The other Amendment in the group, No. 23, is a consequential drafting Amendment in order to keep the syntax correct when the reference has been removed from the middle to the beginning of the subsection. That was the objection; and that is how we have met it. I beg to move.
Lord DONALDSON of KINGSBRIDGE: My Lords, I do not know whether the noble Lord would be happy to discuss all six Amendments to Schedule 11 together, or whether he wishes to take separately the first three to which he has spoken.
Lord ELTON: My Lords, the substance is different. I propose that we deal with the principle that we have not mentioned but which the noble Lord has at the back of his mind, which applies to them all. I will reply to that in my wind-up to this debate. The next debate will be about a different matter, in relation to which the noble Lord put into my head an idea which I thought was a good one, and which I have embodied. I do not know whether the noble Lord's brief is so interlaced with the two matters that he cannot separate them. We shall have to see how he gets on. I want to preserve the oportunity to speak twice more, not once more.
Lord DONALDSON of KINGSBRIDGE: My Lords, I anticipate no problems with my brief. It is worth reminding noble Lords what the Amendment is ultimately about. We are talking about technical details. The Amendment itself is an attempt to give the Secretary of State power of approval over certain schemes—basically, the proposals by local education authorities to establish new schools, to cease to maintain schools, or to make significant changes in the character or size of premises at schools—and to give the Secretary of State an appeal on these points over and above the Assembly. The noble Lord and I have corresponded on the technical aspect, we have both taken advice, and I believe that we have reached a stage of polite disagreement.
When we discussed the original Amendments—that is, the ones which appeared as Amendments Nos. 6 and 7 today—we made it clear that the Government could not accept the policy behind them, and this is still the case. We see no point in devolving powers to the Assembly only to place the Secretary of State in the position of a kind of court of appeal to which people can turn if dissatisfied with the Assembly's decisions.
At the time the noble Lord moved his Amendment to Schedule 11, I said that it was not technically acceptable; and I think it is worth pointing out also that he is making a particular exception in this case in a field otherwise almost totally devolved. Although the Amendments before your Lordships go some way towards meeting my objections, I am afraid it is still the case that even if these Amendments are carried the entry for Sections 13(4A) and 13(4B) in Schedule 11

1729
will be defective. To achieve the desired effect we should have to start afresh; and I have written to the noble Lord about the points at issue. My letter is long and complicated, and I do not propose to read it into the record unless at a later stage somebody asks for it; but my advice is that I cannot accept these Amendments even as a tidying up of a general situation with which, in any case, I do not agree. So, in the circumstances, I am afraid I must resist them.
Lord ELTON: My Lords, one sympathises with the noble Lord's position, of course, though one cannot agree with it. Perhaps I may take from him part of the burden of explaining (which he has not explained) the technical objection, because I think this is what we are about to vote upon. The principal objection seems to be that there are duties and powers ancillary to the power to approve proposals, some of which may need a partial reservation where it is the Secretary of State who gives approval; and Section 13(6) of the 1944 Act is given as an example of this.
I should like to remind your Lordships of our earlier discussions on Clause 75 of this Bill. Clause 75, which to a layman is a sinister provision included in the Bill, says:
"The enactments mentioned in Schedule 11 to this Act"—
and this is one of them—
"shall have effect subject to the amendments specified in that Schedule".
That is quite clear, but after that it says:
"A Minister of the Crown may by order make such amendments in any Act passed before or in the same session as this Act"—
and that refers, of course, to this Bill, which we are now discussing, as well as many others—
"and in any other enactment passed or made before the passing of this Act as appear to him necessary or expedient in consequence of this Act".
When asked why this was so, we were told that there were many cases where there would need to be partial reservations which were too small and pernickety to be embodied in the Bill as an original Amendment at this stage. It seems to me that the noble Lord has in fact produced for us exactly such an example: that this Clause 75 is incorporated in the Bill to meet the objections which he has made to our scheme in this Amendment.
I think that the matter of the reservation of a power of appeal is an important one. It may be an isolated example, but I said at Second Reading, and repeated at Committee and Report stages, that one of our functions is to have important principles discussed in another place, and this was not. I am confident, and my advisers are confident—and they are well qualified—that the particular objection I have referred to is not without force, and I therefore ask your Lordships to repose your confidence in that advice and to accept this Amendment.
4.44 p.m.
On Question, Whether the said Amendment (No. 22) shall be agreed to?
Their Lordships divided: Contents, 101; Not-Contents, 74.

CONTENTS

Adeane, L.

Cockfield, L.

Exeter, M.

Ailesbury, M.

Colville of Culross, V.

Falkland, V.

Aldenham, L.

Cork and Orrery, E.

Ferrier, L.

Ampthill, L.

Craigavon, V.

Fortescue, E.

Auckland, L.

Cranbrook, E.

Gainford, L.

Avon, E.

Croft, L.

Geoffrey-Lloyd, L.

Balfour of Inchrye, L.

Cullen of Ashbourne, L.

Greenway, L.

Barnby, L.

Daventry, V.

Gridley, L.

Belstead, L.

de Freyne, L.

Hailsham of Saint Marylebone, L.

Berkeley, B.

Denham L.

Bessborough, E.

Derwent, L.

Hawke, L.

Bradford, E.

Ebbisham, L.

Henley, L.

Caithness, E.

Eccles, V.

Home of the Hirsel, L.

Campbell of Croy, L.

Ellenborough, L.

Hylton-Foster, B.

Carrington, L.

Elles, B.

Kemsley, V.

Cathcart, E.

Elliot of Harwood, B.

Kinnaird, L.

Clancarty, E.

Elton, L.

Kinnoull, E.

Clitheroe, L.

Emmet of Amberley, B.

Lauderdale, E.

Leinster, D.

O'Hagan, L.

Strathcarron, L.

Long, V. [Teller.]

Onslow, E.

Strathclyde, L.

Macpherson of Drumochter, L.

Porritt, L.

Strathcona and Mount Royal, L

Mancroft, L.

Rankeillour, L.

Tenby, V.

Marley, L.

Rawlinson of Ewell, L.

Terrington, L.

Massereene and Ferrard, V.

Redmayne, L.

Teviot, L.

Melville, V.

Reigate, L.

Teynham, L.

Middleton, L.

Romney, E.

Trenchard, V.

Monson, L.

Ruthven of Freeland, Ly.

Tweeddale, M.

Morris, L.

Sandys, L.

Vaux of Harrowden, L.

Mottistone, L.

Selkirk, E.

Vernon, L.

Mountgarret, V.

Sharples, B.

Vickers, B.

Mowbray and Stourton, L. [Teller.]

Skelmcrsdale, L.

Vivian, L.

Sligo, M.

Ward of North Tyneside, B.

Newall, L.

Soames, L.

Wilson of Langside, L.

Northchurch, B.

Stanley of Alderley, L.

Young, B.

Nugent of Guildford, L.

NOT-CONTENTS

Amherst, E.

Goronwy-Roberts, L.

Ponsonby of Shulbrede, L.

Annan, L.

Hale, L.

Rochester, L.

Ardwick, L.

Hampton, L.

Sainsbury, L.

Aylestone, L.

Harris of Greenwich, L.

Samuel, V.

Banks, L.

Hatch of Lusby, L.

Sefton of Garston, L.

Birk, B.

Henderson, L.

Segal, L.

Boston of Faversham, L.

Howie of Troon, L.

Shepherd, L.

Brockway, L.

Hutchinson of Luliington, L.

Shinwell, L.

Byers, L.

Jacobson, L.

Snow, L.

Caccia, L.

Jacques, L.

Stedman, B.

Castle, L.

Janner, L.

Stewart of Alvechurch, B.

Collison, L.

Kirkhill, L.

Stone, L.

Cooper of Stockton Heath, L.

Leatherland, L.

Strabolgi, L. [Teller.]

Crook, L.

Listowel, E.

Wallace of Coslany, L.

Cudlipp, L.

Llewelyn-Davies of Hastoe, B.

Wedderburn of Charlton, L.

David, B.

Lloyd of Hampstead, L.

Wells-Pestell, L. [Teller.]

Davies of Leek, L.

Lloyd of Kilgerran, L.

Whaddon, L.

Davies of Penrhys, L.

Lovell-Davis, L.

Wigg, L.

Donaldson of Kingsbridge, L.

McGregor of Durris, L.

Wigoder, L.

Douglas of Barloch, L.

Melchett, L.

Willis, L.

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

Murray of Gravesend, L.

Winterbottom, L.

Gaitskell, B.

Oram, L.

Wise, L.

Gardiner, L.

Parry, L.

Wootton of Abinger, B.

Gladwyn, L.

Peart, L. (L. Privy Seal.)

Wynne-Jones, L.

Gordon-Walker, L.

Pitt of Hampstead, L.

On Question, Motion agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
4.52 p.m.
Lord ELTON Lord ELTON moved Amendments Nos. 23 and 24:
Page 72, line 22, leave out ("the proposals made under this section") and insert ("them")
Page 72, line 28, leave out from beginning to ("that") in line 30.
The noble Lord said: My Lords, with the leave of the House, I beg to move Amendments Nos. 23 and 24.
Lord ELTON Lord ELTON moved Amendments Nos. 25 to 27:
Schedule 11, page 72, line 30, after ("approval") insert ("or as the case may be that decision to withhold approval")
Schedule 11, page 72, line 33, leave out ("against that approval")
Schedule 11, page 72, line 44, leave out ("objections to the Secretary of State") and insert ("to the Secretary of State objections either to the approval or as the case may be to the decision to withhold approval referred to in a public notice made under subsection (4A) of this section").
The noble Lord said: My Lords, we are still looking at the same part of the Bill; that is to say, the Amendment. In the correspondence I had with the noble Lord on the subject of these Amendments, it was suggested to me that the situation had changed by reason of the introduction of what we are not allowed to call another tier of government but what is certainly another tier of decision, and that there was an extra dimension to the matter. As the noble Lord, Lord Donaldson, has said, what we are discussing is an appeal from a decision of the Welsh authority to approve a scheme against which objections have been made. As it may also not approve a scheme and as that decision

1733
might be the subject of a grievance—and it might be the subject of a grievance by a local authority in this case—then it was suggested that this was a question which might also be brought into the purview of the Bill. I am always glad to take advice from noble Lords opposite. The occasions when it is possible to do so are rare and correspondingly valuable; but that I have sought to do—including both approval and refusal to approve. I do not think it necessary to spell out the way in which this is done unless the noble Lord opposite, with his screwdriver and pliers, will demonstrate that this also is defective. Then it may be necessary to do so. Otherwise, it suffices if I have said what is the intention. With the leave of the House, I beg to move Amendments Nos. 25 to 27 en bloc.
Lord DONALDSON of KINGSBRIDGE: My Lords, in view of the passing of Amendment No. 22 there is no purpose in opposing this Amendment or the next two. I am therefore happy to accept them.
Lord ELTON: My Lords, I am glad to note that the noble Lord is happier than he looks at accepting the Amendments.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 28:
Schedule 11, page 85, line 31, at end insert—
("THE INNCR URBAN AREAS ACT 1978
88.— (1) Section 2(4)(b) of the Inner Urban Areas Act 1978 shall have effect, in any case where—

(a) the loan is made by a designated district authority in Wales, and

(b) the Assembly is satisfied that it is not for the acquisition, construction or alteration of a building intended for use for industrial or commercial purposes,

as if the reference to the Secretary of State were a reference to the Assembly.
(2) Paragraphs 1(3)(b) and 3(3)(b) of the Schedule to that Act shall have effect, in relation to any area in Wales, as if the reference to the Secretary of State included a reference to the Assembly").
The noble Baroness said: My Lords, this is the last of the Amendments dealing with the Inner Urban Areas Bill. It may be appropriate to say that I have taken
1734
advice on the question which was raised earlier as to whether we were establishing a precedent in the way in which we were dealing with this question. I am advised that it is quite common towards the end of a Parliamentary Session for one Bill to contain textual references to another. Any difficulties created by amendment to one Bill can be accommodated by printing changes to the other Bill. It is clear what provisions are being referred to even if, occasionally, clause numbers may be changed. I can assure the noble Lord that we are not setting a precedent in the way in which we are dealing with the Inner Urban Areas Bill today.
The Amendment provides for the devolution of the power to vary interest rates under Clause 2(4)(b) of the Bill except in respect of loans for industrial or commercial purposes. Loans under Section 2 may be for the acquisition of land or for the carrying out of works. Secondly, it provides that maps of improvement areas should be sent by designated district authorities both to the Assembly and to the Secretary of State. This reflects the fact that such areas must be approved by both. I beg to move.
Lord ELTON: My Lords, as this is the last series, I should thank the noble Baroness for her explanation which, as always, was an extremely concise and lucid one. Perhaps this is not the stage for compliments but this is a good example of what she has been doing and we are grateful.
Lord ELTON Lord ELTON moved Amendments Nos. 29 and 30:
Page 85, line 35, at beginning insert ("Subject to paragraph 1A below")
Page 85, line 37, at end insert—
("1A If this Act and the Scotland Act 1978 are passed in the same session, the day mentioned in paragraph 1 above shall be the same day as that on which the referendum provided for in the Scotland Act 1978 shall be held").
The noble Lord said: My Lords, this Amendment, together with Amendment No. 30, seeks to secure that the referendum on the question of whether or not there is to be a Welsh Assembly shall be held on the same day as the referendum on the question of whether there is to be a Scottish Assembly. We have trodden this ground

1735
fairly thoroughly and the Government have given assurances in the Scotland Bill. They gave some assurances during the progress of this Bill at earlier stages that it was their honest and open intention to carry out the two referendums on the same day. Then they added, "Providing nothing untoward occurs". This is an elastic phrase. I should like to know what it conceals. I have spent some time trying to think what extraordinary event could occur which would make it appropriate to ask the question of the Scots on one day and inappropriate to ask the Welsh on the same day, unless the day itself had been chosen with malice aforethought. If it was a day of particular importance in one country which perhaps another chooses to observe as a universal holiday, that might be the case. But that cannot be what is anticipated for that would be to anticipate incompetence or else malice aforethought. So it cannot be that.
What we wish to know if we are not to press this Amendment is what it is that the noble and learned Lord feels might occur which would make it unfortunate if we were to press it. If the Government say it is their intention to do this—and it may be marginally discourteous (although that is not intended) to require them to do it after they have already said that such is their intention—what can be the objection? We shall listen to the reply with considerable interest. With the leave of the House, I beg to move Amendments Nos. 29 and 30 en bloc.
The LORD CHANCELLOR: My Lords, it is the case, as the noble Lord said, that we have traversed this ground on several occasions. The same Amendments were discussed during the Third Reading of the Scotland Bill. On that occasion, the paving Amendment was negatived without a Division and the noble and learned Lord, Lord Wilson of Langside, did not move his substantive Amendment. That, your Lordships may think, was a clear indication that so far as Scotland at any rate was concerned, it was decided that this proposed provision should not be made in the Scotland Bill. It is perhaps a little surprising therefore to see it sought to be introduced in the Wales Bill. Clearly, we cannot look at the two Bills in isolation. If we introduce a statutory provision that the Welsh referendum is to take place on the same day as the Scottish
1736
referendum, it follows by inexorable logic that the Scottish referendum is to take place on the same day as the Welsh referendum, about which, I venture to think there will be little disagreement even at this late hour on this sunny afternoon. We have decided not to make this statutory requirement in relation to the Scotland Bill and so it is surprising to see the Amendment on the Marshalled List once again.
I am asked why it is that we take the view that although it is the firm intention of the Government—which has been repeated more than once—that both referenda should be held on the same day, we still believe that a certain flexibility is necessary in case of unforeseen circumstances. I am afraid that I cannot satisfy the curiosity of the noble Lord, Lord Elton, about what future unforeseen events may prove to be which may make it impracticable to hold the two referenda on the same day. Your Lordships will remember the wise advice of Mark Twain: it is always dangerous to prophesy especially about future events. Your Lordships may think there is some wisdom in that observation. Strange things can happen and I think that, for the sake of flexibility, there should not be this statutory requirement. We have nothing up our sleeves about this matter; it is merely a prudence to avoid the unexpected making it impossible to achieve the holding of the referenda.
Lord WIGG: My Lords, as I spoke on the Scotland Bill, I am interested in what is in the Wales Bill. Will the noble and learned Lord the Lord Chancellor give the same categorical assurance on the Wales Bill as he gave on the Scotland Bill, that in so far as it is humanly within the control of himself and his colleagues, it is the firm intention to have the referenda on Scotland and Wales on the same day? If he does that—in other words, to repeat the assurance now that he gave on the Scotland Bill—then perhaps noble Lords on the other side of the House might be satisfied.
The LORD CHANCELLOR: My Lords, I thought that I had given that assurance. If I failed to make it clear, I give my noble friend that absolute assurance as to what the intention is.
Lord ELTON: My Lords, I am obliged to the noble and learned Lord and also the noble Lord, Lord Wigg. It is firmly on the record that this is the Government's intention and that they cannot conceive of what could occur to deter them from carrying out their intention. Their amazement will only be exceeded by ours if such an occurrence takes place. In the light of that, I beg leave to withdraw my Amendments.
Amendments, by leave, withdrawn.
5.4 p.m.
Lord ELTON Lord ELTON moved Amendment No. 31:
Page 86, line 16, after ("officers") insert ("and any other expenses incurred exclusively and necessarily for the purposes of organising and administering the conduct of the referendum").
The noble Lord said: My Lords, this relates to the expenses to be borne by Her Majesty's Government in one form or another during the conduct of the referendum campaign. Your Lordships will remember that the noble and learned Lord the Lord Chancellor flung at my head, as though it were a missile, the speech of the noble Lord, Lord Wedderburn of Charlton, on the Scotland Bill. I have since read that speech. It seems to me that, with one exception, it is an outcry not against the drafting or the effectiveness of the Amendment, as I had supposed from what was said last time, but against its results, which are intentional.
It is intentional that the Government should not publish a White Paper on the issue of the referendum because they have said already that they are not going to do so. It is the intention that the Secretary of State should not travel to Scotland for the specific purpose of addressing a public meeting at public expense—of course, he can travel otherwise. That is intentional. When is the beginning of the referendum? I think it has begun already. I do not think we need a beginning date for that.
However, the noble Lord was concerned as to the meaning of the restriction of the use of the resources of the Government. I personally think that what we already have on the Marshalled List and in the Bill is adequate. As I understood matters when I was a Parliamentary candidate—and I do not think that has changed—all the proper expenses of arranging an election campaign were to be met only by
1738
the returning officer. The provision of the ballot boxes, the ballot papers and hiring the schools, went through the hands of the returning officer. However, as there is obviously doubt among distinguished and noble Lords, I have taken advice and added what may be superfluous but is at least clarificatory in the form of words in Amendment No. 31. Those words are to add:
"and any other expenses incurred exclusively and necessarily for the purposes of organising and administering the conduct of the referendum".
If therefore there he some which do not properly pass through the hands of the returning officer, that is covered by this Amendment. If, on the other hand, there is doubt as to what is meant by the expenses that the returning officers normally bear, that is covered by this Amendment. This does not broach a new principle; it makes it crystal clear what it is that your Lordships have already decided upon. I hope the Government accept this Amendment. I beg to move.
The LORD CHANCELLOR: My Lords, the Amendment appears to be intended to ensure that the official Opposition Amendment to paragraph 5 of Schedule 12 carried at Report stage has not inadvertently slammed the door on what they would regard as legitimate expenditure of public funds on the referendum. It does not have that effect because the original Amendment was misconceived and itself is not effective. As the noble Lord has explained, the Amendment which is now before us has the laudable motive of attempting to ensure that public funds can be spent on what noble Lords opposite would regard as legitimate purposes in the organisation of the referendum. This Amendment is wholly unnecessary. Expenditure on the organisation and conduct of the referendum will be ministerial expenses falling on a vote in the usual way as mentioned in Clause 71.
I ventured at Report stage in using what is somewhat severe language for me on this Bill—which has been conducted so agreeably through your Lordships' House—to describe this Amendment as "an absurdity". It was nevertheless, in spite of that view, carried by your Lordships. In my submission, this Amendment's attempt to refine and rescue an absurdity

1739
is misconceived and unnecessary. However, if the noble Lord wishes to pile Pelion upon Ossa, I shall not stand in his way.
Lord ELTON: My Lords, I have never really seen myself in that role. However, the noble and learned Lord has invited me to adopt it with such persuasive charm, in contrast to the unusually severe language which he used before, that I think I can fulfil that role to the satisfaction of the House.
5.10 p.m.
Lord ELTON Lord ELTON moved Amendment No. 32:
Page 87, leave out lines 10 to 14 and insert—
("Mae'r Senedd wedi penderfynu ymgynghori ag etholwyr Cymru ynglyn a ddylid gweithredu Deddf Cymru 1978.

DO YOU WANT THE PROVISIONS OF THE WALES ACT 1978 TO BE PUT INTO EFFECT?

  A YDYCH AM I DDARPARIAETHAU DEDDF CYMRU 1978 GAEL EU GWEITHREDU?
  Put a cross (X) in the appropriate box Rhowch groes X yn y blwch cymwys

  YES

  YDWYF

  NO

  NAC YDWYF

  The noble Lord said: My Lords, we now come to what I regard as a rather cheerful Amendment. Many of your Lordships on the other side of the House have persisted in regarding my noble friends and I as being killjoys who were determined to destroy what they regarded (mistakenly, in my view) as the beautiful debutante on the stage of the Wales Bill. This is as good an opportunity as any to tell your Lordships that if in spite of our advice and in spite of the defects which we have tried to bring to public notice that exist in this Bill, the Welsh people feel that they want the sort of Welsh Assembly that eventually emerges from both Houses of Parliament, then good luck to them! It is their choice, it is their future and it is their government. All we can do is to seek to see that the alternative presented to them is the most agreeable that we can devise, that the choice is put to them
  1740
  fairly and that they can make the decision themselves.
  Therefore, if the noble Baroness, Lady Stedman, will forgive me, this is something of a birthday party for the Welsh if in fact they are going to take this opportunity. The Bill which is before us will be a milestone in Welsh history. I do not think that it will be, but it might be; and to have such a milestone upon which so much passionate feeling has been expended in defence, and indeed promotion, of the Welsh identity, of which almost the principal feature is the Welsh language—to have that enshrined in an Act of Parliament totally expressed in English seems to me an act of Anglo-Saxon insensitivity of the first order.
  I am sure that the noble and learned Lord is going to tell me that what I am suggesting to your Lordships is superfluous: he has already said so, and this is the disadvantage of speaking at Third Reading, after Report, after Committee, after Second Reading and indeed after many conversations concerning earlier legislation. But the fact is that, even if it is superflous, and the ballot paper eventually emerges with the Welsh tongue elegantly inscribed upon it, as I suggest to your Lordships it now is in our Amendment, I do not think that is in any way at all superfluous. I think this is a great occasion. For the most part, we have to play it down because we are trying to achieve through a Parliamentary process something that will improve the Wales Bill and the Welsh Assembly. But, on this occasion, let us enter into the spirit of the thing—and that is Welsh.
  I was greatly afeared—because, as I have told your Lordships before, I am not a Welsh speaker—that what I put on the Marshalled List might not be good Welsh, but your Lordships will recall' that the noble Lord, Lord Goronwy-Roberts at Report stage, said that it would be possible for us to get together with the Welsh Office. That has been done and in the process my advisers have been complimented on the work they did; but none the less their work has been improved upon and we gladly accept the assistance that has come our way. There was an inadvertent misprint which I noticed in the word ddarpariaethau yesterday and that has been put right. As I understand it, therefore, what we have here now is correct Welsh.
  I was also afeared that it might be thought inappropriate or a dangerous precedent to introduce into the Statute Book of England a language that was not English; but of course this is not the Statute Book of England but the Statute Book of the United Kingdom and the language we are now introducing is the language of, among others, the noble and learned Lord who sits on the Woolsack, who can protect us from any misconceptions of language. Moreover, I am advised by the Table that there is no force in such an objection. Therefore, I can only see a myopic and churlish reluctance to enter into the excitement of the beginning of a new phase of history as the only conceivable motive for rejecting this Amendment. If we do divide, it will give me the greatest pleasure, but I do not think we shall, because the noble and learned Lord must surely see the reason and the force of these arguments. I beg to move.
  The LORD CHANCELLOR: My Lords, I was so moved by the tremendous eloquence of the noble Lord, Lord Elton, and his wish to make this gracious gesture to the Welsh language and the Welsh people that I thought he might have exerted himself to do it in Welsh and to read out the Welsh, as did his Royal Highness Prince Charles in Caernarvon a long time ago. However, I forgive him for not having reached that summit of excellence. The noble Lord has anticipated what I am about to say, which is that the ballot paper which will be used will, of course, be bilingual and the only question at issue between us is whether the Welsh language version should be inserted in the Bill or whether it should be produced under the existing authority of Section 2(1) of the Welsh Language Act. That empowers bilingual documents to be produced and is an Act, the use of which is familiar, frequent and well-known in Wales. There would be an anticipation that it would be used also on this occasion.
  If I might remind your Lordships who were the enthusiastic architects of the EEC referendum ballot paper, the Welsh language did not appear in the Statute so far as that was concerned, but the EEC referendum ballot paper was produced in a Welsh version under the authority of the Welsh Language Act of 1967. The matter
  1742
  was put in a nutshell by my noble friend Lady Gaitskell during a debate on the Committee stage when she said at column 1559 of the Official Report, on 23rd June:
  "If the Minister will put everything into this Bill which is nice but not necessary, it will be twice as long as it is already".
  That is a very profound and true observation. If I may say so, this has been a most agreeable final curtain to draw upon the Report stage of the Bill. I say to noble Lords in Welsh, Diolch yn fawr, but I venture to submit the Amendment is really unnecessary, charming though this discussion on the Amendment has been.
  Lord ELTON: My Lords, the argument of the noble Baroness, Lady Gaitskell, —and the noble and learned Lord is always quoting arguments in aid from other stages—would have had force on Amendment No. 1 on the first day of Committee stage, but on the last Amendment of the last day of the last stage of this Bill, we are not in danger of doubling its length. We are only in danger of gilding what the noble and learned Lord sees as a lily and what I see as something else. It may be superfluous, but it is not ungracious.
  5.20 p.m.
  The LORD CHANCELLOR: My Lords, I beg to move that this Bill do now pass. We have now reached the end of the odyssey of the passage of the Wales Bill through your Lordships' House, and it is my privilege to move that the Bill do now pass. The Bill has gone through the most searching and careful scrutiny in your Lordships' House, and we have had some very good debates. The respective teams, in strength on each side of the Chamber, have worked hard upon the Bill and applied themselves with great conscientiousness to what has often been a very technical matter.
  It is the case that the Government's proposals for Wales have certain novel features, and they contain differences from the proposals for Scotland of an intriguing character. But I believe that, as the process of consideration of the Bill has gone on, there has been increasing, if not complete, understanding of what the Government have had in mind in regard to the provisions of the Bill. In preparing it, the Government aimed at devising a scheme

  1743
  of devolution which would meet the particular needs, as we saw them, of the Welsh people.
  In Wales, there has been no widespread demand for a legislative Assembly, and the deep concern has been, first, that the activities of Ministers and of nominated bodies should be submitted to closer democratic scrutiny than the existing system allows; and, secondly, that it should be left to the people of Wales and their representatives to determine the priorities of development in the fields which concern the Welsh people alone. The scheme of executive devolution which the Government have put before your Lordships is specifically designed to meet those particular needs.
  There are, of course, those who say that the Government should have gone further, and others who argue that the scheme goes too far, which suggests to me that we have got it about right. We have sought to adopt a balanced but positive approach in the Bill, and we believe that our proposals, when they are implemented, will bring satisfaction and benefits to the people of Wales. No Bill achieves perfection, and a number of Amendments which have been put down have usefully drawn attention to certain imperfections which existed in the Bill, and the Government have readily accepted a number of constructive suggestions which have been made by noble Lords. Indeed, we have shown, I submit, a degree of flexibility in accepting some Amendments which, although not entirely to our taste, have given rise to deep feelings in the House which we have recognised.
  On the other hand, I am bound to say that certain other Amendments which the House has accepted have shown what we believe to be less than complete appreciation of the structure and the principles of the Bill, and have introduced elements of inconsistency, infelicity and, indeed, un-workability, which the Government, even in the most generous mood that I am now displaying, cannot readily accept. I do not want to go into detail at this stage, but the points that I have in mind will clearly call for careful consideration in another place. But, by and large, the structure of the Bill, although it has been dented in places, remains pretty well intact.
  1744
  The Government, as I have indicated, recognise and appreciate the conscientious, relatively calm and undogmatic way in which noble Lords have applied themselves to a constitutional exercise of great importance and no little complexity. It is, of course, in the minds of all of us that, before finality is reached, the people of Wales will have the last word and make their own pronouncement on our labours, and we shall await their verdict with keen anticipation.
  Finally, my Lords, may I stress once again that what has been uppermost in the Government's mind throughout their travails on this, and on the Scotland Bill, has been the need to preserve and, indeed, enhance the unity of the United Kingdom. The Government believe that measures of devolution arc not only necessary but inevitable, if that unity is to be preserved. We have sought to forestall the charge of too little and too late, and we have acted now for what we believe will be the future benefit of all our peoples. My Lords, beg to move.
  Moved, That the Bill do now pass. —(The Lord Chancellor.)
  5.29 p.m.
  Lord ELTON: My Lords, as the noble and learned Lord has most eloquently put it, our work is nearly done. He referred to it as an odyssey. I must say that I consider it more an operation. We, after all, were thinking of this Bill, at the outset of its so far short career, as though it were Mrs. Worthington's daughter presented untimely for the stage, and we were doing our best by plastic surgery, though not, please notice—and the noble and learned Lord, by saying that the Bill is dented but largely intact, has conceded this point—by amputation.
  We have given in the process to the elected representatives of the people of the United Kingdom, and particularly to the elected representatives of the people of Wales, their first opportunity to discuss some 30 aspects, all discussion of which has so far been denied them by the arrangements made in another place. As examples, we have the relationship between the Assembly and the Welsh Development Agency, the Development Board for Rural Wales and the Land

  1745
  Authority for Wales; and, indeed, the exclusion of Members of Parliament themselves from membership of the Assembly. That is a matter to which they will wish to pay close attention, and I hope that this opportunity is taken.
  We have also sought to alter the Bill in a number of important ways which we hope will he accepted by another place. In doing this, we have been guided throughout by a desire to protect the interests of the Welsh people and of the United Kingdom. May I give noble Lords instances of this. We have provided that only residents in Wales may rule over the population of Wales. We have provided that local government, whatever its defects, shall not immediately be torn up by the roots as a result of investigation by what most of us see as entirely the wrong body to do the job. We have provided that the executive committee, which will hold all the reins of power, shall not become a closed shop for the discussion of plans and the disposal of resources behind closed doors. We have provided that the proceedings of the Assembly shall be published abroad for all Welshmen to be able to read them, and that their meetings shall be held in public so that all Welshmen may be allowed to attend them. We have provided that the salaries of Assemblymen shall be determined by the Secretary of State with the agreement of Parliament rather than by themselves, in the hope that they will then escape from the penurious dilemma which besieges Members of another place year after year.
  It has been a hard and difficult task that we have undertaken in working on this Bill, and I wish that we might have had more help with it. In particular, I was a little surprised by the rapid diminution of contributions in debate by the Liberal Party. Once the temporary, cross-Floor alliance on proportional representation dissolved itself, the Liberal Party tabled only one Amendment throughout the proceedings on the Bill that I recall, on safety in sports grounds—not, I should have thought, the most important aspect of the Bill before us. During the Report stage, the Liberal Party spoke but twice, abstained twice and voted with us once; otherwise they followed mute behind the Government through the Division Lobbies. I should have thought
  1746
  that for a great Party—the noble Lord opposite is speaking in such a loud voice that I can hear him saying that he thinks this is a good thing to do. It may so appear to him, but for the Welsh to find that this great Party has no view and does not wish to influence the opinions of any other Member of the House except by following its Government leaders is a great abrogation of authority and leadership.
  Lord WYNNE-JONES: My Lords, would not the noble Lord agree that it is a very excellent leadership?
  Lord ELTON: My Lords, the noble Lord may be in doubt as to my answer, in which case let me tell him that it is not a very excellent leadership. What Her Majesty's Government propose to do is, after all, to place an extra level of government, or whatever you care to call it, upon the shoulders of the Welsh people—to interpose an extra round of negotiation between the electors of Wales and the financial resources of the United Kingdom, and in so doing to say that they are bringing them closer to the centre. In truth, they are pushing them, ever so politely and guilefully, a few miles further out into the Irish Sea, and all the time growing red in the face with the exertion of accusing us, the Tory Party, of insulting the Welsh people: "Don't you trust the Welsh people?" they keep asking us. Of course we trust the Welsh people, but we are an Opposition Party and we have been in opposition, perhaps, for too many years. The one thing that we have learned in opposition is that what you cannot trust is government—in any shape and in any place—and that includes a brand new government set up in Cardiff at great expense.
  It is against that threat that we seek to put the Welsh people on guard. That is what noble Lords opposite cannot abide to be told as they try to heave us over Saint David's Head—that it is we, and not they, who have the true interests of Wales at heart. We are prepared to suffer their endless accusations, in Parliament and in the Press, in the knowledge that if we do not stand up for the Welsh people nobody else will do so. Reference to the Division lists and to the list of speakers in these debates will produce significant silences and absences from Welsh noble

  1747
  Lords opposite who have expressed, by saying nothing, more clearly than I can in speech what they think about the future for Wales.
  We have spent nine days of Parliamentary time upon this Bill. I believe that it will turn out to be a nine day wonder—to be apprehended with astonishment, examined with curiosity and forgotten with relief. Perhaps the Welsh would describe that differently—perhaps like R. Williams Parry in his poem to the Fox, Y Llwynog. They will say that it is:
  "Megis Seren Wib" —
  like a shooting star, a sudden light, that as suddenly fails and can portend good fortune or ill. But let me and let my Party not be misunderstood as to this. If the Welsh freely decide in a referendum that they wish to take this new yoke upon their backs, if they freely decide that it is worth the price to be paid—that the extra 11,500 civil servants and the extra £12.5 million on the United Kingdom Exchequer are inevitable and additional burdens that they ought to carry—if that is their judgment, far be it from us to gainsay them. Once the Assembly is there, unwise as we think they would be to accept it, then the English people and the United Kingdom Parliament must do everything in their power to strengthen the bonds of friendship, patriotism and loyalty which have for so long united us.
  To the Welsh, this should come as no surprise. We are, after all, the Party that first appointed a Minister for Welsh Affairs; we are, after all, the Party who first appointed a full-time Minister of State for Wales; we are, after all, the Party who first introduced the Welsh Grand Committee in another place; and we are, after all, the Party who have transferred responsibility for primary and secondary education and the urban programme to the Secretary of State for Wales and away from Westminster. It is in this sort of way—by strengthening, in democratic terms, the Welsh Council—and perhaps by the creation of a Welsh Select Committee in another place, that Wales should be given a steadily clearer identity, with assistance.
  Finally, before the cries of noble Lords opposite become too blatantly Welsh for us to resist a reply, may I thank my noble friends not only for their tireless assistance
  1748
  in the Division Lobbies late at night but also for sitting through the gentler passages of my own delivery, which may well be described, although I hope they will not be, as the calm before the yawn. I trust that they will have the gratification that I have. I believe that thanks are due not only from me but eventually also from the Welsh people for what my noble friends have done in this House. With those thanks, there is no phrase with which to end a speech like this. I cannot do it in Welsh. However, it is not, "Goodbye" to the Wales Bill, because it will come back to us. It is, "Au revoir".
  5.39 p.m.
  Lord DAVIES of LEEK: My Lords, I sat through that—I do not know how! It reminded me of when I was a boy at the Methodist chapel in Cardigan. At great moments, when the preacher had got the hwyl and the roof and the rafters were doing a swirl with the oratorical Welsh arpeggios, they would say:
  "Y mae duw yn agosai"—
  God is present. I thought that the destiny of mankind depended upon the magnificent work of the noble Lord, Lord Elton! I must pay a tribute to the noble Lord, It was absolutely magnificent, boyo!
  "A thymelwynt tachwedd yn siglo'r ty".
  The winds of November were shaking the roof of the Chamber.
  To cut out all the joking, may I pay a tribute to the hard work—sincere work, in many cases—which has been done by the Party opposite. In truth, the Bill has been improved. But let us respect the fact that there are not so many Welshmen on this side of the Chamber as there are Scotsmen and Anglo-Saxons on that side. Those of us who have worked upon the Bill have enjoyed listening to the speeches and will nobly, and without any political venom, pay tribute to the constructive Amendments put into the Bill by the Opposition.
  5.40 p.m.
  Lord LLOYD of KILGERRAN: My Lords, it is with great diffidence that I find myself in a position where such hwyl has been aroused by an Englishman on one side and a Welshman on the other side, and I am here to produce some little damping of that hwyl. When I listened to the noble Lord, Lord Elton, in that

  1749
  wonderful speech in which he was almost singing at the end, I felt like Harry Secombe who, when an Englishman spoke something like that—and especially a Conservative Englishman—said he thought that at last the Conservative landlords were marching towards Wales once again.
  One of the most significant things that I remember in this debate occurred when the question of Welsh history was raised and the noble and learned Lord the Lord Chancellor was sitting on the Front Bench. When the distinguished Conservative Peer, the noble Lord, Lord Elton, mentioned Welsh history, a glint came into th1e eyes of the noble and learned Lord. Of course, that glint indicated that he was not always quite so courteous and harmonious in his addresses outside the House as he has been in this House, and I thought that was the opportunity for the Welsh history to come forth, but the noble and learned Lord merely passed it by and said
  "If the noble Lord wishes to know something about Welsh history, I will help him".
  I may be biased in making these observations and appearing to be supporting the Liberal Party from the rather stupid and absurd attacks that have been made upon it by the noble Lord, Lord Elton. I apologise for using such adjectives on this happy occasion. Like many Welshmen in this place, I may be prejudiced when listening to these arguments and to the Conservative Amendments. My grandfather was thrown out of his farm in Wales because the Conservative landlord found out that he had voted Liberal, but in fact that Conservative landlord did my grandfather and his family quite a lot of good. As a young farmer trying to tear a living out of the land of Carmarthenshire he moved by cart—we have a special type of cart in Wales called a gambo—and the family took their pathetic little belongings from this little farm and crossed the rivers into Cardiganshire. But like all Welshrnen, we never foster or remember grievances and my grandfather said," This Conservative landlord did me a good turn because the farm which I was able to get in Cardiganshire was far better land than I was messing about with in Carmarthenshire."
  Well, ladies and gentlemen—
  A noble Lord: The Election campaign has started!
  Lord LLOYD of KILGERRAN: My Lords, I suppose it was inevitable that I should address your Lordships in the way that no doubt I shall be addressing countless hundreds of people who will come to listen to the Liberal speakers who will be going round the Welsh countryside and even the English countryside; but nevertheless I apologise for referring to noble Lords in those terms, so rashly and indiscreetly.
  I should like to thank those noble Lords on both sides of this House (if I may be serious for a moment) who have helped to attach to this Bill the important concept of elections using a form of proportional representation. There was a large majority in favour of proportional representation, and I should like to make a special plea from your Lordships' House to those in the other place who will soon be considering your Lordships' Amendments to this Bill. I ask them to consider carefully the special position of Wales and the Welsh Assembly in relation to the proposals to introduce PR in the context of a Welsh Assembly.
  The Welsh Assembly is totally different from the proposed Assembly in Scotland and, of course, from the Parliament of Westminster. And it is essential to distinguish sharply the differences between the Scotland Bill and the Wales Bill. The Wales Bill can only deal with a limited number of Welsh domestic matters in a limited way. Indeed, if I may return to the words of one of the most eminent Welshmen of this century, the noble and learned Lord, Lord Morris of Borth-y-Gest, in the early stages of the debate on this Bill he said—and I quote his exact words—"This rather modest Bill …". If I may therefore presume to paraphrase, without distorting the meaning of other elegant passages in his speech, he pointed out that this Bill produced no major upheaval; there was no cause for alarm, suspicion or fear—or even for the speech of the noble Lord, Lord Elton. I beg your Lordships' pardon—that was not included in the noble and learned Lord's speech. The Bill preserved the unity of the United Kingdom and ensured that special heed would in future be paid to the welfare of the people of Wales by the first elected Assembly Wales has ever had.
  My Lords, my speech has become somewhat confused as a result of the hwyl, but

  1751
  there is one merit that this Bill has above all others, in spite of its imperfections. It gives the people of Wales the greatest opportunity they have had for centuries of having an elected body to speak for them. Of course, there will be difficulties to be overcome in making a constitutional change of this kind, but it is far better for Wales that this Bill be passed than not to have a Bill at all. Like the noble and learned Lord, Lord Morris of Borth-y-Gest, I should like to urge upon your Lordships that it is the elected representatives of the Welsh Assembly rather than the Ministers of the Crown at Westminster who best know the needs of the people of Wales in those domestic fields which this Bill covers. I commend this Bill to your Lordships.
  5.47 p.m.
  Lord MORRIS of BORTH-Y-GEST: My Lords, the occasion of the passing of this Bill is one on which in your Lordships' House, with all the civilities and the wit than can mark your Lordships' highly civilised debates, it is fitting to pause just for a moment to consider what we are doing and what we have done in the recent stages of this Bill. The noble Lord, Lord Lloyd of Kilgerran, complimented me very much by referring to something that I had previously said. I still think it was right that we should regard this measure as indeed a modest one, with very limited and restricted application.
  The noble and learned Lord on the Woolsack has reminded us—and I think he did us a great service in so doing—that the Welsh Assembly will not possess any legislative powers in any real sense of the term. In Wales we have had a Welsh Office only in the last few years, I think since 1964. Only in the last few years have we had a Secretary of State. At first the Minister of State looking after the affairs of Wales was generally the Home Secretary—and the Home Secretaries, as I have acknowledged before, contributed materially to the well-being of Wales. I am thinking particularly of the late Lord Kilmuir, and of the noble Lord, Lord Brooke of Cumnor. They rendered invaluable service.
  But the machinery of government in recent years has become ever more complicated and far-reaching. In recent years
  1752
  there has been a process of administrative devolution and under this Bill decision-making, instead of piling up on the desk of the Secretary of State, can be brought closer to the people most affected by the decisions.
  On a Second Reading debate in your Lordships' House your Lordships can give general expressions of opinion as to whether a Bill is to be commended or not. Of course, we did not have a vote in your Lordships' House on the Second Reading, but we heard the speeches of many noble Lords. Some were in favour of the Bill; some were against it, but felt that as it had received the approbation of another place, the elected Chamber in our Constitution, the Bill ought not to be opposed, but as much as possible should be done to improve its content. But I did note that many noble Lords expressed the view that the measure might endanger the unity of the United Kingdom. I am sure it was absolutely right for noble Lords who felt that to give expression to that view. It is something that your Lordships have to have in mind. I can only express my own personal view, which is that the fears expressed by those noble Lords are groundless. I am sure that the over whelming mass of the Welsh people would not wish to loosen the ties which hind us together within and for the great benefit of the United Kingdom and of its constituent parts.
  Since Second Reading we have had Committee stage and Report stage, and I am left with two major impressions. The first is of great admiration for those who over months and years must have been concerned in drafting this Bill. It was a mammoth task going through the Statute Book and deciding what to put in the Bill. The other impression with which I am left is of the great skill shown in your Lordships' House, on the one side by the Ministers of the Crown and on the other side by very many noble Lords who spent a great deal of labour, who devoted their skill to examining the interstices of legislation and then bringing forth proposals for your Lordships' consideration. I have intense admiration for those on both sides of the House. I think the noble Lord, Lord Elton, as he has been leading for the Opposition side, and many other noble Lords, deserve your Lordships' gratitude for what they have done. In the nature of things, it was not possible

  1753
  for most of us to go into the particular detail that was involved in almost every one of the Amendments. There were some Amendments which concerned the question as to whether the newly created Assembly should be left to decide various questions which an Assembly might be expected itself to decide, or whether they should be mostly settled in advance.
  At first some of your Lordships thought that from the Opposition side a certain mistrust of the Welsh people was being shown. But, happily, that can now go out of our consideration. The noble Lord, Lord Elton, most definitely and most generously has assured us that there is in no sense any mistrust of those who are likely to be Members of the Welsh Assembly. Of course, I accept all that the noble Lord has said, and all your Lordships will also do so. But we did have a good many excursions into the Division Lobby. I wondered once or twice why, but I think the explanation must have been that the noble Lord, Lord Elton, had concern for our health and thought that from time to time we ought to wander into the Division Lobbies and so have a little exercise.
  The noble Lord, Lord Elton, on the Second Reading expressed himself, I think, quite firmly in favour of the principle of this Bill. May I remind your Lordships of what he said:
  "The avowed aim of this Bill is to bring control of the Government of Wales more closely into the hands of the Welsh nation, and in this we have no quarrel with the Government whatever. We are absolutely at one with them. We believe in a louder and more effective Welsh voice in deciding how Wales should be run".—[Official Report, 23/5/78; col. 840.]
  They are very splendid words, and I think we are all grateful to the noble Lord, Lord Elton, for expressing himself so clearly. He went on in his speech to pay tribute to the distinct and separate nation with a distinct, separate, proud and very long national tradition. But then at the end of his speech he said:
  "This Bill creates an Assembly ill-suited to express the aspirations, or direct the affairs"
  of what he called
  "a proud, loyal and talented nation".—[col. 846.]
  I was sorry that the noble Lord rather slipped away at the end of his speech from the great sentiment which I am sure he meant to express in favour of the principle of this Bill.
  1754
  As I sit down, may I repeat that I for my part have no fear that the unity of the United Kingdom will be in any way imperilled if this Bill becomes an Act and if later the Welsh people decide that they would like to put it into operation. I have spoken as a Welshman and one who is very proud to acknowledge that he is a Welshman. But I have never found, and never will, that my concern for the honour and dignity of Wales, and the preservation of her traditions and separate culture, forms any bar, any let or hindrance, to my unqualified admiration of the sterling qualities of the English, the Scots and the Irish. Many of our problems are the same problems. My Lords, let nothing be said and let nothing be done which will disturb the mutual understanding upon which the unity of the United Kingdom so firmly rests and from which so many benefits flow for all our people.
  5.58 p.m.
  Lord RAGLAN: My Lords, the noble and learned Lord, Lord Morris of Borth-y-Gest, will not be surprised that I do not agree with him. I should like to say a very great deal more about this Bill; I should like to make several more Second Reading speeches on the subject. In one sense, I think I could say that I have welcomed both this Bill and the Scotland Bill, but only because they have made us think and talk about the rise of Scottish and Welsh nationalism and ponder why it has manifested itself. It is a great pity, I believe, that it has taken a whole Royal Commission and two Bills to make us even start to talk about it, and I do not believe that, even if this Bill is defeated on the referendum, it will be nearly the last that we will hear of Welsh nationalism or the last talk there will be of devolution. It still happens that there are people whom I meet and talk to about Welsh nationalism who act as though they feel they ought to make some obeisance to it, but at the same time rather wish that it was not there, although they cannot say why. It seems to me that there is something of this uncertain approach in the very use of the word "devolution".
  The Government having been persuaded that it was desirable to provide national Parliaments for Scotland and Wales, someone looked around for a rationalisation for what was happening: "Devolution", that is what we shall call it; we

  1755
  know that everyone is in favour of that". Indeed, supporters of these proposals have got a lot of mileage out of that word. But when one examines the proposals—I am not saying that in the circumstances the Government could have done much better than they have—one can see that they do not provide what most people mean by "devolution". I agree that one might fairly claim with the noble and learned Lord, Lord Morris of Borth-y-Gest, and my noble and learned friend on the Woolsack, that the Bill would bring Government closer to the people. However, whether that is desirable depends on what kind of government is being brought closer. The Bill sets up a body which would be so placed that it could and would practice the maximum interference and hindrance to local authorities. As local authorities are already complaining that the central Government—far away though it is supposed to be—interferes too much already anyway, one must say that the Bill would bring the wrong kind of Government closer and that its effect would be anti-devolutionary.
  I have noticed that the London Welsh have been fairly vocal in support of the Bill—and the Guidford Welsh too! They are being sentimental and for that I forgive them—I think. I had a noble friend, who is now dead, but who 10 years ago brought a Bill to set up some kind of Welsh Parliament. I used to pull his leg because although he was so ardent about it all, he lived contentedly in W.8. I would not mind expatriates who indulge in flights of fancy, except that some people who are not familiar with Wales might believe them.
  I heard the noble Lord, Lord Lloyd of Kilgerran, on the first day of the Committee stage refer to Wales as "a little community". I think that he must have been tutoring a nice lady who came to stay with us the other day from Oxford—90 miles distant—who declared that she was so looking forward to coming to Wales as she had always wanted to go to Portmeirion. It was with difficulty that I persuaded her that it would be as near for her to go to London; that actually it would be quicker for her to go to Penzance; and, when all was said and done, did she realise that Cardff is as close to Wrexham as Bath is to Bedford?
  1756
  Wales may be many things but it is not a little community. There is a multiplicity of communities stretched miles from each other divided by hills and rivers. They have different cultures and traditions and different social and economic foci often outside the Border itself. Neither is Wales a locality any more than one could say, for instance, that Gloucester and Chester can, by any stretch of the imagination be called local to each other.
  Now, if one were to look around for any one thing upon which the inhabitants of Wales were agreed, it is that North and South do not agree on much. Indeed, the disparity between them is a kind of standing joke. I think that the inhabitants of North and South Wales are trying to tell us something if only we had ears to hear; that is, that North and South have, in reality, little community of interest. They are trying to tell us that the reality of their separation is different from the myth of their unity. So there is a second reason why the Bill would be counter-devolutionary in practice. Not only would power be taken away from the local authorities which, after all, are the government which is nearest to the people, but behind the Bill is the idea that communities which in history and by tradition and by the plain facts of distance and topography are apart in culture and outlook, should be pulled together into an artificial whole.
  We are being asked to accept either what I would call the "London Welsh concept"—that is, that this disparate land is already one community which needs this Bill to give political expression to a unity which already exists—or we are being asked to accept the nationalist concept that the Bill is necessary to bring unity to people who in theory ought to be unified. Perhaps we are being asked to accept both, I do not know; but those two hypotheses exist uneasily side by side. They are mutually contradictory; they are equally mistaken, and both, if put into practice through the Bill, would have the effect of reducing local autonomy.
  The first theory that Wales is a unified country does not conform to the facts and the second—if I hunt around for something nice to say about it—does not belong to true politics but to the realm of romantic antiquarianism. Of all the

  1757
  curious and irrelevant things upon which to base a political creed, the nationalist case is, I think, the most wonderful. They take a fictitious line on a map—that is how my noble friend Lord Energlyn so aptly described it—which was marked out by some 16th century administrators. They populate one side of the area with medieval heroes. They call the people on one side of it a different race and declare that history intended that land to be a self-governing nation. If this nationalism were just romance, perhaps it would not matter. But, unfortunately, we must not forget that this nationalism does not differ in essence or in sentiment from the beliefs which have caused the most terrible wars during the last century or more, during the time in which this creed has been fashionable. It turns brother against brother. It breeds hatred and venom, and it encourages intolerance of those who would live and let live.
  We should not be led astray by the word "devolution" when used in association with the Bill. Whatever my noble and learned friend the Lord Chancellor avows is the purpose of the Bill, its effect would not be to increase but to decrease local control of affairs and to strengthen Welsh nationalism and we would all suffer a great deal of harm if it ever became law.
  On Question, Bill passed, and returned to the Commons.

  EUROPEAN COMMUNITIES (DEFINITION OF TREATIES) (NO. 5) (JOINT EUROPEAN TORUS) ORDER 1978
  6.9 p.m.
  Lord GORONWY-ROBERTS: I beg to move that the draft European Communities (Definition of Treaties) (No. 5) (Joint European Torus) Order 1978 be approved; and in dealing with it I will also speak to the draft European Communities (Privileges of the Joint European Torus) Order 1978. Both were laid before this House on 3rd July 1978.
  The Schedule to the (No. 5) Order specifies the Exchange of Letters dated 3rd May 1978, constituting an agreement between Her Majesty's Government and the European Atomic Energy Community regarding privileges to be granted to the
  1758
  Joint European Torus, which I shall hereafter refer to as JET. The Schedule to the European Communities (Privileges of the Joint European Torus) Order 1978 specifies the privileges which are to be granted to JET.
  If the House approves the orders, the (No. 5) Order will formally define the Exchange of Letters between the Government and the Commission as a Community Treaty under Section 1 of the European Communities Act. In the Exchange of Letters, the Government undertook to grant certain privileges to JET. In addition, the Council Decision of 30th May established an obligation to confer privileges on JET. The European Communities (Privileges for the Joint European Torus) Order 1978, if approved by the House, would implement the Government's undertaking and give effect to the obligation incurred by the Council Decision.
  Implementing Orders—in this case the European Communities (Privileges of the Joint European Torus) Order 1978—are usually subjected to the Negative Resolution procedure. However, the Government have elected to subject the Privileges Order to the Affirmative procedure. In the present case, it seemed to the Government that it would be for the better convenience of the House to take these two orders together and to subject them to the Affirmative procedure. This will ensure that both orders can be made with the least possible delay because, as the noble Baroness, Lady Elles, and the House know, JET was formally established on 1st June this year, and the Government should be in a position to fulfil what is now an obligation, and to do so at the earliest possible moment.
  The House will know that JET is the first European Community body to be located in the United Kingdom. Your Lordships may recall the debate on 18th May 1976 when this House gave support to the Government in their efforts to secure JET on British soil. It was most gratifying that the Council of Ministers decided on 25th October 1977 that JET should be located at Culham in Oxfordshire. I should like to pay tribute not only to the excellence of the case as presented by the United Kingdom for the location of this important joint undertaking in the United Kingdom, but also to

  1759
  the objectivity of our partners, more than one of whom had very strong claims to locate this important undertaking in their own countries but who nevertheless saw the force of the British claim and loyally joined us and the other Members of the Community in deciding that it should, in fact, come to Britain, to Culham in Oxfordshire.
  The Community's thermo-nuclear fusion programme is an exciting and long-tern effort of which JET is the most important single project. JET will be a large experimental fusion machine aimed at the production of energy through the magnetic confinement of high-temperature plasma. If the noble Baroness invites me to explain that, I must respectfully decline.
  Scientists are generally agreed that this type of experiment offers the best route to potential fusion power. If JET is successful, scientists think that it is likely to make a significant contribution to the generation of electricity in the next century. The construction and experimental stages of JET will last 15 years and it is estimated that eventually about 320 staff, some half of whom will be foreign, will be employed on it. Another way to put it is that quite half of them, although this is a nine-country project, will be British. During the five-year construction phase, some £120 million (at 1977 prices) will be spent by the Community—I repeat, by the Community—on the project. The Community has been joined in this project by two non-Community countries—Sweden and Switzerland—which are associated with JET.
  I should perhaps explain here that JET is a special kind of Community body. It is a joint undertaking established by the Council of Ministers under Chapter V of the Euratom Treaty. Legally it is distinct from the Community: it has a separate legal personality of its own. As with many other international bodies, it needs certain privileges in order to operate effectively. Chapter V of the Euratom Treaty provides that certain privileges set out in Annex III may be conferred on joint undertakings: the Council of Ministers' decision of 30th May 1978 applies certain of those privileges to JET. In addition, the special circumstances of JET called for some additional privileges; these are set out in the Exchange of Letters of 3rd May 1978 between the
  1760
  European Atomic Energy Community and the United Kingdom Government. The draft Privileges Order now before your Lordships gives effect, so far as necessary, to the privileges for JET which come from these two sources.
  I mentioned that JET has a separate legal personality. This is normally expressed in Orders in Council conferring privileges and immunities on international organisations. It is not dealt with in the Privileges Order because we take the view that the second sentence of Article 49 of the Euratom Treaty is directly applicable. We may be asked, why we do not regard the Annex III privileges as directly applicable. It is because they are provided! under Article 48, which says that each Member State:
  "shall for its part ensure that these advantages are conferred".
  In view of this express requirement for Member State action, it would not be safe to treat the Annex III privileges as directly applicable.
  The privileges accorded to JET have been strictly tailored to the requirements of the joint undertaking and are similar to those granted to joint undertakings set up in other Community countries. The privileges agreed are also similar to those granted to international organisations in the United Kingdom by orders made under the international Organisations Act 1968. JET will not, however, enjoy the immunities accorded to international organisations, such as inviolability of premises or immunity from legal proceedings.
  The privileges to be conferred upon JET include exemptions from customs duties and taxes on the importation of goods; relief from the non-beneficial element of municipal rates; relief from value added tax, car tax and other taxes payable on motor cars of British manufacture purchased for official use of the joint undertaking in the United Kingdom; and relief from duty and taxes on the purchase of hydrocarbon oils used in the exercise of the official activities of the joint undertaking in this country. The present Draft Orders are necessary to enable Her Majesty's Government to give effect to those privileges. I beg to move.
  Moved, That the draft European Communities (Definition of Treaties) (No 5)

  1761
  (Joint European Torus) Order 1978, laid before the House on 3rd July, be approved; and
  That the draft European Communities (Privileges of the Joint European Torus) Order 1978, laid before the House on 3rd July, he approved.—(Lord Goronwy Roberts.)
  6.9 p.m.
  The Earl of LAUDERDALE: My Lords, first, may I say that I am sure that we on this side of the House welcome the Government's decision to proceed with the Affirmative procedure. This is a subject which, after the Welsh oratory that we have had this afternoon, gives me the opportunity to tell a new story about the English, the Welsh, the Irish and the Scots. It is said that the English like salvation because they can debate it; the Welsh like salvation because they can sing about it; the Irish like salvation because they can fight about it and the Scots like salvation because it is free.
  The location of a Joint-European Torus at Culham might look at first sight like a free gift, but of course it is nothing of the sort. One would be churlish not to congratulate Her Majesty's Government on their strenuous struggle to persuade our European partners that this very important laboratory should be sited in the United Kingdom. The case always was—and it was expressed by the Scrutiny Committee on European Affairs two years ago—that the best place to site this laboratory was where there was, and would continue to be, a body of expertise in plasma physics.
  It will be within the recollection of those Members of your Lordships' House who took an interest in this matter during the crucial struggles 18 months ago that there were alternative sites canvassed for this important laboratory. They included Ispra in Italy, Ganching in Germany, and Cabarache in France. What is quite certain is that the Government pressed hard and persistently to win for Britain what is the first major Community establishment in this country, and it is a great credit to the Government that they were able to pull it off.
  It is also only fair to say that in the Government's endeavours they were
  1762
  mightily supported and assisted by the adept, tireless, resourceful and always good humoured diplomacy of Commissioner Guido Brunner. My noble friend Lord Bessborough was unable to remain for this debate, but he asked me to mention what he would have mentioned himself, that he, as a member of the European Assembly who has been closely in touch with Dr. Brunner over the last four years, would like to couple his name with those of any other noble Lords who take this opportunity in the House of Lords of expressing our thanks to the tireless and most resourceful diplomacy of Dr. Brunner in working to get an arrangement that would bring the laboratory to Britain, and particularly to Culham.
  It is also greatly to the credit of our partners and, in a sense, of our competitors in the Community, French, Italian, and Germany in particular, and Dutch and Belgian likewise, that they have, now that the dust has settled, readily recognised the strong British claim, on grounds of expertise in plasma physics, for having the laboratory over here. It is also important to put in laymen's language the phraseology that the noble Lord, Lord Goronwy-Roberts, gave us just now. I am notorious in Sub-Committee F of the European Scrutiny Committee for always using layman's language and never bringing more than a layman's comprehension to the erudite debates of the noble Lord, Lord Wynne-Jones, opposite, and the noble Lord, Lord Kings Norton, and other noble Lords who sit on our Committee and exchange ideas and information on scientific subjects way above my head.
  But, as a lay chairman, I am accustomed to trying to pick up what they say and turn it into ordinary, plain, vulgar journalese. If I were asked to say what was this thing at Culham all about, I would say that it is an endeavour to reproduce the physics of a sunspot on this planet. Since a sunspot is a very hot thing indeed, and one would be unwise to try to touch it, the problem is how to enclose it when any metals, or even rocks, that might be brought near to it would rapidly melt. The device that the scientists have discovered is what I would choose to call a coil; a coiled and circular magnetic field which provides the walls within which the experiments are conducted at very great heats. I think it is something like 100 million degrees, and these heats have been

  1763
  attained for as long as one-hundredth of a second hitherto. One of the hopes of this laboratory is to be able to attain them and maintain them for as long as a second. Should all this prove successful, this is but one stage in a long journey on the road to developing power by fusion.
  If the present position in atomic energy is compared with the position in, I think, 1940 when the first fission pile went critical in Chicago, that is about the distance that we are now from fusion, if it ever works. It is a distance of about 45 or 50 years. However, whether or not it will ever work—and nobody knows this yet—one thing is already of great significance: the fact that the European Community has decided to set up this laboratory has put the Community within the top league where energy research is concerned.
  We heard over in Brussels only the other day that, through the medium of the International Energy Agency in Vienna, the Russians have made known to Japan, the Community and the United States that they will be very happy to collaborate in the next stage. They have recognised that the Community, as such, is in the big league, comparable to Japan, the United States and the Soviet Union. This, as a piece of achievement for the standing of the European Community, is something which is difficult to exaggerate.
  Having said those things, it would be a pity to miss this opportunity to say one or two further words about the conduct of our policies in the Community in the energy field, Of course, all sorts of questions arise, and in what I am going to say I am not—repeat not—attempting at this moment to criticise or attack the Government's energy policy in the Community but to draw attention to one or two things which one has come across and which are germane to the whole story of the way we got the JET site to Culham.
  Quite recently, the United Kingdom delegation in the Atomic Questions Group of the Council has created something not far from a blockage in discussion of Commission proposals on the fast reactor option, on reprocessing policy and on the handling of nuclear waste. Likewise, there has been from the British side a severe blockage on proposals to limit and cut back refinery capacity, when there is over-capacity in the world at large.
  1764
  Although the reasons for the British stance are quite easy to understand—Britain would like to export white products from North Sea crude, and to get North Sea crude refined in this country—nonetheless, whether that policy is wise or not, there has been some raising of eyebrows in Brussels about it.
  I am not at this moment attempting to make any kind of capital out of the policy that Her Majesty's Government are pursuing, but I believe that it is proper, in an area so critical to the future of Western Europe as a whole, and to the Community in particular, and certainly to ourselves in the area of energy policy, that there is a great need to follow the principle of Lord Chesterfield in his letters to his son, "Suaviter in modo, fortiter in re", or, if you prefer, if there is to be an iron fist, let it be within a velvet glove.
  I believe that we have in our handling of matters in. Brussels caused needless annoyance. If one is differing from one's partners—if one is differing from the Commission and doing so consistently and frequently—all the more reason to handle them with the utmost diplomacy and care. Here, of course, there is not the vestige of a complaint about the work of our permanent representation in Brussels, headed by my kinsman, Sir Donald Maitland, who I am glad to say supports the Clan Maitland tartan and has in his front hall the emblem of our clan. There is not the smallest adverse comment about his distinguished work. Indeed, everything one hears in Brussels is full of praise for him as the head of our representation and for his staff, who have won great respect for hard and assiduous work and for their great tact in handling matters that may not always he easy to handle.
  However, there have been complaints in certain quarters about the personal stance that one or two of our Ministers have taken. I wonder whether the word could be gently passed on to the Secretary of State for Energy, whose ability and agility any politician must admire, and even envy, that if he were perhaps one day to pay a personal courtesy call on the Commission, with whose proposals he has tangled so often, he might dissolve anxieties and apprehensions that have no reason whatever to be there.

  1765
  Having said that—and it is the most I want to say—I return to give a sincere word of congratulation to the Government for achieving this very important result for enabling the United Kingdom to play a part in an important and critical scientific work which enhances the status of the Community in the world and puts the Community in the top league. For that we cannot thank the Government enough, and in thanking them I suggest that we metaphorically raise our glasses to Commissioner Brunner and all his skill, attention and friendship for this country. With those comments, I wish these orders godspeed.
  6.33 p.m.
  Lord WYNNE-JONES: My Lords, I had the privilege of being in Brussels with the noble Earl, Lord Lauderdale, and had the delight of being entertained by his kinsman. As a Welshman, I do not expect to find a Scot sitting in every Embassy in the world; he probably will be there, but a Welshman will almost certainly not be sitting there. Nevertheless, it was a most enjoyable occasion.
  I wish to make a few observations about the proposal which is before the House. Perhaps it would be simpler if we had used more popular language and instead of talking about the Joint European Torus we talked about the doughnut. It is a magnetic doughnut, literally something like a doughnut; that is what is happening at Culham. We are delighted it is being done there, but it is important to remember certain things about it. First, it is a joint European effort and if it were not such an effort it would not be carried on at all. For this country it would be too expensive; it would absorb far too much of our national resources, and therefore it is important to realise that it is being done not simply for the aggrandisement of this country but to produce energy throughout Europe.
  Secondly, the method being employed was developed essentially in the Soviet Union. Let us remember that in these scientific matters, worldwide co-operation is important. If we had not had—and I assure the House we did have—the closest association with the scientists of the Soviet Union, we should not be where we are today. So do not let us put this
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  either in national or ideological terms; let us remember that this is an attempt to do something worldwide.
  To take the matter further—I wish to question my noble friend about this—a similar project is going on in the United States. The one here at Culham is, I think, on a slightly bigger scale, but because the American resources are much greater than the resources of Europe as a whole, they not only have this Torus or doughnut magnetic containment project; they also have a project for laser implosion. It is a fascinating idea. They have an intense laser beam and to produce that beam they need the energy of a complete generating station as big as any we have. The beam is concentrated into a very narrow line and is focussed on certain particles which drop down. They are minute glass pellets containing hydrogen and they implode in the beam. The Americans believe—at least those working on the project believe; being a scientist myself, I appreciate we are always optimistic—that within a short time (they think within 10 years) they will reach the point of being able to produce in that way energy by fusion which will rival the method we are trying to use.
  My question is this: how close is the association now between the Joint European Torus project, the Russian project—and for Heaven's sake do not let us ignore the Russians; they are extremely competent scientists, as I know—and the American project? Unless we have the closest co-operation between those three bodies I do not believe the world will get proper advantage from all the work that is being done. And remember, too, that this work is not being done simply for we in this country, for the European Community or indeed for the whole of the Western World. It is work which must be done for the world as a whole.
  If one thinks about it, the future for energy in the world will depend, first, on the possibility of this fusion work: but there is other work. We think it will work, but we do not yet know how successful it will be. Secondly, we have the utilisation of solar energy, and despite all that people say, we are not yet certain how far we can go in the full utilisation of solar energy. Thirdly, we have the utilisation of such things as wave energy. There we have the forms of energy for the future, and this order which has been

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  presented to us today is something of immense importance and significance. It is one of the three legs on which the future of energy is going to depend and if only we get that right it will be absolutely invaluable.
  Therefore, I do say that this matter we have had put before us tonight is not a trivial one; it is something absolutely essential to our future. What has been done so far is good, but what I should like to be assured of by my noble friend is that the association with the Soviet Union and with America shall be on the proper basis, so that we are guaranteed that we reach what all of us know must be done to protect the future of mankind.
  6.41 p.m.
  Baroness ELLES: My Lords, it has been a most useful short debate. We have had not only the benefit of hearing the Minister, the noble Lord, Lord Goronwy-Roberts, introducing the orders to your Lordships' House and explaining the technical matters involved, but also two most interesting and valuable contributions from my noble friend Lord Lauderdale and a very distinguished scientist, the noble Lord, Lord Wynne-Jones. Both emphasised the fact that this is a joint European effort. That is what has come out of the speeches and has been a most valuable contribution to the acceptance of these orders tonight.
  I shall say just one rather churlish word, I must confess, in that we regret the two years' delay that it took to get JET on to these shores. I have no doubt at all that it was a question of persuasion by the British Government, mitigated somewhat by distrust of the true European intentions of some individual Members of the present Government, and that is to be regretted. We can only say thankfully that in the end the Member States acted in concert to enable the first European institution in our country to be the major contribution to science that it is obviously going to be.
  It is an immensely important scientific project, as the noble Lord, Lord Wynne-Jones, in particular, has pointed out, not only to the future well-being of the United Kingdom but even of world benefit. I understand that similar projects have already been started and have been going on in the Soviet Union, in particular, and
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  in the United States and we can only hope that the delay in setting up JET at Culham will not have put us behind in the development of this great, high technological experiment.
  I understand also from the Council decision of 30th May—and perhaps the noble Lord the Minister would confirm this—that not only has a decision on the idea of Culham being set up as a centre for JET been passed and accepted, but already a financial contribution has been made from the Community of the sum of something like £68 million in order to get on with the first stage of the project That is to be welcomed. This is not something which has been held back by bureaucratic red tape hut is something that all the Members of the Community believe in and want to see started and set on its way.
  It is also appropriate to mention in this short debate (if I may call it that) the very valuable contribution made by the noble Lord, Lord Hinton of Bankside, in enabling this project to be sited here. The technological analysis made by the Commission at the time showed certain deficiencies in the United Kingdom compared with other possible centres based on social grounds, I understand, rather than economic or technical grounds or on the scientific ability of our scientists at Culham. I understand also that it was the persuasion and the technological analysis made by the noble Lord, Lord Hinton of Bankside, that contributed very largely to persuading the Commission that Culham was capable of undertaking this very major scientific work, not only on behalf of Britain but also on behalf of the other Member States of the Community. So, we are delighted and we congratulate the Government that this JET is now here.
  But there is one slight shadow cast on this sun which worries us, and that is the question of the European school. I apologise that I have not given notice to the noble Lord the Minister on this particular matter, but hopefully he will be able to answer one or two queries which have arisen because of something that appeared in the Press over the weekend. It may be mis-information, I do not know, and I have not been able to verify it, but perhaps the noble Lord would be good enough, if he is able to do so, to verify

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  this matter tonight. As noble Lords know, where there is a European institution—and, as the noble Lord has said, there will be about 160 nationals from other Member States working at Culham—provision has to be made for the schooling of the children of the members working in the European institution. So, a European school is to be set up, attached to Culham, to which the children of the people working at Culham will be able to go, and, presumably, children from neighbouring centres round about, in order to fill up the places available.
  The difficulty arises over the question of the salaries of the teachers. Normally in the other European schools there is a national salary, which is usually agreed, and income tax is paid at the national rate on the national element of the salary. But, because of its very special nature, there is what is called a "European topping up" of the salary, on which at the other European schools no tax is paid. It is free of tax. The Press report indicated that the United Kingdom Government was pressing for United Kingdom income tax to be paid on the total salary of teachers—whether it is only on teachers who have English nationality I do not know. Perhaps that is something else the Minister can tell us about, if this report is in fact correct.
  Clearly, there should be no discrimination whatsoever for teachers who are working in an institution. If teachers are being employed by the European school in order to serve the European Community and the families who live in the European Community, many of whom come over to Culham from other States to work in Britain, those teachers should not be discriminated against. They should have precisely the same treatment as teachers in other European schools throughout the Community. It would be very undesirable if, because of one's nationality, one should be discriminated against and that because one happens to he British one should have to pay tax on a European element whereas a teacher in the classroom next door who happens to he Belgian, Dutch, or whatever nationality it might be, would not be paying it. It would probably be against the Race Relations Act, although I am not certain about that. Nevertheless, it would not be a principle
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  to be followed advisedly by any Government. I very much hope that the Minister will be able to reply on that minor point, although I completely accept that he may not be able to do so tonight as, regrettably, I did not give him notice of this particular question.
  In conclusion, my Lords, we on this side of the House warmly support this order, and hope that the trust that the other Member States have placed in Britain and in its capacity to work on a joint European effort—not only for the benefit of Europeans but, as the noble Lord, Lord Wynne Jones, has said, for the benefit of mankind—will not fail.
  6.50 p.m.
  Lord GORONWY-ROBERTS: My Lords, we have had a short, but very, constructive debate, and I welcome very much the positive spirit in which your Lordships have approached the establishment of this, the first Community body to be sited in this country. Before turning to the questions raised during the debate. I wish to express my appreciation of the graceful tribute which the noble Earl, Lord Lauderdale, paid to the efforts of Ministers to secure this important laboratory for the United Kingdom. I was myself personally grateful for the powerful support of this House when we were making our moves in this direction. I am very glad to join him once more in appreciation of the attitudes of the Commission and of the Commissioner, Commissioner Brunner, and indeed, of Member States, who were themselves keen candidates for this joint venture. I also wish to join the noble Baroness in paying special praise to the noble Lord, Lord Hinton of Bankside, for his contribution, especially on the technological level, in the attempt to secure this important centre for Britain.
  We heard from my noble friend Lord Wynne-Jones a fascinating speech, based on expertise and on the capacity to make scientific and technological matters clear to laymen. After all, he is not only a distinguished scientist; he is also a very eminent professor and teacher, and his experience in that field came to his aid today, as it often does. He reminded us that this is no nationalistic, nor indeed exclusively regional, matter. It is of world-wide importance, and he stressed the need for world-wide co-operation in

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  these questions. He asked how close is the association between the Community and the Russian and the American scientific worlds, and I am very glad to assure him that there is frequent contact between United States, Soviet and Community scientists. As the noble Lord noted, the JET machine is in fact derived from a Soviet machine, named TOKAMAK. There has been frequent contact. I have no doubt that it will continue in the future, and that it will not unduly be disturbed by certain legalistic and other preoccupations which now concern us. Whatever happens in various countries, it is important that contact—individual and professional—should continue. It is when contact is broken off that the attempt to link human rights with scientific progress becomes increasingly difficult. So I join with my noble friend in welcoming this co-operation among the three groups of scientists, and I accept very much the phrase he used, that this matter, like everything in science and technology, is "for the world as a whole".
  The noble Baroness complained in a mild and graceful way about what she called a delay of two years in obtaining this project for the United Kingdom. I do not think that she should be too impatient with our friends and allies in the Community. After all, they, too, were candidates for this important centre, and the fact that they went on fighting for two years to have the centre—in France, Italy or Germany—should not lead us in this House to complain. They were quite right to go on fighting for it, and it took quite two years to persuade them, through arguments of technology and otherwise, that Culham in Oxfordshire, in the United Kingdom, was overall the best site for the project. I do not consider that two years was too long to obtain this result.
  As the noble Baroness said, the first stage is in hand. She quoted the financial aspect of the matter, and I think that that is substantially true. She raised the question of a European school and the arrangements for the payment of teachers there. I do not think that I should go into details about this. There are proposals only, and I am advised that Ministers have not yet reached decisions. However, I note very carefully what the noble Baroness said on this matter, and I think that that should be part of the
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  consideration of Ministers as they approach a decision on the question. The school is of great importance. It would be a separate institution from JET itself, but it is essential to Culham, to the new giant undertaking, and certainly to the families who will be working in connection with Culham and who will be sending their children to school.
  In thanking the House once more for the all-Party welcome which has been given to the order, and in assuring the noble Baroness that the points she has made will be borne in mind, I commend both orders to your Lordships' House.

  EUROPEAN COMMUNITIES (PRIVILEGES OF THE JOINT EUROPEAN TORUS) ORDER 1978
  Lord GORONWY-ROBERTS: My Lords, I beg to move.
  Moved, That the draft European Communities (Privileges of the Joint European Torus) Order 1978, laid before the House on 3rd July, be approved—(Lord Gorowny-Roberts.)

  KING'S COLLEGE LONDON BILL
  Returned from the Commons with the Amendments agreed to.
  JUDICIAL STUDIES AND INFORMATION: WORKING PARTY REPORT
  JUDICIAL STUDIES AND INFORMATION: WORKING PARTY REPORT