Sitting of 16 May 1978

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
DEATH OF A MEMBER
Mr. Speaker: I regret to have to inform the House of the death of Frank Hatton, esquire, Member for Manchester, Moss Side, and I desire on behalf of the House to express our sense of the loss we have sustained and our sympathy with the relatives of the hon. Member.
PRIVATE BUSINESS
  LONDON TRANSPORT BILL
  As amended, considered; to be read a Third time.

  GREATER LONDON COUNCIL (GENERAL POWERS) BILL (By Order)
  Order for consideration, as amended, read.
  As amended, to be considered upon Thursday.

  CHRIST CHURCH WOBURN SQUARE AND SAINT MATTHEW OAKLEY SQUARE BILL [Lords]
  Read a Second time and committed.
ORAL ANSWERS TO QUESTIONS
  EDUCATION AND SCIENCE

    Speech and Language Disorders (Special Tuition)
    Mr. Edwin Wainwrightasked the Secretary of State for Education and Science, in the light of the fact that throughout England and Wales the parents of children who require special tuition because of speaking difficulties are concerned at the lack of facilities in this educational field, if she will make a statement on what action she is taking or intends to take, to improve the present position.
    The Under-Secretary of State for Education and Science (Mrs. Margaret Jackson): I am well aware of the difficulties faced by children who have disorders of speech or language. The identification, assessment and placement of individual children are matters for the local education authority concerned, in consultation with the parents. In addition to the provision made in special schools, local education authorities are increasingly setting up classes and units for these children in ordinary schools. Her Majesty's Inspectorate is currently reviewing some of this provision.
    Mr. Wainwright: Does my hon. Friend realise that thousands of parents are deeply disturbed about the future of their children who require special teaching facilities? The children are not being organised, and it is no good leaving it to the local education authorities. Will my hon. Friend therefore take into account the fact that these parents are deeply worried about what is to happen to their children when the parents pass away? In this very cold, inconsiderate and thoughtless society, we ought to offer special facilities for these children to be educated and trained.
    Miss Jackson: We do our best to encourage local authorities to offer such special facilities in a variety of ways. Unfortunately, as my hon. Friend will know, legislation has placed the duty of carrying out such practices on local authorities rather than on us, but we seek

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    to see that the right kind of provision is made.
    Mr. Wigley: Does not the Minister accept that it is necessary to provide not only special units but also the specialist teachers within them? Is she satisfied with the situation in relation to speech therapists, particularly in view of the drastic shortfall between the numbers now available and those recommended in the Quirk Report?
    Miss Jackson: The provision of speech therapists is a matter for my right hon. Friend the Secretary of State for Social Services. However, it is not my information that there is a shortfall below the figures recommended by the Quirk Report, in the sense that the Quirk Report recommended a certain level of provision but also recommended the speed with which that provision should be reached. It is my understanding that we are, in fact, doing better than the Quirk Report recommended in this connection.
    Mr. George Rodgers: Will my hon. Friend explain the association between her Department and the Department of Health and Social Security in this matter? Presumably the qualified teacher as distinct from a speech therapist, has to have a knowledge of teaching. Does she agree that this situation has lingered for many years and during many Governments? Is there a prospect of remedying it? It leads to great frustrations to the children and their parents.
    Miss Jackson: I understand that there is very close co-operation between speech therapists and teachers in the provision of this work. Many speech therapists carry out a great deal of their work in schools or in particular classes in co-operation with the teachers, but we are always anxious to see this improved.

    University Teachers (Pay)
    Mr. Gouldasked the Secretary of State for Education and Science when she expects to receive the report of Committee B on university teachers' pay.
    Mr. Michael Lathamasked the Secretary of State for Education and Science whether she is now in a position to make a statement on the review by Committee B on the timing of the rectification
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    of the anomaly regarding the salaries of university teachers.
    The Minister of State, Department of Education and Science (Mr. Gordon Oakes): As my right hon. Friend told the House on 5th May, agreement was reached in the negotiating committee that day that the anomaly in university teachers' pay would be rectified in two approximately equal stages on 1st October 1978 and 1st October 1979. I welcome this agreed solution to a long-standing and difficult problem.
    Mr. Gould: Is my hon. Friend aware that there is considerable satisfaction in the universities that a long-standing problem is at last on the way to being resolved? Will he also recognise that the last few years of financial constraint on both staff and resources has damaged morale in the universities and that what is now needed is renewed evidence that the Government place a proper value on the contribution they are able to make?
    Mr. Oakes: I am aware of considerable satisfaction in the universities that a promise made was a promise kept by this Government in this matter. I am also aware that because of that difficulty there has been some lowering of morale. I hope that that will now pass away and that morale will be quickly restored to normal, as I am sure it will be.
    Mr. Latham: Is the Minister aware that those of my constituents who are lecturers at the universities of Leicester, Loughborough and Nottingham will be glad that progress has been made in this way? But they will be well aware that a great deal of time elapsed before a settlement could be reached, and they deeply regret that dilemma.
    Mr. Oakes: Yes, some time elapsed because they were difficult negotiations. However, my right hon. Friend said in March of this year that a decision would be made before June of this year, and, indeed, it was made at the beginning of May.
    Mr. Grocott: Is not one of the main problems that bedevil pay settlements in higher education the fact that divisions exist between universities on the one hand and polytechnics and colleges of further education on the other? Is it not the case that we shall get some sanity

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    at this level of education only if we have a common comprehensive system of further and higher education?
    Mr. Oakes: My hon. Friend has raised a very much wider question, but, as the whole House is aware, there has been an anomaly with university teachers' pay which has existed since 1975. Promises were made by two Secretaries of State that it would be remedied, and I am delighted that it has now been remedied.
    Dr. Hampson: How can the Minister of State say that when the Government, in keeping that promise, have drifted and dithered right up to the point at which university staff threaten not to mark finals examinations? Does he believe that that sort of treatment will keep people of brilliance and talent on £4,000 or £5,000 a year in British universities?
    Mr. Oakes: We did not drift and dither. There was a threat of this form of industrial action, but the university teachers won their case because of their lack of power of industrial action, which proves that the Government are fair to all sections of the community, whether they have industrial muscle or not.
    Mr. St. John-Stevas: Will the Minister of State accept that repentance of a sinner is always welcome, even if it is on a death bed?
    Mr. Oakes: We are far from dead.

    National Association of Schoolmasters and Union of Women Teachers
    Mr. Montgomeryasked the Secretary of State for Education and Science when she last met representatives of the National Association of Schoolmasters and Union of Women Teachers.
    The Secretary of State for Education and Science and Paymaster General (Mrs. Shirley Williams): I attended the organisation's annual conference during the Easter Recess, as the hon. Gentleman may have noticed, and I hope to meet it at the opening of the new administrative building in Rednal on 23rd June.
    Mr. Montgomery: As the National Association of Schoolmasters and Union of Women Teachers is operating a ban on out-of-hours activities in all areas where members have not had a written
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    undertaking from the local education authority that their duties are entirely voluntary, does not the Secretary of State now feel that it would be a good idea to set up a national forum to discuss not only teachers' pay but conditions of work?
    Mrs. Williams: On the first part of the question, the hon. Gentleman may not be aware that I am not a party to teachers' conditions of service. That is a matter which, by law, lies between the teachers' employers—the local authorities—and the teachers' organisations. With regard to the possibility of a professional council, I have indicated to teachers' organisations that I would be willing to consider that suggestion if they can put forward agreed proposals.
    Mr. Hardy: Does my right hon. Friend agree that her reception at the recent annual conference of the union was a great deal more cordial than that which would be afforded by any intelligent group of teachers to the primeval lunacies of the hon. Member for Brent, North (Dr. Boyson)?
    Mr. William Shelton: With reference to the NAS and UWT, can the right hon. Lady comment on the submissions from ACAS regarding teachers' representations in meetings with Her Majesty's Government?
    Mrs. Williams: I very much regret that ACAS has not been able to identify a basis upon which joint consultative meetings can take place. The matter will therefore be passed to me to discuss with the teachers' organisations.

    Schools (Parental Choice)
    Mr. Jesselasked the Secretary of State for Education and Science when she expects to bring forward proposals relating to parental choice of schools.
    Mrs. Shirley Williams: My proposals on school admissions were issued last October. I intend to introduce legislation drawn up in the light of my consultations on these proposals as soon as the parliamentary timetable permits.
    Mr. Jessel: Does the right hon. Lady agree that the drop in the birth rate makes it much easier for local education authorities to let parents have more say in the placing of their children in schools

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    than has sometimes been the case in the past? Can she now give a date on which she will introduce legislation, rather than merely saying "as soon as possible", to promote and encourage wider choice by parents in where their children go to school?
    Mrs. Williams: The fall in the birth rate presents great difficulties as well as great opportunities to local authorities. It is extremely expensive to run a school persistently under capacity. On the latter part of the hon. Gentleman's question, I can give him no fairer or more honest answer than "when the parliamentary timetable permits".
    Mr. Gerry Fowler: Has my right hon. Friend noticed that, in a perversion and sullying of the fair name of parental choice, the hon. Member for Brent, North (Dr. Boyson) seems to have committed the Conservative Party to a voucher system of admissions? However, the hon. Member for Chelmsford (Mr. St. John-Stevas) does not seem to speak with the same voice. Would my right hon. Friend care to comment on the effects of using such a system?
    Mrs. Williams: I am delighted to notice that all those Conservative Members who care seriously about maintained education do not support the concept of the voucher system, which is a ludicrous waste of public money merely enhancing the power of the purse.
    Mr. Flannery: Does my right hon. Friend agree that the slogan "parental choice" has been used by the Opposition to mean everybody, when we all know that they mean education for their own children and not for others? Does she agree that when Government supporters speak of parental choice we want the very best choice for all parents and children and that there is more parental choice now than there ever was before?
    Mrs. Williams: My own view is that parents should be able to express their wishes as between schools. I want to make it absolutely clear that under the old selective system 80 per cent. of parents had no choice at all. We are not interested in a choice that is for only a small minority.
    Mr. St. John-Stevas: Would not the Secretary of State agree that if the Prime
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    Minister wishes to be taken seriously in his new-found concern for the family—[HON. MEMBERS: "Cheap."] It is the truth—he will back up the right hon. Lady in her losing battle with Mrs. Caroline Benn and produce some legislation? Will she make it clear that in that legislation she will make it her first priority not to close anomalies in the law but to extend parental rights and influence?
    Mrs. Williams: With regard to the first part of the question, my right hon. Friend the Prime Minister has consistently, throughout his ministerial career, concerned himself with the interests of the family. With regard to the second part of the hon. Gentleman's question, that horse will not run. As I have said to him on more than one occasion—and I say at the Dispatch Box today exactly word for word what I said in November 1977—we have always favoured the idea of parents being able to express their preferences within the comprehensive principle.

    School Governing and Managing Bodies
    Mr. Formanasked the Secretary of State for Education and Science what representations she has received about the Taylor Report on school governing and managing bodies.
    Miss Margaret Jackson: We consulted more than 30 interested bodies immediately after the publication of the Taylor Report and received about 170 letters commenting on various aspects of the report's recommendations. I have had recent discussions with some of the bodies concerned and expect to have further meetings shortly.
    Mr. Forman: Is the Minister confident that in the light of those representations there is now more widespread public understanding of Lord Taylor's commitment to a genuine partnership in the management and running of schools? Will the Minister confirm that the teaching profession has nothing to fear from a fuller and more equal partnership with parents?
    Miss Jackson: I accept and endorse completely all that the hon. Gentleman said. I can only say to him, in the hope

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    that it will not do him any harm, how nice it is to hear positive sentiments coming from the Conservative Benches.
    Mr. David Atkinson: Whatever the considerable merits of the recommendations of the Taylor Committee, their implementation will require additional resources for local education authorities. Will the hon. Lady give the House an assurance that it will be the Government who provide those resources?
    Miss Jackson: We are a long way from implementing the recommendations of the Taylor Report. We are still at the stage of full discussions about the exact implications of the report. Only when those discussions are finished shall we have a clear idea about the resource implications.
    Mr. Beith: As local authorities in some parts of the country are now embarked upon appointing their education committees in the absence of any change in the law, does not the hon. Lady think that the time is ripe to remind them that governing bodies should contain people who are genuinely representative of the interests involved in schools, and not simply political placemen?
    Hon. Members: Hear, hear.
    Miss Jackson: I accept what the hon. Gentleman said, but I am surprised to hear cheers coming from the Conservative Benches, because it is that party which has been instrumental in putting political placemen in public bodies and in removing governors of immense interest and experience. I agree entirely with what the hon. Gentleman says. Local authorities are already free to implement many of the recommendations of the Taylor Report, and we hope that many of them will do so.
    Dr. Boyson: Is the Minister aware that, in view of the number of representations, many people fear that the Taylor Report—it is an important report, because it is vital to have more teacher and parent representation on the governing bodies—will be put in the "awaiting action" file, like the report on literacy from the Bullock Committee? Can the Minister assure us that, instead of its being put in the "awaiting action" file, the Taylor Report will be debated in this House so that the great debate on education, which is supposed to be going on round the country, may eventually arrive here?
    Miss Jackson: It is not for me to say what will be debated in this House. As the hon. Gentleman well knows, there are many aspects of the Taylor Report which do not need action in this House and which local authorities are perfectly free to carry out at present. I hope that the hon. Gentleman will do his part in encouraging the many Conservative education authorities to carry out those proposals.

    School Transport
    Mr. Temple-Morrisasked the Secretary of State for Education and Science what representations she has received on the subject of the statutory walking distances and school transport.
    Miss Margaret Jackson: My right hon. Friend has received about 100 letters since the beginning of the year on school transport issues from parents and from hon. Members on both sides of the House.
    Mr. Temple-Morris: The Minister will know that it is some three years—1975 to be exact—since her Department published proposals that would lead to the abolition of statutory walking distances. Bearing in mind the considerable delay, does the hon. Lady fully appreciate the arbitrary nature of statutory walking distances, particularly in rural areas. Does she appreciate also the various vested interests which undoubtedly are present when it comes to change? Will she please drive on with her proposals, produce some results and make a statement to the House before the Summer Recess?
    Miss Jackson: I cannot guarantee to do that, although I shall attempt to do so. We quite accept what the hon. Gentleman says about the arbitrary and unsatisfactory nature of the present arrangements. For the past three years we have been trying to find a way in which some kind of arrangement could be reached to improve them.
    Mr. John Ellis: Is my hon. Friend aware of the position in South Humberside, where the new Conservative-controlled council has gone back to the absolute minimum standard—we had a better standard under a Labour-controlled authority—to the consternation of everyone in my constituency, particularly in the rural villages? Will she make quite clear, because all sorts of

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    rumours are going about, that there is no question of any Government directive but that it is a Conservative action taken by a Conservative-controlled council which could be doing something better?
    Miss Jackson: Sadly, the example of Humberside is repeated right across the country. It is my understanding that in Humberside it is not only in transport that improvements carried out by the previous authority have been removed.
    Mr. Michael McNair-Wilson: Would not the Minister agree that it would be fairer if the distance were related to the actual miles that have to be driven by a vehicle rather than the present basis of assessment, which appears to be the principle of "as the crow flies"?
    Miss Jackson: I must agree with the hon. Gentleman that there are a variety of ways in which a fairer scheme could be devised. It is our hope that we shall be able to find a scheme which will meet with agreement.

    Mathematics and Science Teaching (Retraining)
    Mr. Madelasked the Secretary of State for Education and Science how many vacancies currently exist for those who would like to take the special Government courses for retraining in teaching of mathematics and science in schools and if she will make a statement.
    Mr. Oakes: Some 270 qualified teachers are taking these retraining courses this year, and about 340 people are taking initial training courses with awards from the Manpower Services Commission. About 320 places will be available on retraining courses beginning next autumn, and initial training will again be available. Those now wishing to take such courses should apply as soon as possible.
    Mr. Madel: As we now know the number of students taking these courses and the number of vacancies for those who can apply if they want to, can the Minister say what is the shortage of teachers of these subjects in schools and how long the Government think it will take to overcome that shortage?
    Mr. Oakes: I cannot give the precise figure now but I shall write to the hon. Gentleman with that figure. It will take some years before the shortage of mathematics
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    and science teachers is made up, but by these schemes the Government are doing their best to bridge the gap.
    Mr. Spearing: Will any of the teachers who are retraining in science be equally competent to take physics, biology and chemistry classes up to O-level? Does my hon. Friend agree that over-specialisation in teachers who are unable to teach these three subjects up to O-level has been one of the difficulties in the past?
    Mr. Oakes: They will be studying a variety of science courses and some of the teachers—I do not know the percentage—will be able to teach all three science subjects. Of course, some of the retrained teachers would not be able to do so.
    Mr. R. C. Mitchell: Will the Minister ensure that teachers who are retrained to teach mathematics are able to teach traditional mathematics as well as that hotchpotch popularly known as modern mathematics?
    Mr. Oakes: I think that training colleges are aware of the concern expressed in the country, but there are different ways of teaching mathematics to different students and pupils. However, I think that training colleges will be aware of my hon. Friend's concern.

    Education for Political Competence
    Mr. Knoxasked the Secretary of State for Education and Science what action she is taking to persuade schools to include in the curriculum for 11 to 16-year-olds education for political competence, as suggested in the working papers recently prepared by Her Majesty's Inspectorate.
    Mrs. Shirley Williams: While I have indicated my support for the study in schools of our political institutions, it is for local education authorities and schools themselves to decide whether to adopt the suggestions of the recent Her Majesty's Inspectorate working paper. Copies of the document have been sent to all LEAs and are available in the Library.
    My Department's circular 14/77 sought information on the steps authorities have taken to help schools promote the development of pupils' understanding of contemporary economic, social and political life.
    Mr. Knox: Does the Secretary of State agree that most schools are failing to give children an adequate political education and that, provided there is no political indoctrination, it is essential that there should be more political education if we are to have a well-informed and responsible democracy?
    Mrs. Williams: I could not agree more with the lion. Gentleman, but before the working paper was prepared by Her Majesty's Inspectorate there had been no working papers on the subject of political education. I very much hope that schools will look at that working paper. I hope, too, that the original agreement between the political parties made in 1973 under the aegis of the Hansard Society, which sets out some useful rules for the teaching of politics to children in schools, will be honoured.
    Mr. Madden: What plans are being made to enable parents to receive the same information?
    Mrs. Williams: I am sure that my hon. Friend knows the answer to that question even better than I do.
    Miss Fookes: What is meant by "political competence", and would we all pass the test?
    Mrs. Williams: The hon. Lady tempts me, but I have never endeavoured to insult the House from this Dispatch Box.

    Educational Maintenance Allowances and Awards
    Mr. Andrew F. Bennettasked the Secretary of State for Education and Science what steps are being taken to increase educational maintenance allowances and discretionary awards to students for the academic year 1978–79.
    Mr. Oakes: I refer my hon. Friend to the answer given by my right hon. Friend to his Question on 12th May, but I would point out that no new statutory system of awards which might result from my right hon. Friend's discussion with local authorities could possibly be introduced as early as the academic year 1978–79.
    Mr. Bennett: I thank my hon. Friend for that answer, but does he not appreciate that if an increase is not introduced for this September there will be a temptation for people to defer going
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    into the sixth form for a year and to join the dole queue or try to get a job and return to higher education the following year so as to take advantage of the grant? Would it not be a good idea for the Minister to try to persuade local authorities to increase the educational maintenance allowances now available from this September, possibly on the basis of reimbursement from the Government?
    Mr. Oakes: I do not think that any increase in the existing provision for EMAs would have a lot of effect, nor do I think that there is a grave risk of my hon. Friend's fears being realised in that people would defer going into higher education for a year. It is unreasonable in May to expect that negotiations with local authorities could be completed for what, in effect, would be September.
    Mr. van Straubenzee: Does not the Secretary of State's recent announcement add yet one further form of support for 16-year-old to 18-year-old students, some of whom are not under her control? Does not this require us to look at the totality of this support? Is there not a fear that such support is now so separated as to be defeating some of its original purpose?
    Mr. Oakes: It is true that there are many different schemes at different levels. The fact that the Government are operating these schemes, which have been asked for by various Members of the House for years, is a major breakthrough. I pay tribute to all those who have put pressure on the Government, including my hon. Friend the Member for Stockport, North (Mr. Bennett), who has had a Question on this matter on the Order Paper every month since I have been a Minister.
    Mr. Gwilym Roberts: Is not my hon. Friend concerned about the reluctance of Tory-controlled authorities to offer many of these discretionary awards? Does he not consider that we should now be moving towards the stage when the discretionary nature of awards should be abolished and when awards for the majority of courses should become mandatory?
    Mr. Oakes: The principle has been decided, but the nature and type of the awards are still under discussion. The

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    object of this exercise—and I hope that every local authority, whether Tory-controlled or Labour-controlled, will be of this opinion—is to increase the participation rate to well above the present 30 per cent.
    Dr. Hampson: Is the Minister aware that the Opposition have repeatedly called for an inquiry into the anomalies that exist in this matter as a result of the involvement of the Manpower Services Commission and the local authorities, as well as the social security system, but that the commitment announced on Friday was of a very generalised kind, with conceivably wide-ranging cost implications? Will he say when the House will have further details and when the Secretary of State intends to have the commitment implemented? As the means test for the educational maintenance allowances is much stricter than that, for example, for school meals, what sort of means test will be implied in this case?
    Mr. Oakes: I am not convinced that an inquiry will achieve more than can be accomplished through the initiatives that we have currently in hand. Indeed, we have acted, not set up an inquiry, on educational maintenance awards. As the hon. Gentleman is aware, this will require discussions with the local education authorities on a number of matters, and I cannot therefore now give a date or a time when firm proposals can be given. The whole question of the means tests will also be discussed with the local authorities. I can say, however, that those discussions will begin immediately.
    Mr. Gerry Fowler: Will my hon. Friend accept, for himself and his right hon. Friend, the congratulations of this side of the House on the fact that at last we have made progress on this vital matter? Will he also accept that the net cost of such a scheme is not nearly as great as the gross cost when one deducts supplementary benefit for those who would otherwise be in the dole queue? Will he accept, too, that many of us hope that, whatever restrictions are placed upon the initial scheme, it will prove to be the thin end of the wedge in securing adequate support for all in this age group?
    Mr. Oakes: I am grateful to my hon. Friend for what he says. It is, of course,
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    a red letter day for him too after his work on this matter both as a Minister and as a Back Bencher.
    Mr. St. John-Stevas: I accept the Minister's argument that there is something to be said for these sixth-form allowances, but is not my hon. Friend the Member for Wokingham (Mr. van Straubenzee) right in saying that, by introducing yet another benefit into a competing field, we are making a confused situation even more chaotic? Is there not now a strong case for a rational policy based on clear principles to deal with the educational and employment problems of the 16 to 19-year-olds?
    Mr. Oakes: There is a need for a rational approach, but in the meantime I think that the Government are right to establish the principle that they have. It is money that is wanted, not inquiries. I greatly welcome what the Government have done in ensuring that some youngsters who at present are denied higher education because they are poor will be able to achieve it in the future.

    Public Schools
    Mr. Grocottasked the Secretary of State for Education and Science if she will take steps to provide for equality of educational opportunity by incorporating the public schools into the comprehensive system.
    Miss Margaret Jackson: As I told my hon. Friend the Member for Enfield, North (Mr. Davies) on 18th April, my right hon. Friend has at present no plans to do so but remains firmly committed to the long-term aim in our manifesto of phasing out fee paying in schools.
    Mr. Grocott: Since 62 out of the 74 High Court judges and the overwhelming majority of leading industrialists, civil servants, diplomats, newspaper men and military men—not to mention 211 out of 282 Tory Members of Parliament—are public school-educated, is it not high time that we scrapped the system and gave all our children an equal chance?
    Miss Jackson: I accept what I am sure is my hon. Friend's underlying contention—that the quality of all these gentlemen would be greatly improved had they attended comprehensive schools.
    Mr. Stokes: Is the Minister aware that the hon. Member for Lichfield and Tam-worth (Mr. Grocott) wants to abolish everything which is good in England? Is she further aware that what the country needs is the spirit of leadership and service which the public schools so amply provide?
    Miss Jackson: I had no idea that my hon. Friend's ambitions were so widespread. I certainly accept that the country needs leadership and service. That is what it is getting and will always get from this party.
    Miss Joan Lestor: Will my hon. Friend convey to her right hon. Friend that, whatever the difficulties may be about the integration of public schools into the State sector, there is a real anomaly in relation to the registration as charities of schools such as Eton College and others in my constituency? Will she therefore do something about the Chancellor of the Exchequer, who seems very reluctant to take any action in relation to this question?
    Miss Jackson: I do not accept that my right hon. Friend is reluctant to take action, but I believe that the difficulties are more substantial than one would at first imagine.
    Mr. Adley: Is the Minister not aware that many thousands of parents, including, for example, myself, are nearly bankrupting themselves in order to take advantage of the United Nations Charter and provide the education of their choice for their children? Is it not a fact that people do this because they believe that there are advantages to be gained for their families? If the Minister and her right hon. and hon. Friends are interested in good education, would they not seriously be better employed in trying to understand what it is about the public schools that provides the sort of education that appears to be so advantageous, according to her hon. Friend the Member for Lich-field and Tamworth (Mr. Grocott), and trying to learn from them rather than trying to abolish them?
    Miss Jackson: I accept that there are many parents who mistakenly believe that by paying extra money for their children's education they will automatically give them a better standard of education. However, the questions of monetary difficulties
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    and salaries of Members of Parliament are not for me.
    Miss Maynard: Does my hon. Friend agree that it is high time that this became a short-term rather than a long-term objective? Is it not really a question of political will and a real desire to incorporate these private schools into the comprehensive system?
    Miss Jackson: Unfortunately, it is not as simple as a matter of political will. We have taken many steps in that direction—for example, by reducing the number of places that local education authorities have previously taken up in the independent sector. We are making progress.
    Dr. Boyson: Does the Minister agree that it is part of a free society that people are allowed to dispose of their remaining income as they wish after they have paid their dues to the State? Would not a desire for a proper education for their children be part of that? Would there be any moral claim on a State which outlawed three things—hard drugs, hard pornography and private education?
    Miss Jackson: I do not understand the hon. Gentleman. Do I take it that he is saying that hard drugs, hard pornography and private schools are all equally desirable?

    Comprehensive Education
    Mr. Litterickasked the Secretary of State for Education and Science what proportion of the current year's school leavers will have received all of their secondary school education in a comprehensive school.
    Mrs. Shirley Williams: I am afraid that the information requested is not available, because the information we collect on pupils leaving school includes only the school last attended and not any other secondary schools pupils may have attended in the course of their secondary education.
    Mr. Litterick: I am grateful for that answer. Does it not point to the fact that the various wild comments made by Conservatives about the effect of comprehensive education are based on ignorance and emanate from bigotry?
    Mrs. Williams: In 1973, of those leaving school 51 per cent. had attended comprehensive schools, and the figure has now risen to over 80 per cent. That seems to be a development in the right direction. It is interesting that the Conservative Party is almost wholly schizophrenic on the subject of comprehensive schools. We should like to know its true opinion.
    Mr. Rhodes James: Is the right hon. Lady aware that the eldest daughter of the hon. Member for Cambridge is leaving a comprehensive school this year, that we are delighted with her progress and that we believe in the comprehensive system, but as our own free choice?
    Mrs. Williams: I am delighted to hear that the comprehensive school has pleased the hon. Gentleman so much. I do not know what party that leaves his children to become members of.
    Mr. Ashton: Will my right hon. Friend make it perfectly clear to those Tory county councils, such as my own in Nottinghamshire, which are deliberately stalling and determined not to bring comprehensive education into the area that she will not stand for it? Is she aware that when Clay Cross took on the Tory Government in 1973 and defied the law, the Tory Government leaned on it very hard indeed? Can she now do the same to those Tory county councils which are refusing to bring in comprehensive education?
    Mrs. Williams: My hon. Friend will know that we have made absolutely clear to those authorities which have not yet submitted schemes, or submitted revised schemes, that the law must take its course in this case, as under all other Acts of Parliament.

    Tameside Litigation (Costs)
    Mr. Gowasked the Secretary of State for Education and Science what was the total cost to public funds involved in the legal expenses incurred by her Department in the Tameside litigation in the High Court and in the Court of Appeal.
    Miss Margaret Jackson: I have nothing to add to my reply to the hon. Member's Question on 21st November 1977.
    Mr. Gow: When does the Minister expect that the total cost to public funds of this disgraceful exercise by the former
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    Secretary of State will be known? Does the Minister recollect that the judge in the case found that the Minister has misdirected himself fundamentally about his duties? In those circumstances, may we look to a contribution from the present Secretary of State for Defence and from his successor?
    Miss Jackson: I think it extremely unlikely. As for when we shall know the answer, unfortunately we are awaiting the views of the local authority on its costs before any decision can be reached.
    Mr. Noble: Does my hon. Friend agree that the Tameside affair cannot be measured in financial terms alone but should be measured in terms of the deprivation suffered by many people, particularly the children who were forced into a selective system? As regards the late lamented Councillor Thorpe, who was chairman of the education committee and who was removed by the electorate at Tameside, would my hon. Friend care to comment on the reasons for his failure to achieve re-election?
    Miss Jackson: I am not sure that I would say that Councillor Thorpe is lamented. As for the reasons for his defeat, I understand that most ungallantly he blames his defeat on the immigration policies of the right hon. Lady the Leader of the Opposition—in which, of course, he may be correct. But, in fairness to the right hon. Lady, it is only right to point out that since Councillor Thorpe claimed, when he was last elected, that the electorate had chosen grammar schools, we can deduce that perhaps now they have chosen comprehensives.

    Secondary Education (Cheshire)
    Mr. Nicholas Wintertonasked the Secretary of State for Education and Science what recent discussions she has had with representatives of Cheshire County Council concerning the reorganisation of secondary education in Cheshire.
    Miss Margaret Jackson: My right hon. Friend has had none, but I have recently had a meeting with representatives of Cheshire County Council concerning the reorganisation of secondary education in Crewe.
    Mr. Winterton: I am grateful to the Under-Secretary of State for that reply.

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    Is she aware that many of my constituents whose children go to Crewe Grammar School for Boys are very pleased that she has turned down the county's proposals to establish a tertiary college in Crewe, which would have meant that at the age of 16 pupils would have had to transfer from a grammar school, interrupt their education and go to a tertiary college?
    Will the hon. Lady accept that uncertainty still exists about what will happen in the future in Crewe, and will she give an assurance to the House that the children who start selective education at Crewe Grammar School for Boys will be enabled to go through until the age of 18 to complete their education at that school?
    Miss Jackson: The hon. Gentleman will know the implications of the decision we have taken on the scheme in Crewe, and it is my understanding that all local opinion in Crewe was united in wishing for the original scheme put forward by Cheshire County Council rather than this new scheme put forward at such a late day.
    Mr. Flannery: Will my hon. Friend accept from me that, where anyone's constituents have the chance to send their children to a grammar school, far more of those constituents do not have the chance to send theirs to a grammar school? Will she accept, therefore, that the sooner we do not have Crewe Grammar School and other grammar schools, and the sooner we have comprehensive education all over the country, the more democratic will education be for every child?
    Miss Jackson: I entirely accept that, and we are working towards that end.
    Mr. St. John-Stevas: On behalf of my hon. Friends and myself, may I ask the hon. Lady whether the activities of herself, her Department and the Secretary of State would not be better directed to improving existing comprehensive schools rather than destroying grammar schools of proven worth?
    Miss Jackson: We are spending our time not only on seeing good comprehensive schemes brought into being but on improving all schools that currently exist.

    TEHERAN
    Mr. Litterickasked the Prime Minister if he will seek to visit Teheran in the near future.
    The Prime Minister (Mr. James Callaghan): I have at present no plans to visit Iran.
    Mr. Litterick: Is my right hon. Friend aware that the United Arab Emirates have tripled their expenditure on armaments during the last year and that this has taken place in response to what they regard as the rapid military build-up of Saudi Arabia and Iran, both of which are being heavily supplied with armaments by the United Kingdom? Therefore, will my right hon. Friend try to find a way of conveying to the Shah of Iran—and to this House—that there must be some limit to the quantity of arms that we are prepared to supply to both Iran and Saudi Arabia because we wish to avoid the repetition in the Gulf of the shambles that we and other great Powers have created in the Eastern Mediterranean?
    The Prime Minister: The expenditure on arms in almost every country is too high at present, and especially in the developing countries. That is one reason why I hope that the United Nations disarmament conference will be able to take steps to reverse that trend. I would point out to my hon. Friend that Iran has on her northern border a most powerful and heavily armed neighbour and that there has been a recent uprising in her Eastern neighbour. She is, therefore, properly concerned with her own security. However, I assure the House that we shall consider on its merits every proposal made for the sale of arms.
    Mr. Walters: Should the Prime Minister have the opportunity of visiting Iran, will he point out how much we and the Western world appreciate the important part that that country is playing in maintaining stability in the area? Will he also point out how much we value its important trade relations with Britain?
    The Prime Minister: The policies of the Shah of Iran are intended to produce greater stability in the area in which it is such a powerful component. Of course, Iran is the most important trading partner we have in Asia, and we must also take

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    that factor into account, too. But I hope that we shall be able to have good discussions with the Shah about a number of matters that are of concern, I know, to him in his process of liberalisation which has gone so far and which, I believe, he wishes to carry further. I should like also to express my appreciation of the help that he has given us in our policies in relation, for example, to the Middle East and Rhodesia.
    Mr. Newens: But in view of the flagrant abuses of human rights and the denials of elementary democracy in Iran, how can my right hon. Friend justify the continuation of the supply of huge quantities of arms to that country which are to be used primarily in suppressing the attempts of the people of Iran to obtain similar rights to those which we demand for ourselves in this country?
    The Prime Minister: I do not accept my hon. Friend's analysis. The arms that we are supplying are certainly not intended to work for internal suppression. They are intended for the reasons I gave in reply to the first supplementary question.
    On human rights there is concern, as is well known, and that concern is felt inside Iran as well as outside. But it is a difficult process for a ruler such as the Shah, who has immense power, gradually to release that power and to encourage more liberalisation while at the same time maintaining a degree of order. I hope that he will be able to do so. Certainly, we would support him in both efforts—namely, to secure greater liberalisation but at the same time to secure continual progress in that country.

    QUEEN'S REGULATIONS
    Mr. Ridleyasked the Prime Minister if there is a copy of Queen's Regulations for the Army in the library of No. 10 Downing Street paid for out of public funds.
    The Prime Minister: No.
    Mr. Ridley: Is the Prime Minister aware that Queen's Regulations do not forbid the wives of Service personnel protesting about the low level of pay, and was it not rather shabby of him to try
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    to stop them doing so? Secondly, will the right hon. Gentleman stop trying to pay decent wages to public service personnel by post-dated cheques drawn on the next Tory Government?
    The Prime Minister: The hon. Gentleman is quite right in saying that Queen's Regulations do not forbid Service wives making protests about the levels of pay or, indeed, other matters. Far from discouraging them or forbidding them to do so, when I went to Plymouth I met a deputation of Service wives from the Royal Navy and had a very full discussion with them about the whole matter. Therefore, perhaps the hon. Gentleman will withdraw that imputation. As regards post-dated cheques, I can promise the hon. Gentleman that we shall be here to redeem all the cheques that are issued.
    Mr. Roy Hughes: Will the Prime Minister consider allowing members of Her Majesty's Forces to join their appropriate trade union, so that they may then have opinions different from the one recently expressed in cold-war terms in China by a senior officer?
    The Prime Minister: My experience over the last few weeks convinces me that the Services are extremely well served in the matter of knowledge of their conditions and pay being made public and the pressures that are applied upon Her Majesty's Government to ensure that their obligations are met in full.
    Rear-Admiral Morgan-Giles: When this subject was last raised with the right hon. Gentleman, he assured the House that the Forces would get a square deal. Why has he not fulfilled that promise?
    The Prime Minister: Clearly, that must remain a matter of opinion, but in relation to all civilian employees, both in the Government service and generally, I think it true to say that the Services have been given an equivalent deal, together with a firm promise that where their conditions have fallen behind they will be brought up to date during the next two years. Despite our great success in the battle against inflation, we must not forget that there is still a continuing battle to be fought and won on that front, and every section of the community has to play its part.

    PRIME MINISTER (ENGAGEMENTS)
    Mr. Kenneth Lewisasked the Prime Minister whether he will list his public engagements for Tuesday 16th May.
    The Prime Minister: This morning I greeted President Khama of Botswana on his arrival for an official visit to this country. In addition to my duties in this House, I shall be holding meetings with ministerial colleagues and others. This evening, subject to parliamentary business, I hope to address the annual dinner of the CBI.
    Mr. Lewis: If the Prime Minister has time during the rest of the day, will he reconsider two speeches he made over the weekend? In the first of them he said that his Government had plenty of time. As for the second, will he reconsider what he said in terms of the family—that he would have a special family policy, the Government's family policy? Does the right hon. Gentleman realise that the impact of every Government policy so far has done nothing but damage families in this country? Unemployment is now higher than ever before, we have a poorer education system than we have ever had before, and we have a flagging National Health Service. Had not his Government better forget bringing in that kind of policy?
    The Prime Minister: I am glad to say that both speeches I made at the weekend were extremely well received and that I derived very great encouragement from them. I do not recall—I wish that I could pick the audience here; it would be a lot better than the one I have got—the first reference that the hon. Gentleman made. As regards family policy, however, I do not really see how he can make that charge when we consider the proposed and actual increases in child benefit, when we recall that the present Budget introduces a new reduced rate band which certainly helps every working wife to a greater extent than it helps where there is one income coming in, and when we recall a number of other measures of which the hon. Gentleman is well aware.
    What I feel is clear is that the policy of the Government—like that of others—has not been totally co-ordinated. As
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    there is now a larger number of women going out to work than ever before, a number of changes are needed if we are to preserve and enhance the family's dimension and the family circle, which I believe to be a very precious asset in our national life.
    Mr. Mellish: My right hon. Friend should not be worried, because most of us thought that the speeches were jolly good. [AN. HON. MEMBER: "What is your majority, Bob?"] Unlike some hon. Gentlemen, I do not worry about majorities. When the Prime Minister meets the CBI tonight, will he be good enough to revert to what is properly called his "Buy British" campaign and in this instance strongly urge British manufacturers to ensure that they buy British raw materials rather than buy from abroad? This is one of the worst features of our import problem.
    The Prime Minister: The accent on our import propensity is very considerable. I believe that the CBI is a very useful instrument for trying to bring suppliers and customers much more closely together. It is at the manufacturing stage that I believe "Buy British" can have most effect. It is "Buy British make British and sell British".
    Mrs. Thatcher: If the Prime Minister has always had a natural wish to help the family, why have his Government pursued a policy of heavy income tax on families, as on everyone else in society? Why have successive Labour Administrations taken so much away from families in income tax that they have left them with too little to keep themselves and then compelled them to apply for means-tested benefits in order to get some of their own money back?
    Mr. William Hamilton: Milk snatcher.
    The Prime Minister: The right hon. Lady's comment seems to be more an expression of opinion than a question asking for information, but I must tell her that, in addition to the benefits that I have already mentioned in reply to the Question of the hon. Member for Rutland and Stamford (Mr. Lewis), we have, as she will remember, kept the price of school meals steady during the course of the current year. I am particularly glad that we were able to increase the provision of free school milk. [HON.

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    MEMBERS: "Hear, hear."] I am sure that the right hon. Lady will join me in thanking the Chancellor for doing that.
    Generally, it seems to me that the burden that the family has had to carry has been part of the national burden borne over the last few years in order to get our situation right. I am glad to say that living standards are now going ahead faster than they have done for some years.
    Mrs. Thatcher: Will the Prime Minister address himself to the supplementary question which I asked? Is it not better to leave the family with enough of its own money to keep its own children rather than first to take it away in income tax and then to compel the family to suffer the indignity of applying for means-tested benefit such as school meals?
    The Prime Minister: The right hon. Lady obviously does not want to listen to the answers that I give, because it is quite clear from what my right hon. Friend the Chancellor of the Exchequer said that in fact income tax is being reduced in this Budget for the family. This was in every sense a family Budget when one takes into account school meals, school milk, the reduction in income tax and the increase in children's benefits. It is the right hon. Lady and her friends who have distorted the Budget by giving relief to those who are best off in the country—to those, indeed, who are getting the highest incomes. How that can be construed as helping the average family is more than I can understand.
    Mr. Terry Walker: Will my right hon. Friend have opportunity today to consider newspaper reports about the future production programme of British Aerospace and whether the future partners of British Aerospace will be European or American? Will he confirm those reports, which suggested that a Cabinet decision is forthcoming on this matter? This is most urgent and important to many workers in my constituency whose jobs depend upon it and also in view of the pressure of British Airways in trying to buy American aircraft at this time.
    The Prime Minister: My hon. Friend introduces one of the complications in
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    what is undoubtedly a natural instinct to buy British, because the conflicting interests of British Airways, British Aerospace and Rolls-Royce do not all run in the same direction. I can promise my hon. Friend that the Government are giving the most careful consideration to these matters. We shall try to produce an answer in due course that will best meet the national needs and, I hope, safeguard a great many jobs.
    Mr. Prior: Will the Prime Minister take time today to inquire why no decision has been reached about the removal of the hulk of the "Eleni V" from just off my constituency? Is he aware that the delay has caused grave misgivings among my constituents and that there has been a lack of decisive action? Will he further state that the Government will now hold a full inquiry into all the events of this ghastly accident in order that we can learn from the experience of what has happened so that we try not to make the same mistakes again?
    The Prime Minister: Without accepting that mistakes have been made in this matter, I understand fully the concern of the right hon. Gentleman and his constituents, as I believe we all do, especially taking recent events into account. I made inquiries before coming into the House and I understand that the immediate objectives of attaching tow lines securely to the wreck have largely been achieved. There is adequate buoyancy, and representatives of two leading salvage firms are now meeting in order to reach an early decision on the best course of action. If there are any lessons to be learned, I can assure the right hon. Gentleman that that will be so, but after every one of these disasters the local arrangements are reviewed very completely indeed in order to ensure the least possible damage to the coast.
    Mr. Prior: Is it not extraordinary that this ship—
    Hon. Members: Oh, not again.
    Mr. Speaker: Order. I have always tried to help hon. Members from both sides. If they have constituency interests, Members know that I try to help.
    Mr. Prior: What seems extraordinary is that the hulk has been lying off the

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    coast for 10 days, it has been known that it would have to be raised, it has now been raised and still no decision has been taken as to what to do with it. It really is a terrible situation for my constituency, and I believe that the Government ought by now to have decided what to do.
    The Prime Minister: I do not complain about the right hon. Gentleman using this opportunity to raise what clearly is a very serious matter for him, but I think he will excuse me from knowing all the details of these matters. I shall certainly make inquiries of the appropriate Ministries about the situation, but I understand that eight spraying vessels, together with a naval minesweeper, were on the scene within 24 hours, that the numbers have progressively been increased and that the local authorities were prepared when the first oil reached the beaches, but I also understand that they are still having great difficulty in deciding about the future of the vessel. That, however, does not necessarily lie wholly in the hands of the Government. I can assure the right hon. Gentleman, and especially the people who live on that part of the coast, that the Government will make sure that there is no delay in reaching decisions on this matter.

    QUESTIONS TO THE PRIME MINISTER
    Mr. Newens: On a point of order, Mr. Speaker. Is it possible to give further consideration to the pattern which Prime Minister's Questions seem to take time after time, when hon. Members flit from one subject to another which has nothing whatsoever to do with the subject of the Question? I believe that I am correct in saying that some time ago it was agreed that the Prime Minister would answer a great many more Questions of substance instead of merely dealing with the general Questions which come forward.
    Therefore, would it not be timely for us to ask that some further consideration be given to this matter in order to ensure that hon. Members on both sides of the House have a better opportunity to follow through themes which are developed during Question Time? I also believe that many members of the public who listen to what is going on here are completely
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    bemused by the way in which we conduct our affairs and that we ought to do something about it.
    Mr. Speaker: I am much obliged to the hon. Gentleman for raising that very serious question. I have no doubt that the usual channels will have noted what the hon. Gentleman said.
    Mr. Heffer: Further to that point of order, Mr. Speaker. As regards the last two questions put to my right hon. Friend the Prime Minister by the right hon. Member for Lowestoft (Mr. Prior), I should like to ask what exactly is the position. There are many hon. Members on the Government side who are not Members of the Front Bench and who may well have constituency problems, too. Is it not right that right hon. Members should either put down a Private Notice Question or raise the matter with the appropriate Minister and not use their Front-Bench position in the way in which it was used?
    Mr. Speaker: As I said to the House, I have tried to help many hon. Members on both sides of the House when I know that they have anxieties about their constituencies.
    Mr. William Hamilton: Abuse.
    Mr. Speaker: Order. I must say that both sides of the House benefit from time to time from the efforts on my part to be fair and, above all, that is what I try to be.
    The Prime Minister: Further to that point of order, Mr. Speaker. While it may be of benefit to the House, I hope that you will also appreciate in your consideration that it is sometimes an embarrassment to me when I am asked detailed questions on any of the thousands of matters that pass in front of the Government, when it is only by coincidence or good fortune that I may happen to have the information.
    I suggest, with all due deference to hon. Members, that it would be better if we reverted in some ways to the earlier practice of addressing far fewer detailed Questions to the Prime Minister, but addressing individual Ministers on the subjects on which hon. Members want replies. This would enable me to give far better consideration to what is addressed to me.
    Mr. Tebbit: Further to that point of order, Mr. Speaker. Is it not a fact that, during the period when the Prime Minister said that he would welcome more Questions on more specific matters to avoid the difficulty of the typical Question about his engagements for the day—a visit to Chingford or something of the sort—he fell into the habit of transferring all those Questions, and that hon. Members who imagined that they had a Question in the first three which were to be reached too often found that that Question had been transferred?
    If I may say so, Mr. Speaker, it is not a matter for you and the Chair. It is a matter primarily for the Prime Minister—whose office decides which Questions he will keep and which he will transfer—to sort out the business of how Prime Minister's Question Time proceeds.
    The Prime Minister: Further to that point of order, Mr. Speaker. The hon. Member for Chingford (Mr. Tebbit) has touched on a very important matter. I think he will find, when he looks at the Answer which I gave him earlier, that I transferred very few Questions during that period. The truth is—I shall offend the hon. Gentleman by saying this—that Question Time was abused by him and some of his hon. Friends. They were putting down Questions in an attempt to get me to take over ministerial responsibilities, to prove party points in the House, and not genuinely seeking information at Question Time. I know that that statement offends Opposition Members, but I want to try o give reasonable Answers o sensible and well-designed Questions. That was not, however, what the hon. Gentleman tried to do when he put his Questions down.
    Mr. Stoddart: Further to that point of order, Mr. Speaker. Is not the point that my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) was trying to make that, while we understand your desire to help hon. Members in constituency matters, all hon. Members other than Front Benchers do not have that opportunity, since Front Benchers are called automatically, whereas it is very seldom—and I appreciate that it can only be very seldom—that Back Benchers are called? Was not that the point that my hon. Friend was making?
    Mr. Speaker: I understand the difficulty, if I may refer to the general problem first. The House knows that I now keep a register of every hon. Member who is called to ask the Prime Minister a supplementary question, because the facts of life are that in recent days far more hon. Members want to be called—and I understand that they want to be called—then it is possible for me to call. In order to ensure justice, I am trying to keep a register.
    With regard to the Opposition Front Bench today, it is within the memory of the House that it is a considerable time since I called anyone from that Front Bench other than the Leader of the Opposition during Prime Minister's Questions, as it so happens. That is a fact to be borne in mind.
    With regard to the open Question, this has become a problem in this Parliament for the first time. It used not to be. We used to be able to get down Questions to the Prime Minister. We have always had a full Question period to the Prime Minister. But the House itself has to look to that, not me.
    Mr. Tebbit: Further to that point of order, Mr. Speaker. I appreciate that the Prime Minister is very keen that nobody should make party political points in this House of Commons. He does his best to avoid doing that himself, I am sure. But the point is that if he maintains that Questions about specific matters should be transferred to the Ministers concerned and that we should not ask general Questions of him, it will be difficult to find anything at all that we can ask the Prime Minister. I repeat that it is in his hands to improve the standard in Prime Minister's Question Time if he so wishes, because it is he who has the opportunity to pick the Questions that he wants to answer. That is what he has been doing.
    Several Hon. Members rose—
    Mr. Speaker: I will, of course, call any hon. Member who wishes to raise a point of order, but I suggest that the House would like to move on to the Private Notice Question.
    Mr. Ashton: Further to that point of order, Mr. Speaker. I am sorry to prolong these exchanges, but is it not a fact

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    that since the House has been broadcasting Prime Minister's Question Time live, the number of Questions put down has doubled and that this had never occurred before the past few weeks?
    Mr. Speaker: Not only that, but our own normal Question Time has slowed down by nearly 30 per cent. I understand the reasons, and if I were sitting on the Back Benches, I should probably also want to be heard. But the truth is that we have to adjust to a new dimension in our affairs.
    Mr. Ridley: Further to that point of order, Mr. Speaker. Is it not the case that the open Question, as you so rightly call it, presents the Prime Minister with extremely great difficulties because he does not know which supplementary questions he will be asked, which is why we have had such an abysmally low level of answers from the Prime Minister? Would it not be for the convenience of the Prime Minister himself if he undertook to accept more specific Questions, because in my own experience, during the period to which he referred, every Question that I put down on a specific topic was transferred, but all the open Questions were kept? He has only himself to blame if he is always being bowled out.

ZAIRE (BRITISH SUBJECTS)
Mr. Luce(by Private Notice) asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the position and safety of British subjects in Zaire following the reported invasion across the southern borders.
The Secretary of State for Foreign and Commonwealth Affairs (Dr. David Owen): The Government are making every effort, through the British Embassy in Kinshasa and other Western countries with communities in Shaba province to ensure the safety of the British community in the area of the fighting. The total number of British and Commonwealth citizens in the Shaba province—the area affected—is believed to be 171. We are in close touch with the mining companies, who employ a number of British subjects. The town of Kolwezi, where there are 24 British and Commonwealth citizens, is
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reported to have been taken by the invading force. We have, so far, had no reports of harm to British subjects. The mining town of Tenke-Fungurume, east of Kolwezi, could be affected. Of the 19 British subjects there, six dependants were flown by their company to Kinshasa yesterday and other dependants are being flown today to Zambia.
My right hon. Friend the Prime Minister and I discussed this question in detail with President Kaunda yesterday. The President has assured us that Zambia will give every facility to British subjects evacuated from Shaba province.
This is a serious and threatening development to the stability of this part of Africa. I will keep the House closely informed and make all possible information available to the relatives of those concerned.
Mr. Luce: I am grateful to the Secretary of State for that statement. May I put three questions to him? First, since it is a primary duty of any British Government to safeguard the interests of British subjects in any part of the world, may I tell him that the Opposition will support any positive action that he decides to take, preferably in concert with other Western Powers, to protect the interests or British subjects? May we also welcome the fact that President Kaunda has offered to help in this connection?
Secondly, can the Foreign Secretary tell the House a little about the nature of this invasion? What information is available to him? Is there evidence of any military support—whether by means of equipment of personnel—from outside powers, particularly Cuba or the Soviet Union?
Thirdly, in view of the historic European links with Zaire and with other African nations, and in view of the Western interest to see stability in the African continent, can the Foreign Secretary tell the House what action he will seek to take in concert with European and other African Powers to help maintain stability in Zaire?
Dr. Owen: As to the first question, we shall act in concert with Western Powers. We are in close touch with Belgium and France and, of course, the United States. As for the hon. Gentleman's last question,

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there will be a private meeting in Denmark of Foreign Ministers of the European Community on Saturday and Sunday. That will provide a very good opportunity to discuss this situation.
As to the nature of the attack, an attacking force—which appears to be similar in nature to that which mounted an incursion into Shaba from across the border with Angola in March 1977—attacked the region of Kolwezi. There is no evidence of involvement of Cuban forces, but, of course, there are about 20,000 Cuban troops in Angola.
Mr. John Mendelson: While the Foreign Secretary will, of course, receive support from everyone in this House and in the country in protecting the interests and, above all, the safety of British workers and managers out there, may I ask that he should not be carried beyond that into co-operation with, say, France or other Powers immediately to take action of a military nature that might be based upon the assumption, not proven, that this is an operation coming from any particular outside Power? Has my right hon. Friend seen the reports in Brussels that there is a genuine inside movement against the Government in that country at the moment? We have no business to take sides if that is the case.
Dr. Owen: As my hon. Friend knows, the root of this problem goes way back to the whole question of Katanga. There are, and have been for a number of years, Katangese who have been allowed to stay in Angola. There is no evidence that the movement is backed by anyone other than them at present, but it would be idle to pretend that there is not the possible danger of their being supported by other forces. This is something we want to watch very closely to make sure that it does not escalate into a very serious arms struggle—which it could do.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to call those hon. Members who have been seeking to catch my eye.
Mr. Amery: If, as appears to be the case, the insurgents came from Angola, would the Foreign Secretary agree that they could not have come without Soviet
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and Cuban authorisation? Secondly, as it is alleged that they came through Zambian territory, did President Kaunda make it clear to him that this was against the wishes of the Zambian Government?
Dr. Owen: As to the first question, I do not think that we can make the assumption that the insurgents came with such authority. I should be very surprised however if they came without the Soviets and Cubans knowing about it.
As to the second question, it is not exactly clear what was the line of attack. It could have been to cross that small part of Zambian territory. But when we discussed that with President Kaunda, he knew nothing about it and was having inquiries made. We have no evidence that people, armed and in uniform, or in any military sense, crossed through Zambia, but that is a possibility.
Mr. Dalyell: As delicate and emotive issues of recent history are involved, would it not be better to do the work on an EEC rather than on a Belgian basis, and can it wait even until the weekend conference?
Dr. Owen: We are in close touch with our European colleagues, and I agree that it would be unfair to Belgium to expect a response entirely from that country. Its traditions and historical links are well known. If it is necessary, I shall be speaking to people well before the weekend. The situation is moving very fast, and it is difficult to know at this stage exactly what is happening.
Mr. Fairbairn: Can the Foreign Secretary give us some more detailed information? How many rebels are involved, who armed them, who trains them, who leads them and what is their political objective? Do they have the backing of Soviet Russia, and do they have the approval or disapproval of the British Government?
Dr. Owen: The answer to the last question is perfectly clear and has been made known to everyone. We do not believe that the way to solve these problems is through armed conflict. We are, therefore, opposed to any threat to the territorial integrity of the country. The way to resolve these disputes is through peaceful negotiated means.

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As for his other questions, the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) is asking for a degree of detail that I cannot provide. I have given to the House all the information that I have.
Mr. Rathbone: In the light of the Foreign Secretary's first answer to my hon. Friend the Member for Shoreham (Mr. Luce), what representations have Her Majesty's Government made to the Governments of Cuba and Soviet Russia?
Dr. Owen: The main question is that the attackers have come from Angola. Then the question is what is the involvement of the Angolan Government. As for Cuban involvement in Africa generally, and Cuban involvement in Angola in particular, the view of the British Government is clear and is well known. I ask the hon. Gentleman to look at the issue in its historic perspective. There is no doubt that there is a danger of adventurism of the kind we have seen by the Soviet Union and by Cuba there. But at root there is a complex dispute over Katanga which goes back deep in history, We need to stand back and to consider it in that context, as well as in that of our genuine concern for other dangers.
Mr. Hastings: Referring to the Foreign Secretary's last answer, is it not high time that the Foreign Secretary protested again—if he is interested, as he says he is, in stability in the area—to the Cuban Government and to their Soviet masters about the presence of two or more Cuban divisions in Angola? Why cannot they be told to take them away?
Dr. Owen: The hon. Gentleman asks questions as though he were totally unsophisticated in these matters. The House knows that that is not the case. He holds his views, and that is fair enough. But he knows perfectly well that it is the right of any sovereign Government to invite other troops into their territory. We disapprove of it, particularly when it changes the balance of power—
Mr. Hastings: Has the right hon. Gentleman said so?
Dr. Owen: Of course I have said so. I made a speech at the Mansion House
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—of which I shall send the hon. Gentleman a copy—which made my view on Cuban involvement in Africa very clear.
Mr. Rathbone: On a point of order, Mr. Speaker. Since the Foreign Secretary refused to answer my question, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.

ELIZABETH GARRETT ANDERSON HOSPITAL
3.55 p.m.
Mr. Geoffrey Finsberg: 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 closure of the Elizabeth Garrett Anderson Hospital."
This hospital is of great importance to women, many of whom do not wish to have doctors attending them other than of their own sex. This applies particularly to some of the immigrant communities whose representatives have made representations to me.
It is also important because there are breaches of faith involved. The Secretary of State confirmed the view of his predecessor, which was recorded in Hansard on 6th May 1975. That statement was read out by the hon. Member for Holborn and St. Pancras, South (Mrs. Jeger) quoting the Under-Secretary of State for the Home Department who said:
"'Fortunately, as quite a lot of women doctors are available, many women are able to choose a woman GP, or go to the Elizabeth Garrett Anderson Hospital. Such choice is a factor in NHS medical treatment and it will continue to be'."—[Official Report, Standing Committee B, 6th May 1975; c. 252.]
The hon. Member for Holborn and St. Pancras continued:
"I am sure that my hon. Friend would not have given such a categorical undertaking in Committee without consulting her hon. Friend the Minister of State, Department of Health and Social Security."—[Official Report, 16th May 1975, Vol. 892, c. 970.]
The breach of faith was compounded—
Mr. Frank Allaun: On a point of order, Mr. Speaker. On previous occasions, when hon. Members have strayed into arguing the case, you have promptly

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pulled them up. The hon. Gentleman was so straying during the past few minutes.
Mr. Speaker: I am much obliged to the hon. Member for Salford, East (Mr. Allaun). We must treat everyone alike and I try to do so. The hon. Member for Hampstead (Mr. Finsberg) must make out a case for holding an emergency debate. He must not argue the merits of the case.
Mr. Finsberg: I was not straying, Mr. Speaker, as I think the House is well aware. I was giving the reasons why we should have the debate. One of the reasons concerns a breach of faith. That breach continued, because in the debate in another place on 26th April, the following was stated:
"the view of the right honourable Barbara Castle and repeated by her successor in office, … who said that he believed that the future of the hospital would be within the ambit of a district general hospital."—[Official Report, House of Lords, 26th April 1978; c. 1926.]
That breach of faith was repeated in a DHSS statement of 17th February.
The other reason why this is an important matter is that there was a meeting with the Minister of State and the hon. Members for St. Pancras, North (Mr Stallard) and Holborn and St. Pancras, South when we were given a categorical assurance that no statement about closure would be made without prior notification to the three hon. Members. That assurance has not been honoured, and that is a reason why this matter should be debated urgently in the House. Any issue that can combine the three hon. Members for Camden is obviously a bipartisan matter. It is a specific matter, because a closure date has been announced and a spurious offer has been made, yet again to put the Elizabeth Garrett Anderson Hospital into the Whittington Hospital. That hospital does not want it, and has said so.
The matter is urgent for two reasons. First, the Government business managers must know that if they do not accede to this request, those of us who are interested will follow the lead of the hon. Member for Islington, South and Finsbury (Mr. Cunningham) and block all Government business. The Government business managers would not like that.
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They will remember what happened previously. They had to give in to the hon. Member for Islington, South and Finsbury.
The issue is urgent because the action, once taken, would be almost irreversible. There is a need for this action to be justified to the House.
Mr. Speaker: The hon. Member asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the closure of the Elizabeth Garrett Anderson Hospital."
As the House knows, under Standing Order No. 9, I am directed to take into account the arguments set out but to give no reasons for my decision. I am afraid that I cannot accede to the hon. Gentleman's request, although I have listened carefully to what he said.
Mr. Mellish: On a point of order—a friendly point of order—Mr. Speaker. I have listened to what has been said and I understand and respect your ruling. But in a human interest matter of this kind—there are no party politics involved—would it not have been a good thing if the Secretary of State for Social Services had been here to listen to what was being said? He must have known that such an argument was to be raised. Should it not be put on record that the least he could have done was to have the courtesy to come and listen?
Mr. Speaker: That might be friendly to me, but it was not friendly to someone else.

GOVERNMENT CONTRACTS
4.0 p.m.
Mr. John Cope: I beg to move,
That leave be given to bring in a Bill to regulate Government contracts; and for connected purposes.
The purpose of the Bill is to stop Governments from using the purchasing power of the public purse in a discriminatory manner for their own purposes without the express approval of Parliament. It seeks also to provide proper controls over the operation of discriminatory powers if Parliament should, in the future,

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approve such powers for some purpose. Obviously, the immediate example I have in mind is the pay policy and the enforcement of the so-called voluntary pay policy, but the Bill covers any discrimination.
In my view, public servants should make the best buy they can when purchasing the items that the Government need, and do nothing else at the same time. If a Minister or an official were to discriminate in favour of a particular firm out of a mere preference for one firm rather than another, we should all rightly be horrified and suspect corruption. Indeed, the black list system which has now been adopted by the Government was anticipated by the Royal Commission under Lord Salmon on the standards of conduct in public life. It chose as an example of possible corrupt practice the refusal to include a company on a list of suppliers invited to tender for a particular contract. Naturally, it was concerned that such a practice should not occur: and we, too, should be concerned.
Therefore, Part I of the Bill would make it clearly illegal for a Minister or an official of the Government to award or fail to award a Government contract on any ground other than the fitness, having regard to all the circumstances including price, of the goods and services to be supplied. The Bill would provide for fines related to the size of the contract involved.
If we in this House do not stamp on this practice now, I believe that the practice will increase. Indeed, even since I put this motion on the Order Paper the required 21 days ago, a further extension of the practice has been discovered. The case of GEC-Schreiber is now public knowledge. It seems that that case may be illegal under the existing law. It concerns discrimination under the Industry Act and would not be covered by my Bill but is covered by other legislation.
I believe that the discriminatory awarding of contracts without parliamentary permission is a disgraceful constitutional practice. If the Government argue in a particular case—as they do now concerning pay policy—that it is the best or the only way to achieve some policy, let them come to the House, and get approval.
A few minutes ago the Prime Minister seemed to be saying that discrimination
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in favour of buying British might be a good idea, particularly in the context of the aircraft industry. Those remarks surprised me, because it has recently come to my knowledge that Customs duties at present actually discriminate against British Airways buying British aircraft and in favour of that corporation buying American aircraft. That is a matter which I am attempting to pursue in another manner and which I cannot pursue today.
Part II of the Bill would come into play if Government purchasing were to be used to discriminate at some time in the future. It would provide that any Department or office of the Government which legitimately discriminated would have to be the subject of a special report each year by the Comptroller and Auditor General in which he set out the additional cost of discrimination, and such costs would count against the estimates of the Department whose policy was supported by the discrimination, and not the Department which signed the contract.
I believe that it is important that the House and the public should realise that discriminatory Government contracts cost money and that they distort the figures of Government spending on the various programmes. I give a hypothetical example. Let us suppose that the DHSS is stopped from buying some hospital beds from the supplier who submitted the lowest tender because he is not complying with pay policy. Three consequences follow. First, it benefits another supplier who pays lower wages but charges higher prices, so distorting competition in favour of the less efficient. That is an inevitable consequence of the policy. Secondly, it increases Government expenditure in total. Thirdly—this is an important consequence—it increases National Health Service expenditure in particular, although that extra expenditure is designed to assist not health policy but economic policy.
There is a concealed virement or transfer of money voted for one purpose to another purpose. Normally, that is not allowed. Incidentally, given cash limits, the result is also a reduction in the amount that can be spent on health care.
I hope that the Bill will appeal to Members in all parts of the House. I think that it should appeal to the nationalists, who do their best to identify

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supposed discrimination in the system against Scotland and against Wales. The Bill would control any such discrimination if it were to occur. The Bill also should appeal to the Liberals—if they were here—as being an extension of the careful accounting bequeathed to us by the Gladstonian tradition. I hope that the right hon. Member for Down, South (Mr. Powell) and his colleagues will likewise support it for the same reason.
The Bill should appeal to those Labour Members who dislike enforced pay policies. For the same reason it should appeal to the TUC, which is against such policies. It should appeal to the CBI, which last week called for a larger role by the Commons in the creation of pay guidelines. It should even appeal to the Government. They—I am sure that they realise it—have got themselves into a grave constitutional difficulty and my Bill would get them out of it. Part II, in particular, would provide machinery for the Government to do legally, and under proper control, that which they are now doing unlawfully. I therefore hope that they, too, will support my Bill.
It is therefore with every expectation of a clear run for the Bill through to the statute book, even at this stage of the parliamentary year, that I present this Bill. On that basis I ask leave of the House to introduce the Government Contracts Bill.
Question put and agreed to.
Bill ordered to be brought in by Mr. John Cope.

GOVERNMENT CONTRACTS
Mr. John Cope accordingly presented a Bill to regulate Government contracts; and for connected purposes; And the same was read the First time; and ordered to be read a Second time upon Friday 14th July and to be printed. [Bill 132.]
ORDERS OF THE DAY

  FINANCE BILL
  (Clause No. 11; new clauses relating to stamp duty on house purchase, indexation for capital gains tax, deferred payment of duty on whisky or interest on repayments of overpaid tax.)
  Considered in Committee. [Progress 10th May.]
  [Sir MYER GALPERN in the Chair]
  4.10 p.m.
  The Chief Secretary to the Treasury (Mr. Joel Barnett): On a point of order, Sir Myer. The Committee will recollect that I was accused by the right hon. and learned Member for Surrey, East (Sir G. Howe) of misleading the Committee in some figures I gave. He said that I had given false figures. I remind the Committee of what was said at the time. It stemmed from the fact that the right hon. and learned Gentleman had said that Inland Revenue and Customs and Excise staff had grown by 20,000 between 1974 and 1978 and suggested that they could be cut so as to make a considerable saving.
  I said on 8th May:
  "Another big item which the Shadow Chancellor put forward for offsetting the tax cuts was a cut in the staff of the Inland Revenue and the Customs and Excise, which, he claimed, had increased by 20,000 since 1974. The increase between 1974 and 1978 was about 13,000, slightly less than the increase between 1970 and 1974, when it was 15,000."—[Official Report, 8th May 1978; Vol. 949, c. 915.]
  On 10th May the right hon. and learned Gentleman said:
  "I have taken the precaution of checking the figures"—
  since he had previously spoken—
  "and the actual figures are as follows. On 31st March 1974, the total employed by Customs and Excise and Inland Revenue was 94,800. On the same date in 1970 the total was 86,500. There was an increase during the four years March 1970 to March 1974 of 8,300 in round figures. Almost all of that, just over 7,000, was in Customs and Excise … The increase under this Government from the end of March 1974 to the end of last year has been 20,000."—[Official Report, 10th May 1978; Vol. 949, c. 1194.]

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  Clearly, it would be right for me to apologise to the Committee if I had misled it and if the facts that I had given were incorrect. In fact, the facts that I gave to the Committee were correct, and the right hon. and learned Gentleman once again has his figures wrong. I must ask him to apologise and withdraw the serious accusation that he levelled at me.
  In fairness, I should give the Committee the figures. The totals employed by the Inland Revenue and Customs and Excise are as follows: 1st April 1970, 87,125; 1st April 1974, 102,152; 1st April 1977, 113,961; 1st April 1978, after adjusting for the effect of the Budget, 115,079. The increase is thus some 15,000 between 1970 and 1974, some 11,800 between 1974 and 1977 and some 12,900 between 1974 and 1978.
  The reason for the right hon. and learned Gentleman's error is that he took the permanent figures and ignored short-term appointments. For example, on 1st April 1974 there were 7,303 people in post on short-term appointment in the Inland Revenue. Thus, when the right hon. and learned Gentleman told the Committee that I was wrong and said that the total employed on 31st March 1974 was 94,800, that was untrue. The actual total employed at that date was 102,152. I repeat that the right hon. and learned Gentleman has his figures wrong, and I ask him to withdraw the serious charge that he made against me.
  Sir Geoffrey Howe (Surrey, East): I am grateful to the right hon. Gentleman for that information. He will recollect that the figures that I gave in my speech on 10th May, from which he has quoted, were then stated to have been drawn from answers to Questions. The Questions were those answered in relation to Inland Revenue staff on 19th January 1978—this is column 310 of Hansard—and on Customs and Excise staff on 16th January 1978, at column 27 of Hansard. They are a familiar line of inquiry, which has been pursued by hon. Members on both sides over a number of years.
  The right hon. Gentleman has not challenged the figures that I gave based on those Written Answers. The Questions were related to permanent staff and, as far as I know, there has been no disclosure in answers or anywhere else of the existence of the temporary staff to which the right hon. Gentleman has referred.
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  If one takes the inquiry a stage further, as clearly one should, and studies the annual reports of the Board of Inland Revenue—I look at the 119th report for the year ending 31st March 1976 and the 120th report for the year ending 31st March 1977—one sees that in each of those reports there is a chapter, chapter 4 in each case, entitled in 1976 "The Staff" and in 1977 entitled "Staff and Organisation". Those two chapters set out, in 1977, under the heading "Staff Numbers", detailed figures which coincide precisely with the figures given in the parliamentary answers to which I have referred. They refer—I quote from the most recent one, 1977—to the following:
  "Staff Numbers—At 31st March 1977 the Department had 83,885 permanent staff."
  That is one of the figures I have been quoting—
  "The table below shows the growth of staff numbers for selected years since 1939."
  We then turn to paragraph 53:
  "The table shows that the 3,600 additional staff this year were needed, as in previous years",
  and so on. Therefore, throughout these reports the references are to staff and organisation—staff numbers. When the reports talk of the need for "additional staff", without qualification, they give the figures on which I have relied taken from the annual reports, and the figures given by Treasury Ministers in answer to Questions.
  If one looks at the most recent report of the Commissioners of Customs and Excise for the year ended 31st March 1977, one finds a much more laconic reference. There is only one reference to the figures there: the number of staff in post on 31st March 1977 was 29,389.
  The figures I gave were founded on questions directed, in each case over a number of years, to the number of permanent staff employed by these Departments. But there is nothing anywhere in any of the annual reports of the Commissioners of Inland Revenue to suggest that there is any difference between staff numbers taken in the round and the additional staff appointed this year and the number of permanent staff quoted in those figures. The permanent staff figures are those which I gave to the Committee and are entirely in line with the answers given by Treasury Ministers. For the purposes

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  of the calculation I was giving, they are the relevant figures. They represent the permanent growth in the size of the staff of these Departments as reported to the House in successive parliamentary answers.
  Mr. Joel Barnett rose—
  Mr. Stan Thome: On a point of order, Sir Myer—
  The First Deputy Chairman: Order. I confess that I find points of order one of the most difficult aspects of occupying the Chair. One is always told that one cannot say that anything is out of order until the point of order has been heard. But, having heard what I have just listened to from both sides, I think that the whole business is absolutely irregular. It has nothing whatever to do with the Chair. I am here to conduct the Finance Bill and to permit hon. Members to start discussing New Clause No. 1. Therefore, I do not propose to allow any further discussion on the point of order. There are other methods, well known to both sides, by which this matter can be raised. What has happened is irregular. I am therefore calling New Clause No. 1—Sir Geoffrey Howe.
  Mr. Joel Barnett: Further to that point of order, Sir Myer. A very serious accusation has been made against me personally as a Minister giving incorrect information to the Committee. The right hon. and learned Gentleman has once again misled the Committee. I ask him to withdraw his accusation. It is quite disgraceful.
  Sir. G. Howe rose—
  The First Deputy Chairman: Order. We are not going to carry on with this. We are here to discuss the Finance Bill.
  Sir G. Howe: Further to that point of order, Sir Myer. I have quoted from the parliamentary answers given to Questions tabled by my hon. Friends. The figures that I quoted are founded on those parliamentary answers and on the figures quoted in the annual reports of the Commissioners of the Board of Inland Revenue, and the only figures quoted in those annual reports.
  Mr. Joel Barnett: That is not true.
  The First Deputy Chairman: Order. There are many methods whereby this matter can be pursued other than by addressing points of order to the Chair. I want to get on to the business that we have down for consideration.
  Mr. Thorne: Further to that point of order, Sir Myer.
  Mr. Nicholas Ridley rose—
  The First Deputy Chairman: I am not taking any more points of order. I have indicated that quite clearly. The whole thing is irregular.
  Mr. Ridley: I beg to move, That the Chairman do report Progress and ask leave to sit again.
  The First Deputy Chairman: I am not accepting the motion.

  FINANCE BILL
    New Clause No. 1

      INDEXATION OF CAPITAL GAINS TAX
      '(1) At the end of section 20(4) of the Finance Act 1965 there shall be added the words "Provided that the said total amount shall be multiplied by the retail price index for March in the year of assessment and divided by 100."
      (2) At the end of section 20(7) of the Finance Act 1965 there shall be added the words:
      "(8) The amount of the chargeable gains shall be computed as provided in this Act subject to the amount of the consideration, the value at 6th April 1965, and the sums allowable under paragraph 4 of the Sixth Schedule to this Act, being adjusted by applying thereto the fraction 100,/y where Y is the retail price index at 6th April 1965 or for the month in which the acquisition for disposal is deemed under this Act to occur.
      (9) In this section "the retail price index" means in relation to periods from 1st January 1962 the general index of retail prices and in relation to earlier periods an index which shall be, calculated and published by the Board."
      (3) The provisions of this section shall apply for the year 1978–79 and subsequent years of assessment.'.—[Mr. Lawson.]
      Brought up, and read the First time.
      Mr. Nigel Lawson: I beg to move, That the clause be read a Second time.
      The new clause stands in the name of my right hon. and learned Friend the

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      Member for Surrey, East (Sir G. Howe), who I must say is owed an apology by the Chief Secretary—
      Mr. Joel Barnett rose—
      The First Deputy Chairman: Order. I think it is unfair of the hon. Member for Blaby (Mr. Lawson) to introduce a topic when I have said that it is out of order. I hope that he will conduct himself appropriately to the dignity of the Committee.
      Mr. Lawson: This is a matter which is not new to the Committee, but I make no apology whatever for bringing it before the Committee again on this occasion. It is a new clause to index the capital gains tax—[Interruption.] May I have some protection, Sir Myer, from the non-stop chattering—
      The First Deputy Chairman: Order. I think that the hon. Gentleman is getting more interference from right hon. and hon. Members on his own side of the Committee than he is geting from the other side.
      Mr. Lawson: This is a matter which has been raised on a number of occasions, in previous Finance Bill Committees and in the House on Report, but I make no apology for again raising the matter, because we have had, since it was last debated on the Report stage of the Finance Bill last year, a very important document from the Inland Revenue on this subject. This carries the matter a little further, and in that sense it is a most helpful document. The fact that it does not carry it to a successful conclusion from the Opposition's point of view, and, I believe, from most of the Committee's point of view, is a matter which we hope can be put right even at this late stage.
      Perhaps it might be as well to put the matter into perspective. The question has been raised in previous debates on this matter by, I believe, the right hon. Member for Down, South (Mr. Powell) about whether there should be any capital gains tax at all, or whether there should be any capital taxation at all. It is my view, and the view of my right hon. and hon. Friends, that there should be capital taxation. But it is not at all clear to us that there need be a whole battery of capital taxes in order to achieve the taxation of capital.
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      At present we have, at the very least, four major taxes on capital in one shape or form. We have a surcharge on investment income, capital transfer tax, stamp duty—one part of which we shall be coming to shortly—and we have capital gains tax. It seems dubious whether we need the last-named tax at all.
      If the total amount of capital taxation is adequate—whatever is considered to be adequate, and there might be differences of opinion within the Committee on that—do we need four totally separate taxes on capital to achieve it?
      If we are to have a tax on capital gains, it should be just that—a tax on genuine, real capital gains and not on paper gains. Yet it has been revealed in a recent speech by one of the Treasury Ministers that before the minor changes introduced in the Budget, of the total expected yield this year from capital gains tax of £390 million in a full year, no less than £350 million was the result of purely inflationary gains—paper gains—and only 10 per cent. of the yield was derived from genuine gains.
      I have no idea whether that is right or wrong, and, no doubt, the Minister will confirm or deny it. All I know is that that is the figure that was thrown across the Chamber by Ministers in an earlier debate. But we are concerned about the principle of whether inflationary gains, which are only paper gains, should be taxed.
      Mr. Ron Thomas: Is the hon. Gentleman suggesting that his party wants to give another tax handout of £350 million to the wealthy section of our society?
      Mr. Lawson: I thought I made quite clear that we are concerned here with justice. Despite the jeers of hon. Members below the Gangway, this is accepted by all those who have made a serious study of the matter and is, indeed, why the Inland Revenue, under instructions from the Treasury, produced the document of 5th October to which I have already referred.
      While we are talking about the cost, another point is that, whatever the cost may be, no cost will fall on the borrowing requirement this year. It is clearly stated in the clause that it will come into effect only for gains made this year. Any

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      tax payable on gains made this year, whether at the present level or any diminished level, will not affect the revenue until next year, 1979–80. So it has no effect whatsoever on the borrowing requirement this year.
      The capital gains tax covers two different types of gain—that is, genuine gains in the real value of the asset which has been disposed of, and gains which are not real gains at all—gains which arise on paper because the asset appears to have increased in value when disposed of although in fact, because prices generally have increased, the true value of the asset may not have increased at all.
      What we have here is a substantial and capricious wealth tax. This has been admitted by Treasury Ministers in past debates, and those who have come lately into our debates should not attempt to contest it unless they have studied the matter rather more deeply than the hon. Member for Bristol, North-West (Mr. Thomas) has done.
      As I say, this is a wealth tax of the most capricious kind, and that is why the Minister of State said what he said last year on Report. I quote from the Inland Revenue document:
      "In the course of a Finance Bill debate on 14th July 1977, the Minister of State to the Treasury, Mr. Denzil Davies, said that the Government would look sympathetically at the problem of the effect of inflation on capital gains."
      It is to that point that I wish to devote myself in opening the debate. But for the benefit of hon. Members below the Gangway on the Government side who may have a misunderstanding of what is at issue, I shall read a letter from a constituent of my hon. Friend the Member for Bosworth (Mr. Butler). This is from a small shopkeeper:
      "I came to my business 7 years ago having experienced three jobs disappear, and bought a sub-post office and newsagency which had just had the delivery service abandoned. I paid £10,000 split as to £7,500 property and £2,500 goodwill…
      "Over my term of office my post office salary has increased from £1,000 to £3,150. Last year I realised that if I wanted a saleable business I had to resurrect the news delivery service so now in spite of sometimes feeling rather ill I opted to work a 13-hour day instead of merely 12. Just to show really willing, I also installed an automatic paraffin vending machine.
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      "You must ask yourself whether we small shopkeepers really try. I must mention that over this period my rate of pay would not be much more than 50p an hour.
      "And now after 7 years I decide to sell up! We have now gone 7 years without a holiday and at last we are having to think in terms of appointing an assistant for whom I would have to allow £1·20 hourly plus and three weeks holiday. And this I will not do.
      "Over my 7 years, what we have not suffered to enhance the value of my business I cannot think. I always managed to save the post office salary and it seemed some consolation for working 6½ days a week. When the estate agent got me £34,000 for the business it seemed that at least I had balanced out inflation …
      "You have probably guessed—my accountant now tells me that I shall be liable to capital gains tax to the tune of £5,000.
      "I cannot describe the utter despair my wife and I feel. Everything we have done has been a waste of time and one of my tax inspector friends tells me how lucky we are that we didn't put our money in a building society as if there is something akin as between a stock exchange capital gains flutter and the service we have given the public.
      "I scarcely need to say, that I am having my rewards confiscated purely on a non-existent capital gain created by inflation. Is it any wonder that the unions, this Government and even some traders love inflation and will not consider indexation?"
      Need I tell hon. Members that after paying the Chancellor his £5,000, the shopkeeper, possibly fatally ill, can receive neither dole nor sick pay? That is an example, of what is happening under the present regime of capital gains tax. I notice that Labour Members below the Gangway are no longer jeering or laughing. Quite right, too.
      4.30 p.m.
      This sort of problem is not in any way met by the mitigation for small gains introduced in Clause 35 of the Finance Bill. Nor is it met by any of the other provisions of the Bill. There is a genuine problem to which this Committee, should address itself. Indeed, the Inland Revenue note did its best to address itself to this problem. Hovever, the Inland Revenue—
      Mr. Russell Johnston: The hon. Gentleman said, after he had finished recounting the example of the shopkeeper, that Labour Members below the Gangway were, perhaps, taking a more solemn view of the matter. As far as I could see, they were not. It would be interesting to see whether they agree

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      with what the hon. Gentleman said. Perhaps they might indicate that by some interjection.
      Mr. Lawson: The hon. Gentleman is absolutely right. It will be interesting to see whether Labour Members agree. I hope that in particular the hon. Member for Liverpool, Walton (Mr. Heffer), who I know is concerned about small businesses, will make some contribution to the debate on this very matter and indicate his feelings.
      Mr. Eric S. Heffer: The hon. Gentleman has read out a letter which quotes one side of the argument. We would need to examine it. I have learned in this world that one needs to examine the full details of any case that is put forward. I receive letters from constituents. The hon. Gentleman has a letter which puts one side of an argument.
      In the past—I do not do it now—I have rushed in on the white horse, charging for this or that constituent and have discovered that there is another side of the argument as well, which had not been mentioned to me. Before I or anybody else rushes in to say that that is right or wrong, we would need to examine all the facts of the case.
      If we are talking in general I agree that there is a case for small businesses, and that there is a need to look into the problems of small business men. But I wonder whether the hon. Gentleman is concerned only with the small business man—
      Mr. Ron Thomas: Of course he is not—
      Mr. Heffer:—or whether he is concerned with all of those in business rather than one aspect of the problem.
      Mr. Lawson: I admire the hon. Gentleman's insistence on studying this matter thoroughly before jumping to any conclusion. I and my hon. Friends have done so. Evidently he has not. I hope that he will not vote in any Division on this matter, on the ground that he has not had time to go into the matter with the thoroughness that he thinks necessary before reaching a conclusion.
      The Revenue's note was interesting in one respect. It was looking at two different
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      methods of dealing with this admitted problem of inflationary gains which ought not to be subject to tax but which are caught by the tax as it is at present constructed, and which would not be subjected to tax were this new clause, which indexes the gains, to be approved by the Committee.
      One method of dealing with the problem was tapering, say over a period of 10 years, and the other was indexation. I know that a number of hon. Members have, until this Revenue document, thought that, possibly, tapering was a simpler solution and, therefore, to be preferred to indexation. The Revenue document makes two things absolutely clear. First, it makes clear that if the problem is inflation, the only logical solution is indexation. There is a case for tapering, but it is not the case which arises from inflation.
      Before the hon. Member for Inverness (Mr. Johnston), the representative of the Liberal Party, leaves the Chamber, he should know that in our debates last year his hon. Friend the Member for Cornwall, North (Mr. Pardoe) stated clearly that he was in favour of indexation rather than tapering, because indexation directly concerned itself with the problem of rising prices and inflationary gains whereas tapering was something other than that. I refer to column 864 of the Official Report for 14th July 1977. I hope, therefore, that, with his usual consistency, the hon. Gentleman will be in the Lobby tonight with his hon. Friends.
      Secondly, the Revenue document showed that the complications arising from tapering were every bit as great as those arising from indexation and that therefore the possible advantage of tapering—that it was a such simpler method—disappeared.
      Logic and practicability go hand in hand to favour indexation as the method. There is only one respect in which tapering produces a simplification: the gains disappear altogether, for tax purposes, at the end of 10 years. But that can perfectly well be written into an indexation clause, as is done in some countries overseas, where gains over 10 years old are automatically exempt and there is indexation for those that are caught.
      Three alleged practical disadvantages of indexation were produced by the

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      Revenue in paragraph 20 of the consultative document. The first is that
      "a suitable index—or set of indices—would need to be prescribed."
      There is no problem in prescribing a suitable index. In this clause we have suggested the retail price index, which is what is usually used where there are linkages to take account of inflation, whether in pensions or other aspects of our social security or tax system.
      What is clearly wrong is the suggestion that there would have to be a set of indices. We are concerned with inflation, which means the changes arising in the general price level. Therefore, the only relevant index is one relating to the general price level. The argument of the Minister of State in our debates last year that there would have to be a separate index for every different type of asset was, therefore, bad. He now accepts that that was a bad point. That is made clear also in the Meade Report, which I have to hand. We need a general index of prices to establish how much is real and how much inflationary gain. That rules out the problem which might be introduced if there had to be a set of indices.
      The second objection put forward by the Revenue was the "awkwardness", in the case of wasting assets such as leases, of both writing down the cost of the asset and adjusting it to take account of indexation. I think that by now the Inland Revenue will have received sufficient submissions to show that there is no such awkwardness. The existing system would be used for wasting assets such as leases. I do not wish to go into this matter in any more detail, but I have a note on it. If the right hon. Gentleman wishes me to—
      The Minister of State, Treasury (Mr. Denzil Davies)indicated dissent.
      Mr. Lawson: The right hon. Gentleman accepts that there is no problem there. Good. I shall not go into that.
      The Revenue's third objection was about very long-term gains. If the Minister of State considers that this is the only problem, such gains could be exempted in an amendment to the new clause.
      The Revenue put forward one other ironical objection—the compliance cost
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      to taxpayers. Taxpayers pay a large sum of money on capital gains which are not true capital gains at all. All the taxpayers that I know would be happy to suffer the increased compliance cost in order to escape paying a tax which they should not pay in the first place.
      Many other countries such as France, Sweden—for some gains—Ireland and so on index their gains for just this purpose. The Revenue is opposed to indexation. One knows that. I have a letter from a Revenue official. It is surprising to find Revenue officials having policy views, but evidently that is the situation we are in now. The Revenue official says:
      "As you know, I hold no brief for indexation".
      Therefore, the Revenue has been inclined to exaggerate the difficulties. There are some difficulties. For example, there are difficulties in the case of investment trusts and unit trusts, which, if there were indexation of gains, should be exempted altogether from capital gains tax. But the difficulties are not nearly as great as the Revenue has made them out to be. A number of submissions, copies of many of which I have, which were made to the Revenue in response to its consultative document have shown the way round these problems.
      There was one curious matter in the Revenue document. The document claimed that when capital gains tax was orginally introduced in 1965 by the present Prime Minister, then Chancellor of the Exchequer, it was introduced at what was called "a relatively low flat rate" because it was specifically taken into account that it might contain an inflationary element.
      Reading that document surpised me because it did not accord with my recollection, so I looked back to see what the then Chancellor of the Exchequer, the present Prime Minister, said on that occasion. He said:
      "As for assets which are held for periods exceeding 12 months, I think that it would not be reasonable to subject a gain which may have accrued over a long period to the full rates of Income Tax and Surtax applicable to ordinary income for the year in which the gain is realised. I propose, therefore, that these long-term gains shall be taxed at a flat rate. Given a flat rate, I do not consider that there is any need to taper the rate according to the length of time for which the asset has been held, and the flat rate will, therefore,

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      apply irrespective of the period of ownership.—[Official Report, 6th April 1965; Vol. 710, c. 250.]
      That was all he said on that point.
      Therefore, the Revenue has it completely wrong. The 30 per cent. flat rate was specifically put as an alternative to a taper. It was not in any sense intended to take inflation into account because, of course, it was not envisaged at that time that we should have inflation at anything like the rates we now have.
      We were then living in a different age. We were living in an age of what is now called the money illusion, when people who expected interest on money which they had lent thought of it in money terms, not taking inflation into account. People drawing up the profits of their companies were not concerned about inflation. Trade unions negotiating for wage increases in those days of 1965 did not really take inflation into account. Now everybody does. Now we are in a different era.
      It is a very sad thing, and a damp squib, that the Treasury has come up with at present, because the relief that is included in the capital gains tax clauses, which we shall be dealing with in Standing Committee, is a relief which nowhere near meets—quite apart from the fact that it is different in form, size and scale—the amount of tax which is wrongfully extracted from taxpayers for gains which they have not in any genuine way been fortunate enough to acquire.
      The Chancellor of the Exchequer, announcing the failure to introduce any form of indexation in his Budget Statement—this is the last quotation I shall read from a member of the Government—said this:
      "I do not think that it would be right to give relief for inflation to investors in shares and land"—
      If I may here interpolate, as we have seen, it is not simply a matter of shares and land. It is also a matter of the small shopkeeper and the sale of his shop. The Chancellor continued:
      "while investors in building societies and other fixed-interest loans receive none—and while an investor can benefit from the decrease in the real value of his own borrowings."
      That is an extraordinary statement. As to the first half of it, it is perfectly true
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      at present that if somebody invests in a building society or some other fixed-interest security, a part of that which is taxed as income—and with the investment income surcharge, too—is merely replacement of the capital value which is otherwise deteriorating through inflation. That causes taxation to be too high.
      4.45 p.m.
      But the amount that that man suffers is not nearly as great as the suffering from capital gains tax—the inflationary gains being taxed at a real rate. That is a far greater injustice, and to say that the Government cannot remedy that glaring injustice because they have not seen a way of remedying the lesser—even though there are ways suggested in the Meade Report for doing that, but I leave them aside—really is a poor argument.
      Mr. Heffer: I am following the hon. Gentleman's argument very closely, and up to a point I sympathise with some aspects of it. But would he not agree that if we are to have a system of indexation of the kind that he wants, he would also then have to apply indexation to wages and salaries? In fact, he would have to index all incomes of one kind or another. Is the hon. Gentleman in favour of indexing wages? Does he think that salaries also should be indexed? What is his view on that?
      Mr. Lawson: The hon. Gentleman is on to an interesting point, but it is a completely different matter. He would be the first, I should have thought, to insist that wages and salaries are matters for negotiation freely between employers and employees and between employers and trade unions. If a trade union wishes to negotiate with an employer an index clause in a pay agreement, it is free to do so. There is no reason why it should not. But it is not a matter for negotiation or collective bargaining, even though perhaps the hon. Gentleman might like it to be, to decide how much tax should be paid. That is a matter laid down by law. It is a matter of the legal relationship between the State and the citizen and the obligations under law that the citizen has.
      Mr. Denzil Davies rose—
      Mr. Nick Budgen: I wonder whether my hon.

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      Friend would comment upon the relative attractiveness, in terms of employment in the private sector and the public sector, if all contrasts of service within the public sector were indexed. Would it not mean that labour would be sucked into the public sector, unless the private sector was prepared also to index all contracts of service?
      Mr. Lawson: It might well do but, as I say, I do not accept the parallel of the indexation of wages.
      Mr. Denzil Davies: Will the hon. Gentleman give way?
      Mr. Lawson: In a moment, I shall. Where there is a parallel is in other aspects of the taxation system; and it will be within the hon. Gentleman's recollection that last year, despite the Government's opposition, we insisted on indexing the personal allowances for income tax on precisely similar grounds.
      Mr. Denzil Davies: In reply to my hon. Friend the Member for Liverpool, Walton (Mr. Heffer)—and I think it was a fair point—the hon. Member said that within private industry of course it was a matter of negotiation between the employer and the employee. However, if the Government accepted his view that indexation was a good idea, would he be in favour of indexing all contracts of employment between the Government and their employees, given that there was indexation?
      Mr. Lawson: No. There really is no comparison with, say, the firemen, to take a recently topical case, who negotiate wages with the local authorities, and if they do not like the wages they can leave the fire service, as some of them may have done. That is quite different from a taxpayer who is legally obliged to pay a particular tax and cannot opt out of it. I think, therefore, that the Minister is on to a very bad point, and not for the first time.
      Mr. David Price: May I go back a number of years, as one who has had a lot of experience at negotiating in the private sectors with trade unions? It is implicit in the realm of contract that one tries to index. All that stops indexation is Government pay policy. In the real world, every trade union which is
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      worth its salt expects the minimum of indexation, although the phrase is not used, and any sensible employer who can possibly afford it will accord it.
      Mr. Lawson: There is implicit in what my hon. Friend said a very important point—that is, that matters which are reviewed every year, such as wages, can be, in a rough and ready way, adjusted for inflation. One of the reasons why the injustice is greatest in relation to capital gains tax is that this is not something which is adjusted every year, unlike even the income tax allowances. It is a tax concern with a period of years, when the pounds at the beginning of the period bear no relation in value to the pounds at the end of the period.
      Let me remind the Committee of the final reason, as it was a few moments ago now, that the Chancellor gave for not moving on this matter, even though we were given to understand that there would indeed be legislation this year and the Inland Revenue document stated that the hope was that there would be legislation this year that a satisfactory form could be found.
      The Chancellor said that he was not prepared to do this
      "while an investor can benefit from the decrease in the real value of his own borrowings."—[Official Report, 11 th April 1978; Vol. 947, c. 1202.]
      Who is the investor who benefits most from the decrease in the real value of his own borrowings? It is the Government. It is the Government who are the biggest borrower of all. If anybody has benefited from the decrease in the real value of his borrowings, it is the Government. For the Government to say "Because we have had this great benefit, that is a reason why we cannot give any benefit to taxpayers whom we have been mulcting unfairly all these years" is a most monstrous and extraordinary argument. I am surprised that even the Chancellor, who, after all, had time to compose his Budget Statement as well as a long time to say it, should have used an argument of that kind. The fact that he did is, I think, some indication of the weak ground on which he found himself.
      Mr. Ron Thomas: I thank the hon. Gentleman for giving way and will disregard the nasty comments he made earlier. Will he be good enough to tell

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      the Committee how much he thinks the proposal will cost? We know that he had some trouble with the figures last time the Committee met, and perhaps he has had difficulty in getting it right, but could he give us some indication? Is it the £350 million of which we spoke earlier? If he would give just some indication, I at least should be grateful.
      Mr. Lawson: The cost this year will be nothing at all, for the reason I have already given. The cost in a full year, next year, will in any case fall to be met by the incoming Conservative Government, so I think that the hon. Gentleman can leave that to us. I would judge that the order of magnitude—and it is possible to make only a guess at it, and that is the case with the Treasury, too, which is perhaps why it has produced a series of wrong answers in its Written Answers—is about £300 million of inflationary gain.
      This, as I have said, is a matter of pure justice. That is why we have said in our policy document "The Right Approach to the Economy" that
      "we shall adapt Capital Gains Tax so that only true profits (as opposed to inflationary gains) are subject to the tax."
      We have an opportunity to embark on that course now. We have an opportunity to remove from the statute book in its present form a tax which is a wealth tax masquerading as a capital gains tax, a wealth tax of a higher incidence even than the Swedish wealth tax in a period of the sort of inflation that we have had in recent years, and a wealth tax which falls in a most capricious and undesirable way, which is contrary to any justice and contrary to the economic needs of the country.
      I invite hon. Members on both sides of the Committee to give the new clause their support.
      Mr. Denzil Davies: Perhaps I may come in at this stage and say a few words about the new clause, because the hon. Member for Blaby (Mr. Lawson) did not address his mind to it at all. He pretended that there were no real problems involved in indexation. Then he made a knock-about Second Reading speech which we have heard from him before.
      Mr. Peter Rees: A very good speech.
      Mr. Davies: It may have been a very good speech from the hon. and learned Gentleman's point of view, but the hon. Member did not really address his mind to the clause itself. He was asked, and he gave figures, about the cost of the new clause. He is quite right in saying that there is no cost this year because of the way the assessments are made. Our best estimate is that in a full year this new clause would cost about £350 million. I am not making an issue of the figures. I am just telling the Committee that our best estimate of the cost is £350 million.
      The total yield from capital gains tax, if we include corporation tax on capital gains, is slightly greater than the hon. Gentleman seemed to think. It is about £480 million. But, as far as we can judge, the cost of this new clause in a full year is about £350 million.
      Mr. John Cope: Will the right hon. Gentleman give way?
      Mr. Davies: In a minute. The hon. Member for Blaby dismissed that. He said "Next year it will be a Conservative Government, and we will see about the cost." But he still has not told the Committee—indeed, we were not told on other amendments—from where this money is to come. We have had almost £700 million in a full year on other amendments, and here we have another £350 million, with very little indication from the Opposition where they will find the money.
      Mr. Cope: What assumptions has the Minister made in arriving at the figure for the rate of inflation next year?
      Mr. Davies: The assumptions are that the rate of inflation more or less will remain what it is now. I said that it was extremely difficult—the hon. Member for Blaby also mentioned this—to arrive at an accurate figure when estimating for a year ahead. But our best estimate is that the cost is around £350 million. I cannot pretend that it is an exact figure, but it is probably pretty close to what the actual cost will be if this new clause is accepted.
      Mr. Ridley: Is it not a rather extraordinary admission by the Government that, if we take the £390 million figure of my hon. Friend the Member for Blaby (Mr. Lawson), 90 per cent. of capital gains

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      tax is yield from inflation gains and only 10 per cent. is true capital gains? Is that not an extraordinary admission?
      Mr. Davies: I do not accept that. In fact, leaving aside assumptions and the argumentative point, about 75 per cent. of the yield is what we assume would be lost as a result of this new clause. We are debating a new clause and its effect on the Government's income, and I am telling the Committee—whatever conclusions hon. Gentlemen wish to draw—that this amounts to about £350 million. I think that the Opposition owe it to the Committee to tell us where they would find the money that would be lost as a result. The tax may be unfair. It may be a tax on inflationary gain. That is a matter for argument. The Opposition still have a duty, if they pretend—I think that they have given up all pretence of being a responsible Opposition—to be responsible, to say from where the money is coming. We have heard nothing.
      Mr. Ridley: Next year.
      Mr. Davies: Next year. That is a typical Conservative approach. There is no problem this year, so let us pile up the problems for next year. That is extremely irresponsible. We have not been told from where the £350 million is coming.
      The hon. Member for Blaby argued for indexation. We have heard the argument before. He appears to be in favour of almost general indexation, provided that it is not of wages and salaries in the public sector—or, perhaps, contracts. He holds his face against that.
      We have debated this case several times, and I do not suppose that we shall ever agree whether indexation of the tax system is right. My own view, which I have expressed previously, is that I do not think it fair to index for the benefit of one group, be it a group selling capital or any other group. If one goes down the road of indexation, one must index right across the board, and then, as far as I can see, one is back in the same situation as at present, and nobody really benefits at the end of the day.
      5.0 p.m.
      Indexation addresses itself to the symptom of inflation. It is not a cure. It is a kind of pain-killer, and, like all painkillers, it gives one the false illusion
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      that the disease has been cured. In fact, the disease has not been cured.
      That is why my own view is that indexation is dangerous. It draws attention away from the real problem of inflation, which is the problem to which the new clause should address itself The real injustice is inflation. That is why this Government have been addressing themselves, very successfully, to the problem of inflation.
      Mr. Lawson: I do not accept for a moment that a Government who have allowed prices to double during their four and a half years of office have been successful in dealing with the problem of inflation. But may I make it absolutely clear that the clause is in no way concerned with curing inflation. The arguments I was adducing in favour of the clause were grounded entirely on justice. It is no good saying that it is not a cure for inflation, a cure for baldness or a cure for anything else. It has not been put forward on those grounds.
      Mr. Davies: I accept entirely what the hon. Gentleman has put forward as a cure. If he is basing his argument on justice, he must, with justice, give the benefit of indexation—if it is a benefit when it covers everybody—to all other groups as well. He cannot in justice claim the benefit of indexation for this group, however worried they might be, without arguing that the benefit should be applied to other groups as well. That is the point I was seeking to make.
      Indexation in this regard seems another Tory easy way out of the problem of inflation. At least this particular group would not suffer. That kind of regime leads to the illusion that inflation is not such a bad problem after all because one has protected certain people from it.
      Mr. Lawson: Rubbish.
      Mr. Davies: In reply to the hon. Gentleman may I quote from the Carter Commission, which was set up by the Canadian Government some time ago to look into the whole tax system. The hon. Gentleman may not agree with that commission's conclusion, but it is a wide-ranging, deep analysis of taxation problems. The Carter Commission said about indexation and capital gains tax:
      "It has been argued that it would be inequitable to tax a gain that resulted from a general increase in the price levels."

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      That was the hon. Gentleman's argument.
      "The point is made that such a gain is illusory because it does not represent any real increase in purchasing power. This argument, when used to support the exemption of stock market gains, appears over-emphasised if the substantial increases in the stock market averages are compared with the rather smaller increase in the cost of living index."
      I make no point on that. The commission went on:
      "In addition, we cannot overlook the fact that there are many members of society with fixed incomes who suffer losses in economic power because of inflation and are unable to protect themselves against it. This is in contrast to the equity holder who during a period of inflation will generally experience some growth in the dollar value of his assets."
      Mr. Lawson: That does not happen.
      Mr. Davies: That is not true.
      The commission continued:
      "Because it is not possible to make provision for complete recognition of declines in purchasing power brought about by inflation, we have concluded that it should not be the function of the tax system to attempt to relieve only some segments of the population from the effects of inflation. The tax system, therefore, in our opinion should continue to be based on current dollars and not on constant dollars."
      Mr. Peter Rees rose—
      Mr. Davies: I have given way on a number of occasions. The hon. and learned Gentleman should contain himself. I am summing up the quotation.
      The Carter Commission makes it quite clear—this is a point that my right hon. Friend the Chancellor made from the Dispatch Box—that it would not be right, on grounds of justice, to give this benefit to one segment of the population and to protect it from the effects of inflation if we were not prepared to extend the benefit to other segments of the population.
      Mr. Peter Rees: If that is the considered view of the Treasury Front Bench, why did it encourage the Revenue to put out a consultation paper and waste a great number of people's time making representations? The only basis for the consultation paper must have been that the Government recognised that there was some case, at any rate, for indexing, or at least countering, the effects of inflation.
      Mr. Davies: The Government did recognise it and still recognise the problem here in relation to inflation and gains of all kinds. But, at the end of the day, having considered the matter, it does not seem to us just and right that we should introduce a measure to protect one group, however worthy or unworthy—it is not a question of merit—from the effects of inflation when other groups would not be so protected by the tax system.
      Perhaps I should remind the Committee—I do so only as a matter of fact and not to draw any special conclusions from it—that the rate of capital gains tax is lower than the rate of taxes on income. The Carter Commission came to the conclusion—I make no comment on this—that the tax on a capital gain should not be at a different rate from the tax on income gains, because both represent a spending power or purchasing power.
      The Meade Committee, which looked at the whole tax system, also seems to be inclined to the view that a capital gain merely reflects purchasing power at the end of the day—whether that is true, I know not—but again thinks that the tax should not be different.
      Mr. Lawson: Will the right hon. Gentleman give way?
      Mr. Davies: The hon. Gentleman has made his speech. He keeps bouncing up and down at every point one makes. He should sit back and reflect on the points that I am making. I want to develop my argument.
      The index chosen in the clause to assess a gain, or to remove the inflationary part of the gain, is the retail price index. That is an index of spending power. So in the new clause we have a kind of implied admission that capital gains can be looked at only as money that can be spent, because of the index which is used. If that is so, does the hon. Gentleman still argue that the rate of tax on capital gains should be any different from the rate of tax on incomes? He should bear in mind that he is relating capital gains to spending power in terms of the index.
      Mr. Lawson: A little while ago the right hon. Gentleman appeared to be praying in aid the Meade Report. Is he aware that that report, which is a

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      very valuable study in many ways, is specifically in favour of indexation of the tax system in general and the capital gains tax in particular?
      Mr. Davies: The tax system in general, and capital gains come into it. The Meade Report was not specific on a large number of matters. I am surprised that the hon. Gentleman can be so dogmatic about that report.
      The question I was seeking to ask—perhaps we shall have a reply from the Opposition in the winding-up speeches—was whether the Opposition accept that even with the new clause the rate of tax on capital gains should be any different, as it is now, from the rate of tax on so-called income or income gains.
      Mr. Ron Thomas: Does not my right hon. Friend agree that for the wealthy taxpayer the rate of tax on capital gains is far less than he would pay on an additional slice of income? At the end of the day, this would be a slice of disposable income, just as though it had been earned.
      Mr. Davies: That was the point that I was seeking to make. My hon. Friend has put it clearly. Many reports, including both the Meade and Carter Reports, come to the conclusion that the rate of tax on capital gains does not necessarily have to be any different. Why should it be, if one is looking simply at spending power? There may be other reasons why the tax on a capital gain should be at a different rate.
      But if one is looking at spending power, why should the rate of tax be any different in respect of capital gains than it is for income gains? The hon. Gentleman should think about it for a while. He is very prone to jump up, and sometimes he does not get it right when he jumps up on the spur of the moment. I suggest that he considers the matter and that when he has the opportunity he returns to it later.
      I now return to the clause. The hon. Gentleman skated over it. The clause was not so important, it seemed. It was the principle in the clause that he was concerned about. The clause fails to meet many important points—and not merely drafting points. I realise that the Opposition cannot be expected to get the
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      drafting right. But this clause was originally conceived by the Society of Conservative Lawyers, so I do not excuse any drafting errors. If those lawyers cannot get it right, they cannot complain if I criticise them on that score.
      The new clause skates over many problems in an attempt to make it look nice and simple. But if we really wanted to introduce the kind of datum indexation that the new clause seeks, we should need at least 10 pages of the Finance Bill instead of one and a quarter sides, as on the Amendment Paper.
      The new clause says nothing about part disposals. Presumably the clause was drafted by all the resources of the Conservative Central Office as well as the Conservative lawyers, but it makes no attempt to deal with the problem of part disposals. No attempt is made to deal with the problem of the pooling of shares. No attempt is made to deal with the problem of enhancement of expenditure. Those are three extremely important issues.
      Mr. Lawson: They are easily dealt with.
      Mr. Davies: The hon. Member for Blaby says that they are easily dealt with. It seems that everything is easy for the hon. Memer for Blaby, but he does not always get things right. If these three matters are so easy, why are they not dealt with in the clause?
      The fact remains that these are complicated matters. I do not say that it is not possible to draft a clause dealing with them, but the best advice I have is that it would take about 10 pages of the Finance Bill. I am not saying that it cannot be done. I am saying that it shows the complexity of what is being put forward by the Opposition and their failure in the clause to recognise—perhaps they did not want to recognise—the complexity involved.
      Then, assuming that we can take care of those three matters, there is the additional problem of existing share pools. I am surprised that the hon. and learned Member for Dover and Deal (Mr. Rees) did not mention that. It, too, is an extremely difficult matter, but the clause makes no attempt to deal with it. My advice is that the Inland Revenue fails to see how it could be dealt with in this particular clause.

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      The hon. Member for Blaby regaled us with quotations from some of the representations made on the Revenue's discussion paper. He will know that one paper put forward by two members of the Bar tried to deal with the problem in relation to datum indexation—the problem of existing pools of shares. They came up with a concept called the minimum referable cost concept with two graphs to support it. But the Inland Revenue has been unable to understand what is meant by the minimum referable cost concept. Indeed, when the Inland Revenue wrote to the distinguished gentlemen who produced the paper, those gentlemen did not even supply an answer.
      I am merely saying that we are dealing with an extremely complicated area. The new clause does not begin to deal with it. It is no good the hon. Member for Blaby coming her and seeking a vote of the Committee. I accept that a debate can take place on the principle of the matter. But here we have the Conservative Opposition saying "It will be a problem next year when we come into Government." They are to vote on a new clause which, frankly, is hopelessly defective. I am surprised that they are prepared to go into the Lobby in support of it.
      Apart from the clause being legislatively defective, there is also the question of administration. Tory Members said that the compliance costs to the taxpayer do not matter. Very well. The taxpayer does not mind as long as he does not pay the tax. But there are the administration costs for the Inland Revenue. In view of the reduced yield of the tax, the actual costs of administration of this tax—the present cost being about 3 per cent. of the yield—would then be about 15 per cent.
      Tory Members will say "That just shows that these are all inflationary gains." But they must accept the consequences of that. The consequences are that they are collecting a tax under the new clause where the costs of administration are 15 per cent. of the actual yield of the tax. I suppose that they will continually leave that problem until the year after next. It is an extremely difficult problem for them to overcome.
      Those are some of the reasons why the Government are opposed to the new clause, apart from our view that indexation for one group is not fair. As I said,
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      indexation is an attempt to offer a palliative to inflation. For that reason, it tends to obscure the real problem. Apart from that, there are the complexities of introducing this kind of indexation in our tax system. That is why the Government decided against it.
      Clause 35, which we put forward and which we shall debate upstairs in Standding Committee, is not a substitute for dealing with indexation. It is not put forward as a substitute. I remind the Committee, however, that proposals put forward by the Government at a cost of £65 million this year—not a small sum of money—
      Mr. Lawson: Not this year.
      Mr. Davies: The hon. Gentleman has got it wrong again. It is a cost of £65 million this year in terms of Clause 35, because it relates to assessments that have been made.
      Mr. Lawson rose—
      5.15 p.m.
      Mr. Davies: I will not give way. The hon. Gentleman is wrong again on his figures. I do not want to make a point of it, but the hon. Gentleman should sit down and think about these matters and consult those who understand them before he jumps up.
      I shall finish my argument. The cost is £65 million in this year, with a saving of about 200 staff and a reduction of 50 per cent. in the assessment. Therefore, 50 per cent. of the assessments will be reduced this year.
      Mr. Lawson: Wrong again.
      Mr. John Pardoe: I think that it would help the Committee if the Minister replied to what the hon. Member for Blaby (Mr. Lawson), said. The hon. Member is reading from the Red Book, saying that the cost is £15 million. The Minister has said £65 million. Who is right?
      Mr. Davies: The cost in a full year is £65 million. If I said "this year", I withdraw what I said. The cost is £65 million in a full year. The cost in the Red Book is the cost this year. The cost is £65 million in a full year. There is a saving of 200 staff and as a result of the new regime there will be only half the number of assessments.

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      Against that, this is a system that is not complicated. I agree that it does not meet the problem of indexation, but that is a much wider problem. The new clause is extremely defective in many areas and I hope that the Committee will not accept it.
      Mr. David Price: I do not agree with much of what the Minister of State said. I am glad that my right hon. and hon. Friends have decided to move a new clause in favour in indexation rather than tapering since I believe that tapering raises not only much more complicated administrative issues but more complicated issues of principle which might divide us all.
      In spite of what the Minister of State said I believe that the new clause is very simple. It does not raise matters of principle and it is non-controversial. In these inflationary days—this is the real point—indexation is increasingly becoming a well established principle. This is why I intervened in the Minister's speech in relation to pay settlements and free collective bargaining.
      When I first became a Member of Parliament we had very gentle inflation. There were sound Treasury reasons for saying "Let us not write indexation into our affairs". But with current rates of inflation—I make no party point about it—indexation has to become part of our general scheme if justice is to be maintained between one citizen and another and the equitable relations between citizen and State are also to be maintained.
      The principle has already been established. I need only mention the indexation of personal allowances for taxation which the House insisted upon last year in the Finance Bill. It is true that it was against the advice of the Treasury Bench, but we did it. It appealed to the House as a whole as a matter of basic natural justice.
      Secondly, there is the whole area of public service pensions. I know that that is not taxation, but it is direct public financing. When I listened to the Minister of State I was inclined to interrupt him on this point but I did not wish to detain the Committee too long. Once we have the indexation of public service pensions
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      it becomes an accepted part of our practices.
      We have the implicit indexation of our social security benefits. The annual review is written into legislation. Therefore, the only issue involved in the new clause is whether we should index chargeable gains under a capital gains tax.
      Let me remind the Committee of what the rate of inflation has been since the present capital gains tax was introduced in April 1965. Between April 1965 and March 1978—roughly 13 years—there has been an increase in the retail price index of 228 per cent. The Chancellor spoke of a more optimistic figure for the future anticipated rate of inflation. He has been telling the country that we can expect a 7 per cent. rate of inflation within the foreseeable future. Let us not argue whether he will achieve that. Let us, for the purposes of this debate, take him at his own word.
      A little simple arithmetic will show that a 7 per cent. inflation, extended over the second 13 years of the capital gains tax, produces an increase of 241 per cent. We have, therefore, the first 13 years of capital gains tax producing a 228 per cent. increase in inflation, and the second 13 years—if the Chancellor is right—241 per cent. I say this to illustrate the rate of inflation that we are currently experiencing and are likely to go on experiencing.
      There was a time in our history when we had years of inflation and years of deflation, and over a period they roughly evened out. Between 1850 and 1914, price levels evened out to about the same. Between 1914 and 1945—say, 30 years—and through two wars, prices roughly doubled. From 1945 to 1967, prices doubled again, in another 30 years. From 1967 to 1973, they increased by a further 50 per cent. But since 1973, they have doubled, in about four years. Let us not go into the reasons. Let us just record the fact.
      The object of the capital gains tax is to put a tax on chargeable gains—that is, where an asset is worth more in real terms when it is disposed of than when it was acquired. Let us not go into the question whether we think it a good or bad tax, but simply accept that we have this tax. The only issue is a very narrow but a very important one; how do we assess chargeable gains?

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      Government supporters below the Gangway say that they would like to see the rate of capital gains tax the same as the rate of income tax. That is not the issue today. They may be right; they may be wrong. We can argue that matter, but let us have a proposition. The issue before us is whether, under a capital gains tax, the chargeable gains should be indexed. I believe that as a matter of simple equity they should be indexed.
      When they are not indexed, the capital gains tax becomes a wealth tax. When there is 224 per cent. inflation in 13 years, it does not require a degree in higher mathematics to work out that if an asset has maintained its market value and one disposes of it after 13 years, one is being taxed on inflation.
      I concede to Labour Members below the Gangway that there may be a case for a wealth tax. If they favour it, let them introduce an honest wealth tax. But let it be open and clean. Let us not have a wealth tax under the disguise of a capital gains tax, when there is no capital gain and the disposer of an asset is taxed on an inflationary gain, whereas in real terms he has made none.
      The only objection to accepting the new clause can be the objection in the Inland Revenue paper. The paper, which we all have at hand, is as to 95 per cent. of its wordage dealing with tapering, so we can ignore that. The amount written in the paper on indexation is about one page. There are broadly three points.
      First, one has to find a suitable index. I suggest that we take the RPI, which is increasingly becoming the general index of inflation. One can get into the more recondite points of statistics, but I think that we can ignore that. I think that anyone with an asset would settle for the RPI. One need not draw any broad deductions, as the Minister of State did, about an asset being, as a result, income and spendable in the year that it is realised. The RPI, incidentally, is used by the Treasury on its own inflation-proof savings certificates for elderly people, so the principle has already been accorded.
      Secondly, let us take wasting assets—leases and so on. That problem exists already under a wealth tax, if we had one, and under a capital gains tax. Therefore, there is no new issue in that respect.
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      Indexation adds nothing except a very minor addition to the problem. The problem already exists.
      Thirdly, there is the proposition that the rules for assets acquired before 6th April 1965 might make it more difficult for taxpayers—and so on. We have that problem anyway, and have to cope with it so, again, there is no new issue.
      The only issue is the choice of index, and I suggest that the Treasury has already set the example in the way that it handles indexation on savings certificates for elderly people by using the RPI.
      In spite of a certain attempt by thy hon. Friend the Member for Blaby (Mr. Lawson), who is so eloquent and such a good debater, and the Minister of State with his Welsh eloquence, to make a great matter of principle out of this new clause, I believe that there is none at all. It is a terribly simple, modest, administrative matter. Nobody need get the least bit steamed up, and I think that we could pass this on the nod and go on to further business.
      Mr. John Cronin: The hon. Member for Eastleigh (Mr. Price) made an interesting point. He said that the clause was meant to dispose of a form of wealth tax. Surely, there is no idea of a wealth tax but simply a question of a tax on capital gains, and even that is not payable until the gains are actually realised. I think that it would be a very good idea if we had a wealth tax, but I do not see how that idea could apply to this new clause.
      The hon. Member for Blaby (Mr. Lawson) made an ingenious and, at times, moving speech. There was a moment—the hon. Member was talking about small businesses—when I thought tears would come to his eyes—
      Mr. Ron Thomas: He was talking about one small business.
      Mr. Cronin: Indeed, yes. But if such tears had come to the hon. Member's eyes, they would have been a splendid example of crocodile tears. The clause might benefit small businesses to some extent, but the overwhelming majority of beneficiaries would be really wealthy people and institutions with enormous sums of money at their disposal.

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      Everyone suffers from inflation, except a privileged class. Thanks to the Government of the right hon. Member for Sid-cup (Mr. Heath), civil servants and officers of the Armed Forces have completely inflation-proof pensions. They are, of course, very worthy people, but in spite of their meritorious services I think that there is considerable resentment among a large number of people, at the particularly privileged position such persons have, I should have thought it most undesirable, in relation to inflation, to create a new privileged class of people who obtain capital gains.
      The new clause may well benefit small business men. I do not know the situation as regards small business men, but it may well be that some of them suffer some hardship. I think that it would be desirable for my right hon. Friend the Minister of State to look into this, in consultation with the Chancellor, to see what can be done to help small business men in cases where they suffer hardship in this matter.
      The new clause benefits mostly entirely different members of the community. In fact, if the hon. Member for Blaby wanted to benefit small business men, he could have reduced the scope of his clause so that it benefited small business men primarily. But the clause is absolutely wide and will embrace everyone who makes capital gains.
      Let us consider what people they are. Pension funds, of course, will be beneficiaries, and that is desirable. But the clause will benefit mostly holders of ordinary shares.
      Mr. William Clark: If I did not mishear the hon. Gentleman, he said that pension funds would benefit from this clause. Pension funds are exempt from taxation.
      Mr. Cronin: That is very helpful. But pension funds draw some of their income from sources where capital gains tax has to be paid. However, I agree that in the majority of cases pension funds do not to a large extent.
      I am trying to be perfectly fair to the hon. Member for Blaby and bring in every possible favourable circumstance for the new clause. But that exhausts my supply of favourable circumstances.
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      5.30 p.m.
      We come now to the other beneficiaries—the holders of ordinary shares. There are insurance companies, merchant banks, joint stock banks, and all the other City institutions. I cannot see why they particularly deserve to have this concession made to them. The clause would also benefit large property owners and large landowners. Why should they have a special concession from, above all, a Labour Government? Those who benefit will be the property speculators, people who buy for no other purpose than to make large capital gains.
      The hon. Member for Blaby read us a letter, which perhaps touched some of us, about a small shopkeeper suffering real hardship at the end of his days. That may well be a genuine case. But I suggest to the hon. Gentleman that his new clause will chiefly benefit such people as Mr. Harry Hyams, the owner of Centre Point—[HON. MEMBERS: "Not the owner."]He was the owner until recently. Such people would profit enormously, not the small shopkeepers. Property speculators would be able to make enormous killings as a result of the new clause. I shall be glad if any hon. Gentleman can tell me why he believes that I am wrong in this respect
      Mr. Budgen: The hon. Gentleman does not take any account of the effect of the development land tax, which was introduced long after the 1965 legislation on capital gains.
      Mr. Cronin: I am fully aware of the development land tax, but even when that takes full effect there are still enormous profits made from property speculation. There is no doubt of that.
      There are also very large profits to be made by Stock Exchange speculators. Why should they be privileged people and have this concession? One of the biggest causes of inequality in this country is capital gains. Rich men, over the years, consistently become richer and richer as a result of capital gains. The new clause is the last thing to which this Committee should give serious consideration.
      Hon. Gentlemen, including the hon. Member for Eastleigh suggested that people who buy property or shares suffer some injustice because of the effects of inflation, but even that injustice is of a

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      very limited nature. Surely all Stock Exchange prices, and perhaps to a lesser extent property prices, are based on the assumption that the purchaser will at some time in the future sell that property—in the hope of obtaining a capital gain. Surely all prices are discounted to allow for that.
      Mr. William Clark: That might be true if someone had bought shares when capital gains tax had not been introduced. But if capital gains tax were introduced, and the hon. Gentleman and I bought some shares, it would be discounted in our purchase price and the discount on the sale price neutralises that. The hon. Gentleman is on the wrong wicket here.
      Mr. Cronin: That is just the point I am making. The discount on the purchase price to a large extent offsets the ill effect of inflation on the sale price even allowing for the continuing discount. I suggest that that is eventually the case, taken over the years.
      A further point is that I believe that a large amount of money for these transactions is found by borrowing—for example, from the banks. Those sums are borrowed at a fixed interest. Someone borrows money to buy shares or property and the money borrowed loses its purchasing power steadily. Although the money that a person receives from an eventual sale loses some of purchasing power due to inflation, nevertheless the two factors tend to cancel each other out to some extent. I believe that to be true.
      The hon. Member for Blaby may laugh at this, but he has produced an extraordinarily ill-drafted clause and he might try to pay some serious attention to a simple situation like this. If the hon. Gentleman borrows £1,000 and buys some equity shares and at some time in the future sells those shares for £5,000, that £5,000 will, admittedly, be affected by inflation. But inflation would equally affect the £1,000 that he has borrowed. Therefore, to a large extent what he has suffered from the effects of inflation will be offset by the fall in the purchasing power of the money he has borrowed. This is simple arithmetic. But one must bear in mind that this new clause will have no useful effect on the economy. It will in no way help people living on small fixed
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      incomes, the worst sufferers from inflation.
      Mr. Clement Freud indicated assent.
      Mr. Cronin: I am very glad to see that the hon. Member for Isle of Ely (Mr. Freud) agrees with me on this, but he is surrounded by a vast number of Tory Members who are not interested in people with small fixed incomes. I suggest that the new clause will have no useful effect on the economy. It will produce no particular incentive to anyone who wants to work harder or who wants to use his ingenuity to help the country. It will not make the trade unions happier, or more disposed to be conciliatory about wage increases. There is no case for this new clause, except a marginal case for shopkeepers. The clause is primarily looking after the interests of the wealthy people whom the Opposition primarily represent.
      Mr. Douglas Crawford: In his opening speech the hon. Member for Blaby (Mr. Lawson) talked about this being a tax on capital. It is a tax not on capital but on capital gain. I hope that the right hon. Member will accept that definition. He did not say how this £350 million was to be funded. I do not know whether the Conservative position is that there should be further public expenditure cuts but, be that as it may, he did not explain how the £350 million was to be found.
      I should have thought that the purpose of a Budget was to seek some sort of social and financial justice and also to create a tax system which would stimulate the actual creation of wealth—wealth which is created through motivation to work, and motivation to work is created by a fair system of rewards. That is why the SNP last week voted for the widening of the tax band at the middle level to assist middle management and others whom we consider to be the real creators of wealth and employment. But it is also the reason why we did not support the Conservatives, who sought to reduce the rates of tax at the very top level. I suggest that the new clause comes into the latter category.
      The Government have done something in the context of capital gains to mitigate the effects of CGT at the lower levels,

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      but my party and I do not believe that the new clause will help the creation of wealth or stimulate the work motivation of individuals. Indeed, it could be argued that the new clause might operate against the motivation of individuals to work to create wealth. If there is to be tax relief, it should be primarily on earned income and not on unearned income.
      My party is against the new clause because it does not assist the creation of the country's wealth. It is inequitable, and if a country's wealth cannot be created there will be insufficient wherewithal to be used for the creation of social engineering—items such as kidney machines and hospitals. The Scottish National Party will therefore vote against the new clause tonight.
      Mr. Ron Thomas: This again, in my judgment, is a clear example of the Tories serving the class interest that they are here to represent. I wish that they would be honest and tell us exactly what they are about. There is no doubt that the new clause is designed basically to assist the wealthy in our society.
      I feel sad that certain hon. Members—for example, the hon. Member for Perth and East Perthshire (Mr. Crawford)—should have got caught last week to the extent that they gave massive handouts to those earning over £10,000 a year and gave £5,000 to those earning £50,000 a year. These are the great innovators and entrepreneurs about whom we heard.
      It would seem that the Tories are determined in this Budget to give approximately £1,000 million to their friends. My right hon. Friend will tell me if I am wrong. If the Tory Party had had its way completely last Wednesday and the previous Monday, I understand that the bill would have been £780 million. Is that right?
      Mr. Denzil Davies indicated assent.
      Mr. Thomas: Thank you. The Tories now want to give away another £350 million, so I am underestimating. We are talking about £1,100 million—over £1,000 million—that the Tories want to give to their friends. We are not given any indication where the £350 million under this proposal is to come from. All we are told is that, if elected, the next Tory Government will deal with it. We know that
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      they are intent on making all kinds of cuts in public expenditure. We know that in the many areas where the Government have given help to certain firms and industries, the Tories would have let them go, unless they were in their own constituencies. When their own constituencies are affected it is a different kettle of fish altogether. They send the begging bowl round at practically every Question Time to the Department of Industry and other Departments.
      In addition, as I understand the statistics of the Budget, 57 per cent. of the total tax handouts on the Government's proposals are to go to those earning over £4,500 a year, which is the average wage. Well over half of the Government's proposals for tax handouts, therefore, were going to those who were earning more than the average wage.
      Given the Tory proposals, including this new clause, it would be 70 per cent. If we add the £1,100 million that they want to give to their friends to what has been given anyway, about 70 per cent. of the total tax handouts will go to those earning more than £4,500 per year. In any event, it will be considerably greater than the Government's 57 per cent. because of the measures adopted on Monday and Wednesday of last week.
      This is a pure example of naked class interest. I wish that the Tories would make this clear instead of trying to wring our hearts about some little shopkeeper who saves up all his pennies to buy a shop, goes into the shop and then has to sell it. If the Tories want to help such people, why not put down a specific amendment to try to deal with that kind of situation? It will not be easy, because such a proposal would encourage people to rush in and out of business and to make losses. They would be better off if they made losses in certain cases. It would not do much for this great innovative and incentive challenge which we are told the Tories' taxation system would defend. Let us get it clear that this is a piece of naked class interest.
      5.45 p.m.
      I am sure that the right hon. and learned Member for Surrey, East (Sir G. Howe) will not be surprised to learn that on capital gains tax I have not had one letter from any docker, aircraft or other

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      worker who creates the wealth in my constituency. I do not know whether the hon. Member for Perth and East Perth-shire has had any letter from the real creators of wealth in his constituency. I certainly have not. If I were to mention capital gains, I am sure that most working people would not know what I was talking about.
      The hon. Member for Blaby (Mr. Lawson) and others suggested that this was some kind of wealth tax. I do not know whether the Royal Commission reports are to be believed, but the November edition, like the others, gives some indication of the total wealth in this country. On page 69 of the report of November 1977 there is a table which gives the total personal wealth in this country. It gives the
      "Numbers of identified wealth owners and amounts of net wealth, by range of net wealth."
      The total estimate of personal wealth in this country is £190,000 million. Capital gains tax bring in £400 million. That is a rate of tax of 0.002 per cent. What a wealth tax: We can work it out for ourselves. We are told that the total wealth is about £200,000 million, and this tax brings in £400 million. If my arithmetic is wrong, I shall apologise to the Committee. What a wonderful wealth tax we have in this country.
      The Labour Party has for decades tried to get across the concept that capital gains are just as much income as any other form of income. The hon. Member for Eastleigh (Mr. Price), in a very reasoned speech—as against the speech made by the hon. Member for Blaby; I listened to him very closely—was trying to say that that particular chunk of income should be treated differently from any other. He was suggesting that perhaps there was something in the indexation of wages. Indeed, he suggested that in some areas workers get wage increases which are equivalent to the increases in the retail price index. But the point is that they pay tax on them. Workers have taken a massive cut in their standards of living. I do not know whether the hon. Gentleman takes the same approach as I do, but if we accept that capital gains are just as much income as income from rent or anything else, because they can be spent, they should be treated as such, and the rate of tax should be the rate for
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      that level of income. I do not see any argument against that.
      Mr. David Price rose—
      Mr. Thomas: If I may finish this point, I shall certainly give way to the hon. Gentleman. If we say that the allowances are not enough, that comes down to increasing someone's personal allowances before he pays tax. But if it is part of his income, it should be treated as income, and income tax at the appropriate rate should be charged on it.
      Mr. David Price: The hon. Gentleman is entitled to argue from his point of view that we should have the same rates for capital gains tax as for income tax. But that does not dispose of my argument, which is outwith his argument, that a capital gain should be corrected for inflation. Therefore, it should be a real gain. We can argue whether the rate should be 100 per cent. total confiscation or 10 per cent. That is not the issue. The simple issue is: what is the chargeable gain for the purpose of capital gains tax? I am sure that the hon. Gentleman is with me on that point.
      Mr. Thomas: The hon. Member can tell me whether I have understood his point. Let me draw a comparison with wages and salaries. The logical conclusion of what he is saying is that those who get a 14 per cent. increase in earnings in the current year will pay no tax on 10 per cent. of it, and will be taxed only on the remaining 4 per cent.—
      Mr. Price: That is not the same thing.
      Mr. Thomas: I say that a capital gain must be treated just like any other income.
      Mr. Price: The hon. Member has got it wrong. Capital gains tax is levied on the basis that over a number of years a capital asset increases in real value and that the increase should be taxed. The proposition is not that the paper value increases and should therefore be taxed. On incomes, the House decided last year to index personal allowances. That was in accordance with the point that the hon. Gentleman is now seeking to make.
      Mr. Thomas: That is not the same thing. All of us receive an indexed personal allowance whether or not we receive a capital gain. We are therefore all equal

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      on that score. The hon. Member for Eastleigh wants those who receive a capital gain to enjoy an additional indexation. I know of no legislation which provides for the taxation of real increases. Capital gains tax is applied on the sale of an asset where the sale price is greater than the purchase price. The figure will not be adjusted according to some index of retail prices or the like, but that is what the hon. Member for Eastleigh is arguing should happen.
      Mr. Ridley: May I suggest that the hon. Member for Bristol, North-West (Mr. Thomas) studies the Order Paper, where he will see just what the clause is intended to do?
      Mr. Thomas: I am taking up the point that the hon. Member for Eastleigh was making, as the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) would know if he had been listening, which I doubt. The hon. Member for Eastleigh was referring to taxes on real gains. Until now tax has been levied on all gains. It is a nonsense to suggest that a person with a total income of £10,000 a year, of which £1,000 is a capital gain, should pay one rate of tax on £9,000 and a completely different rate of tax, or none at all, on the balance.
      On that basis I would insist that a worker who had a 14 per cent. increase should have that increase indexed, in addition to the indexation of his personal allowance. He should not pay tax on 10 per cent. of it, but should pay the same level of tax as capital gains tax, which is 30 per cent., on the remaining 4 per cent.
      Capital gains tax was introduced in 1965 by the then Labour Government. There was growing evidence that people were finding ways of converting income into capital gains which until then had not been taxed. Those who paid high rates of tax did not want dividends; they wanted free shares or scrip issues, and so on. In that way they could employ a tax avoidance technique by obtaining untaxed capital gains. In the event, even those gains are now taxed at a lower rate than income—at 30 per cent. No one has ever explained to me why that difference should exist.
      The right hon. Member for Down, South (Mr. Powell) takes a particular
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      interest in these matters. Does he agree with the suggestion in an article in The Guardian that the differential between capital gains tax and the tax on other income distorts investment decisions? While that arrangement might be best for the individual, it is certainly not best for the community. In addition, the article refers to possible damage to the economy and so on.
      Not for one minute would I support the amendment, which is a plain example of the Tories serving the class interest that they were sent here to represent. That is fair enough. However, I am not happy with the Government's proposals either. I do not see why we should hand out £600 to someone who makes a capital gain of £6,000. The Government's proposal will do just that, but in addition will apply retrospectively to last year, giving a total figure of £1,200 which is in addition to the £750 that such people will get from the Budget anyway.
      The Government's proposals are an erosion of the concept that capital gains should be treated as income. Even at this late stage I ask them not to proceed with the clause, even though the total sum involved may be small. There can be no justification for giving such a handout. If the Government did as I suggested they would at least claw back a little of the revenue lost when the Tories and their allies forced through the income tax amendments last week.
      Mr. Budgen: There is a greater measure of agreement between the hon. Member for Bristol, North-West (Mr. Thomas) and my hon. Friend the Member for Blaby (Mr. Lawson) than appeared to be the case when the hon. Member began his speech. He concluded by advocating some form of more comprehensive indexation. He was saying quite reasonably that we have indexation in respect of capital gains and that we must therefore have some element of it in respect of taxation of income. I am sure that my hon. Friend would agree with that.
      However, the attack that has been made upon my hon. Friend is unjustified. His proposals for the indexation of capital gains are not presented as a class measure, although that would be perfectly justified in this Committee. There would be a perfectly reasonable case for saying that the element of taxation on those with

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      large incomes and wealth is too high. But the proposal is not advanced on that ground. My hon. Friend favours general indexation. He sees it as a method of mitigating for all classes and persons the harsh effect of inflation.
      My hon. Friend at first restricted his argument in favour of the clause to narrow grounds. He said that there was a problem in respect of capital gains, and there is. He argued persuasively that capital gains tax in its present form is nothing more than a disguised form of wealth tax. That is correct. He went on to argue that there were already enough taxes on capital. But he did not give an entirely comprehensive summary of all the taxes levied on capital. He pointed to the investment income surcharge, to the capital transfer tax and to stamp duty. He failed to point out the introduction of the development gains tax and the development land tax.
      6.0 p.m.
      My hon. Friend drew a proper distinction between a so-called real gain, as he put it, and a paper gain. He said that it was this taxation upon the paper gain that concerned him and led him to believe that indexation was the proper way to deal with this anomaly. I do not describe it as an injustice because I do not know in these circumstances what is just or unjust. I describe it as an anomaly.
      However, the fact is that when capital gains tax was introduced back in 1965 there was some truth in the point made by the hon. Member for Bristol, North-West that the great tax game was to try to convert income into capital. Once one has done that, however, it is of benefit to oneself only if one uses it.
      It is true that in the past the principal benefit derived from being able to convert a large income into capital and then pass it on to someone else before the seven-year period was up was that one got the benefit of the legal tax avoidance that was available under the old estate duty legislation. But here the situation has changed. We no longer have a voluntary inheritance tax. We have the capital transfer tax. If we are to have any system of capital taxation on transfer, the general idea of capital transfer tax is fairer, in my view, than the old system of totally avoidable death duty.
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      I argue immediately about the provisions, the exemptions and, most of all, the rate. But personally I much prefer the concept of an even-handed tax upon all forms of transfer.
      The case that existed in 1965 has been eroded. It has been further eroded by the harsh development land tax, because, in respect of all large gains, that starts at 80 per cent. and it is said by the Government to be likely to rise to 100 per cent. in the future. The Tory Party has said that it is in favour of the continuance of DLT—not, of course, I emphasise, at the present level, but at some level. We can argue about whether it should be 40 per cent. or 50 per cent.
      Therefore, I argue that, whatever the case may have been in 1965 for capital gains tax, that case has been eroded. It has been further eroded also by the existence of the Income and Corporation Taxes Act 1970 which, by Section 488, makes artificial transactions in land taxable as though they were income. It has been further eroded by the fact that a single transaction may now be taxed as income if a person is held to be trading in respect of that single transaction.
      I would argue, therefore, that the proper approach for the Tory Party ought to be to give a firm commitment either to phase out or, better still, to abolish capital gains tax. The sooner that is done, the better. If it be that we have not got the courage to say that in bald terms in the new circumstances, so long after 1965, it is not right to pretend—I do not say that my hon. Friend pretends—that it is not right to say that indexation is the only way of dealing with the phasing out of capital gains tax.
      It can be done by tapering, though I accept that when dealing with tapering it is technically very difficult. It can be done also by the system of reliefs which has been introduced in Clause 35 and following clauses in this Finance Bill. I suspect that it may not be possible baldly to say in a pre-election period that we are in favour of abolishing capital gains tax. But these anomalies, the anomalies argued about by the shopkeeper, can be dealt with by the sort of reliefs, on a vastly extended scale, that are so tentatively introduced in this Bill.
      However, in the second part of his speech, my hon. Friend the Member for Blaby stated what I know to be his firm

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      intellectual belief. He is in favour, as the hon. Member for Bristol, North-West turns out to be, of general indexation. I should just like to state very shortly my belief that general indexation is neither possible nor desirable. I shall deal first with why it is impossible.
      It is impossible because although theoretically, of course, it is possible to index both all payments by the State and all payments the other way—receipts—it is not possible in a free society to order every private citizen to index all the contracts that he has with another private citizen. It is not possible, most of all, because one would have to deal with it in respect of retrospective payments. How would one index payments that have been made in the past? One would have to index them retrospectively. One would have to say, for the sake of argument, "I borrowed £100 from my granny 20 years ago." However, when one came to pay back one's granny, the State would have to say "We order you retrospectively to repay to your granny an additional sum that takes into account the change in he RPI"—or whatever other index might be introduced.
      It would be impossible because, no matter how sophisticated we in the House of Commons might be in introducing new clauses such as that before the Committee—and no doubt my hon. Friend the Member for Blaby would say that if I were slightly more numerate I would be able to understand the new clause—I very much doubt whether Granny Smith—
      Mr. Lawson: What the hon. Member for Blaby would say is that what his hon. Friend is now entering into is a fantasy that bears no relation to the proposition that I was putting forward.
      Mr. Budgen: It is not a fantasy. What I am trying to do is to say that one can have total indexation and that that may introduce some appearance of honesty in contracts, but one cannot have partial indexation. It is impossible to argue for indexation only in State transactions without introducing indexation in transactions between private individuals.
      Mr. Ron. Thomas: The point I was trying to make was that if one cannot have—I agree with the hon. Member—
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      indexation for all other forms of income, it is quite wrong to have indexation for a particular form of income—namely, capital gains.
      Mr. Budgen: The hon. Member emphasises the next point that I wish to make. That concerns whether it is desirable for there to be total indexation or even partial indexation. As my hon. Friend the Member for Eastleigh (Mr. Price) says, we already have a high degree of partial indexation. We have indexation in respect of State pensions. Let us be clear about it. There are very many right hon. and hon. Members on the Opposition side who are highly sceptical about whether we should have indexation of State pensions.
      Mr. J. Enoch Powell: Or of Members' salaries.
      Mr. Budgen: There have been many in the Conservative Party who have expressed grave concern about the indexation of State pensions. In Committee and in the House we often talk about the grave difficulty of persons on low wages finding almost no advantage in working because of the incidence of tax and the high level of State benefits. Those State benefits are now indexed.
      There are those on this side of the Committee—I am one of them—who wish to consider whether those benefits should be indexed. However, there will be no intellectually sustainable case for considering either State pensions or State benefits if we are also introducing indexation in respect of capital gains. Therefore, it was undesirable as well as impossible to go further along the road of indexation.
      My hon. Friend the Member for Eastleigh says, rightly, that we already have a great measure of indexation. He argues, rightly, that effectively in wage negotiations there is a high level of indexation. He points to the indexation to which I have referred in public sector pensions, but that merely shows a reason why this country has not felt a greater sense of outrage at the very high rate of inflation that we have suffered in recent years. For instance, if there were not relief from the capital gains obtained on principal private residences, would there not be a great deal more outcry against inflation? If there was not also tax relief on mortgage interest payments,

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      which is tax relief against an inflation-proofed asset, would there not be more of an outcry against inflation?
      I cannot prove that if we mask the symptoms of inflation we shall thereby erode the popular will to defeat inflation. These are psychological factors that we either feel or do not feel in our bones. I was brought up in what is now called a one-parent family. We lived on a fixed income. As a boy, I understood clearly the effect of those low rates of inflation. If I have a strong emotional feeling in politics, it is to see inflation squeezed out of the system. Yet at present I know that in the change of my fortunes I am now a small farmer who is very heavily over-geared. As every month goes by, I see the money value of my assets increasing and the real value of my debt reducing. I know also that as a Member of Parliament I am at least partly dependent on what is effectively an indexed wage from the State. I know that if I am not careful, my emotional attitude towards inflation changes. I say that I can live with it. We can all live with it.
      Unless there is some pain in inflation, the popular will to defeat it will be gone. In a great inflation there will always be those who are clever, able and strong enough to get on the right side of inflation, but the fight against inflation is the fight against real injustice. It is the fight against the arbitrary unjust redistribution of assets.
      Mr. Pardoe: I agree entirely with the hon. Gentleman's indictment of inflation. Most of us in the Committee would agree that inflation has to be beaten. However, his arguments against indexation were slightly odd, coming from someone who, I have always thought, takes the monetarist viewpoint. The monetarist viewpoint is increasingly common on both sides of the Committee which, unfortunately, like much of the rest of the Western world, is in the grip of an evil guru.
      The evil guru himself, Mr. Friedman, states explicitly—
      Mr. Budgen: The hon. Gentleman must not believe everything he reads.
      6.15 p.m.
      Mr. Pardoe: Mr. Friedman says that general indexation is the sine qua non of his whole proposition for defeating inflation. He does not say that he can
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      defeat inflation without general indexation. He says that the only thing that makes his policy for defeating inflation politically and economically possible is general indexation.
      Therefore, those who argue the Friedman policy for dealing with inflation, of acting on the money supply, but deny that we have to go along with his proposals for making it politically possible, are living in cloud-cuckoo land. The only way in which one could make it politically possible to follow Friedman would be to have general indexation. However, I agree that general indexation would be impossible. Therefore, I believe that Friedman is impossible—but I arrived at that conclusion by a different course.
      One of the honest remarks that the hon. Member for Wolverhampton, South-West (Mr. Budgen) made was that perhaps we cannot abolish capital gains tax in an election year.
      Mr. Budgen: No, I did not say that.
      Mr. Pardoe: If the hon. Gentleman reads his speech, he will see that he implied that. If that is so, the amendment comes near to abolishing capital gains tax. The hon. Member for Blaby (Mr. Lawson) thought at the start of events that it was coming nearer to abolishing capital gains tax than it really is.
      Mr. Ron Thomas: It is 90 per cent.
      Mr. Pardoe: It is not 90 per cent. because we have ignored in the Red Book the revenue from corporation tax, which is dependent upon capital gains tax. Therefore, as the Minister made clear, the actual yield that we are dealing with is about £480 million, if we include the corporation tax effects, and we have a new clause which would cost about £350 million. Nevertheless, it is abolishing a pretty large slice of capital gains tax. It is abolishing three-quarters of it.
      Some Conservative Members might well consider, as we all have to, whether this is the moment to abolish capital gains tax, though I would go nearer to the hon. Member for Wolverhampton, South-West on that point than on his other arguments.
      I disagree fundamentally with the hon. Member for Bristol, North-West (Mr. Thomas) about indexation. He has got it wrong. The argument about indexation

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      of the tax system as opposed to general indexation is about parliamentary power and control of the Executive. That argument should appeal to the Tribune Group, as it must appeal to a Liberal Member or to any parliamentarian. The first reason for indexing the tax system—I believe that the principle of doing so is right, proper and necessary—is that taxation should be what Parliament decided and intended. Capital gains tax was intended to tax the increase in the capital value of an asset.
      Inflation was very much lower when Parliament entered into that undertaking. That was one of the reasons, as the hon. Member for Blaby would point out, why the Conservative Government did not index capital gains tax when they were in power between 1970–74.
      Mr. Ron Thomas: I have always understood that Parliament introduced capital gains tax because it was convinced that realised capital gains were the same as income.
      Mr. Pardoe: That, funnily enough, is not the reason why Parliament introduced capital gains tax. The reason why Parliament introduced it is not the essence of the argument. The essence of the argument is that Parliament intended it to be a tax on gains at the then rate. Inflation has changed the balance of that. If Parliament wants to tax capital gains, it should tax the real gains. If they want to achieve £480 million of revenue from gains, the Government should do so by coming to the House and saying "This is the rate at which we have to tax capital gains in order to yield £480 million in a year." Parliament in its wisdom can then decide whether that rate is right or wrong.
      Surely, the whole argument is about parliamentary control. It is wrong that, Parliament having made a decision on the appropriate rate in those circumstances, inflation should be allowed to change that real rate and that Parliament should not be allowed to do it for itself. That is why I believe that, in principle, indexation is right and proper.
      Mr. Denzil Davies: Why cannot Parliament change the rate? The hon. Gentleman is talking as though the rate were laid down in 1965 and is immutable.
      Mr. Pardoe: Parliament could change the rate, but that does not alter the problem. The whole basis of the argument is that we should be taxing the real gains, just as we should be setting the real level of personal allowances right through the tax system, and it is up to the Government to come to Parliament and change the rate. Parliament cannot increase the rate of capital gains tax. Only Governments can put forward an amendment to do that. If Parliament believes that the increase in capital values should yield a specified amount of revenue, we should charge the appropriate amount on real gains. On the principle of indexation, it should be introduced as soon as possible, right across taxation.
      The Minister got it wrong when he said that if indexation were across the board, we should be back in the situation we were in before and no one would gain. That is a gross distortion of the argument. The whole point is that inflation does not affect all people equally. It distorts the economy. That is one reason why the hon. Member for Wolverhampton, South-West and I would argue that inflation must be beaten.
      It is far better that Parliament should distort if anyone is to distort. I suppose that one would then call it discrimination in favour of one section of the economy rather than another, but to allow inflation to do it haphazardly, without Parliament deciding whom it wants to gain and whom it wants to lose from the economic process, is an abdication of Parliament's power. It is not true to say that indexation across the board would put us back to the situation that we were in before. It would alter the situation fundamentally from what we have under current rates of inflation.
      The hon. Member for Bristol, North-West rightly introduced into the argument the fundamental question of why we distinguish between income and capital gains. Parliament introduced capital gains tax for short-term gains only, and those are certainly much nearer to being income than are long-term gains, in reply to public demand. There was considerable public concern at every level of society about, in particular, short-term speculative gains on the stock market. The public does not distinguish between that sort of gain and income.
      Mr. Budgen: Under the present law, that single gain may be taxed as income.
      Mr. Pardoe: That is true, but when the tax was introduced the public did not make that distinction. Since then, because of the tax applying in a different way for long-term gains, we have arrived at a situation in which we try to distinguish between capital gains and income by taxing at a different rate.
      By far the most sensible formula, if we are to go on with capital gains tax, would be to index it but to count the real gains as income for income tax purposes and include them in the income tax schedules. That would be a sensible reform.
      The hon. Member for Loughborough (Mr. Cronin) got it wrong when he said that capital gains tax was the cause of inequality. It is not. The cause is the failure of inheritance taxes and gifts taxes to redistribute wealth adequately. That is where the greatest fiscal failure has taken place in tax policy since the war. I do not believe that it is capital gains tax which has caused this inequality but rather the ability to pass on wealth.
      Mr. Cronin: The problem is entirely an acoustic one. I said that capital gains was the major cause of inequality.
      Mr. Pardoe: All right, but that does not alter the argument, except that the word "tax" does not need to be there and does not make sense if it is.
      Capital gains are not the cause of inequality. It is, largely, inherited wealth which is the cause of inequality and therefore, we need to reform our capital taxation and decide first whether we are to tax the income from wealth or the wealth itself. We have decided that it is better to tax the wealth itself than the income from it. Clearly, wealth that is productive is, generally, good for society and wealth that is not productive and does not produce an income is lazy wealth and is not in the interests of society generally.
      Having decided that we should tax the wealth itself—and that argument is unanswerable—we have to decide how it should be done. We can have either an annual wealth tax or tax the wealth at the point of transfer. If we choose the latter course, it makes much more sense to tax the person who receives
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      a gift or bequest than to tax the estate that gives it up. That would be a redistributive accessions tax. It is a thousand pities that the Chancellor of the Exchequer, having been persuaded in Opposition that an accessions tax was infinitely preferable to a capital transfer tax, was persuaded by the Inland Revenue to change his mind. That is a great pity because we would have had an accessions tax, which would be the best way of taxing gifts or wealth at the point of transfer.
      The Government have not accepted indexation or tapering in the Finance Bill but they have made a significant change in the administration of capital gains tax and the incidence of the tax. I wholly welcome that change. It is not indexation and no one could claim that it is. It seeks only to mitigate the effect of capital gains tax, but let us be under no misunderstanding about the effect of what the Government have done. In an article in the Financial Times on 12th April, Professor Cedric Sandford and Adrienne Gleeson said:
      "The upshot of the proposed changes is a substantial reduction in capital gains tax liability for individuals whose annual net gains rise to quite a sizeable figure, the concession being greater for high income receivers than for basic rate payers, since the latter benefit from the replaced 'alternative charge'."
      There is one problem that I hope the Government will take note of and will return to. Capital gains of £1,000 a year are free of tax. It is comparatively simple for the negative investor on the stock market to arrange his finances so that he makes that sort of gain every year—if he makes a gain at all.
      Why should we discriminate in favour of the person who is able to make a gain of £1,000 a year but not in favour of the person who is able to make a gain of £5,000 on an asset held over five years? Surely that person may be a more positive investor than the man who is going in and out of the stock market in order to make £1,000 a year tax-free.
      I fear that we shall see all sorts of strange devices cooked up in order to ensure that no one makes a gain of £5,000 over five years but that it is somehow converted to £1,000 a year. I see no reason for the Government not to introduce a simple amendment that would enable the £1,000 a year to be held over and credited for as long as a person holds the

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      asset so that, if he buys an asset this year for £5,000 and sells it in five years' time for £10,000, that should count as £1,000 a year and be tax-free.
      The hon. Member for Blaby knows that I accept his arguments for indexation in principle, but in the end the decision comes down to a question of priorities and what we do with £350 million. The hon. Member will say that it is next year and that that is easy. It is always easy to give away money next year. But we shall need to reduce income tax next year as well, whether the hon. Gentleman's party is in Government or not, and £350 million represents 1p off the standard rate. It is a great pity that the Conservative Party, when it refused to support the Liberal Party's suggestion for a 2p reduction in the standard rate, did not say that it could manage only 1p this year but that it would take off 1p next year as well. It did not say that and it did not commit itself in any way to doing that. The Conservative Party is now giving away £350 million of the money which it could use next year to reduce income tax, at the lower level, at the higher rate, in the middle or wherever it might be.
      6.30 p.m.
      I believe that the priority in tax reform is pre-eminently the reduction—and the substantial reduction—of income tax. I do not think it right, therefore, to mortgage funds that will be available for that purpose next year by committing ourselves to a partial reform of the capital gains tax, which is only one small part of capital taxation this year. I believe that we should go for a wholesale reorganisation and reform of capital taxation. It would not reduce the total revenue available. The reforms that I have advocated would actually increase the total revenue available.
      I do not think that this is the right year in which to spend this kind of money—nor, indeed, next year—in fiddling around with the capital gains tax when the money could be used to much better economic purpose by reducing the income tax for every income earner in this country.
      Mr. John Wakeham: We seem to have established in the Committee that in the case of capital gains tax
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      somewhere between 75 per cent. and 90 per cent. of the gain is inflationary. It seems to me that, if we are to go on with the present system, we might as well face up to some of the economic consequences of that fact, or else we ought to alter the position on the lines of the new clause..
      The first consequence of going on as we are is to recognise that anyone wishing to maintain the real value of his capital must speculate. He must put his money into something which is highly risky and probably not very desirable socially. That is one of the very few ways in which to keep up with inflation.
      Secondly, what are we saying to the person who might be inclined to put his money into sensible long-term investments—plant and machinery, factories and businesses—which most of us would consider to be desirable in creating more jobs? We are almost certainly inviting him to incur, over the period of his investment, some sort of capital loss in real terms.
      Thirdly, we are saying that it is much better to seek out that sort of investment which gives a tax-free capita] gain—for example, life policies, Government stocks and so on. If we are to discriminate—as we do at the moment—in favour of institutional investors in that sort of area, particularly in regard to life policies, the effect of this, frankly, is to distort the investment market, because those investments generally tend to find their way back into the major companies in this country and not, for very good practical reasons, into the small businesses. By carrying on in this way, therefore, we are deliberately encouraging the investors to discriminate, whether they realise it or not, against small businesses.
      Fourthly, we are saying to someone who has investments, which it might be right for all sorts of considerations of economics to switch into something else, that he should think very carefully about doing so because a real chunk of his capital will be taken away. This means that attempts to get investment into the right source—the source which will grow and be good for the country—will be distorted by a view of the capital gains positing away part of the real capital of the investor by taxing the inflationary element.

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      Fifthly, whether or not we argue, as the hon. Member for Bristol, North-West (Mr. Thomas) did, that it is only a tiny, weeny wealth tax, it is in fact a form of capital levy of one sort or another if year by year, by capital realisation, we take away some part of the real capital fund.
      There are, therefore, several very serious economic reasons why it is not good for the business, the industrial and the commercial life of the country that we should distort our investment decisions in this way by a capital gains tax which creates taxation on inflation.
      I would go quite a long way with the Minister of State in his references to the Carter Commission. I am by no means less radical than some people on what I consider should be taxed, but what I believe is that, for very sound economic reasons—reason other than simply the personal convenience of the taxpayer—although that is a very important consideration—we have to recognise that if we continue in the way we are going we shall have to face some of these very serious problems. That is one of the reasons why I shall support the new clause, which, I believe, goes a substantial way towards dealing with them.
      Mr. Powell: It has been a curious as well as an interesting debate in Committee on the new clause, because about halfway through—partly thanks to the hon. Member for Bristol, North-West (Mr. Thomas)—the Committee discovered that what we are really debating is not amendment of an existing tax but the replacement of one tax by a quite different tax. Thereupon the debate switched from the previous rather arid attempt to define a capital gains tax to the more practical discussion as to whether we ought to move from one sort of tax to aother.
      Mr. Anthony Nelson: Would the right hon. Gentleman agree that the tax has already become a different tax from that which was intended?
      Mr. Powell: The hon. Member is on the same line of thought as I was intending to pursue. I was about to say that the crystal which the Minister of State injected into the debate was his disclosure that, on the Treasury's estimate, three-quarters of the tax to be expected this year—I think he was talking about
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      this year—is a tax upon inflationary gains: that is to say, 75 per cent. is a tax levied upon that part of the sums coming into taxation which represents the consequences of past inflation.
      I would myself be inclined to think that, even if that estimate is true in one particular year, it is an underestimate, looking at it more broadly, because there are three—and three only—form of capital gain. One is the major forms that we are primarily discussing—that which simply represents the fall in the value of money.
      The second form is a relative gain—namely, the fact that one asset has become relatively more valuable. But that sort of gain is always equal and opposite to a corresponding loss, for it is a truism that all relative increase in value is offset by an equal relative decline in value somewhere else.
      The third and only remaining form of capital gain is one which reflects the general accretion of wealth; but there has been precious little general accretion of wealth in this country in the last five years.
      If capital gains tax, excluding inflation, is run over a period of time, the fact that relative gains and relative losses balance will show up in a disappointingly and surprisingly small yield for the tax. Therefore, from its inception, whatever the illusions that were entertained about it, the capital gains tax was a tax which looked for its prime source of revenue to the taxation of illusory or inflationary gains.
      Indeed, it is doubtful whether we should have engaged in a capital gains tax at all but for the phenomenon of inflation. Certainly, we should not have done so but for the combined phenomena of inflation and high marginal rates of taxation which put such a premium upon methods of converting income into capital that the question naturally arose "Cannot we catch that capital when in due course it is liquidated?"
      There are two ways in which we can face the situation which our experience over the last 15 years has disclosed. One is the method adopted in the new clause. We can attempt to drain out of the capital gains tax the inflationary element. I have an objection of detail as well as

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      an objection of principle to the attempt to do that. The objection of detail is that we all very well know the significance of the retail price index when we compare one year with another, or when we are dealing with a relatively brief run of years. If, however, one has to use the retail price index as a measure of inflation over 20 years, one really is applying an inappropriate instrument to one's purpose.
      The retail price index, even for the purpose for which it was invented—to deal with matters which affect the standard of living of the ordinary family—has periodically to be adjusted, with a consequent break which deprives it of its validity over a long period of time. In fact, every index suffers from an inbuilt contradiction, which is that if its base is consistent it is wrong, because a consistent base becomes increasingly out of date, but if its base changes it is also wrong—for what is the point of an index with a different base? We can laugh off this difficulty when we are dealing with two, three, four or five years at a time. We cannot laugh it off when, as in this new clause, we are prepared to apply it over decades. There simply is no objective method, in terms of decades, of measuring inflation. We know broadly that inflation has taken place, but by the very nature of the phenomenon itself we are incapable of measuring it. That is my technical objection.
      My more serious objection is allied to that of the hon. Member for Wolverhampton, South-West (Mr. Budgen), namely, that we are seeking to reform or, indeed, alter a tax by means of institutionalising inflation, for all indexation implies an acceptance of the phenomenon of inflation and the building of that phenomenon into the structure of our law, be it the tax law or whatever. I share the hon. Gentleman's objection to our undertaking in a branch of the law what is, in effect, an institutionalisation of inflation.
      In an earlier speech, an hon. Member expressed what is a very general assumption but is, I believe, a fallacious assumption that is, that although we were mistaken 10, 15 or 20 years ago, when we thought that inflation rates of more than 2 or 3 per cent. were impossible, we are not mistaken now when we suppose that,
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      having experienced inflation rates of 7 per cent., 10 per cent., 15 per cent. and 20 per cent., we shall go on experiencing those rates in the future. I believe that the one extrapolation is as fallacious as the other. I do not believe that we can go on living with 7 per cent. per annum inflation any more than we could go on living with 15 per cent. per annum inflation. Whether we like it or not, and whether the rest of the world which has more or less been engaging in the same jolly game likes it or not, we shall find that, however painful, we have got to get inflation out of our system or, rather, out of our methods of Government.
      6.45 p.m.
      Mr. Peter Hordern: Many of us share the right hon. Gentleman's hopes in that direction, but we see precious little evidence of that happening with the Government increasing the supply of money as rapidly as they are at present. However, that is not the point that I wish to make. The point is on indexation. Surely the principle of indexation has already been allowed by the Government in allowing for stock appreciation. Indeed, had not stock appreciation been allowed two or three years ago, many companies in British industry would by now have been bankrupt. Therefore, the principle is already allowed. Does not the right hon. Gentleman think that, having allowed that principle, it should be further extended to the indexation of capital gains?
      Mr. Powell: I would certainly not accept that because, in one sector or another, we have found ourselves forced to admit and allow for, and attempt to measure, the consequences of inflation, we ought therefore to generalise any such allowance and that there is an automatic ground therein for extending that procedure from one sphere of taxation or legislation to another.
      The main point to which I was coming is that if it be so that, with bumps along the way, we shall discover that the depreciation of money which even 7 per cent. compound inflation represents is intolerable, capital gains tax will cease to be important in our fiscal pattern. Of course, how soon a given fall in the rate of inflation would reduce the yield of capital gains tax must depend upon something which no doubt the Treasury knows

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      but which is not given to other mortals, namely, the past inflation profile of the capital gains which are coming into tax in a particular assessment year. But, whatever that profile may be, as time goes on, with the fall in inflation, and maybe the disappearance of inflation as an important phenomenon, the capital gains tax will become a very minor revenue yielder indeed. It will certainly disappoint the hopes—here I am with the hon. Member for Cornwall, North (Mr. Pardoe)—of those, like the hon. Member for Bristol, North-West, who believed that capital gains tax would be an instrument of redistribution of wealth.
      Of course it is an instrument of redistribution of wealth between one poor bounder and another, because the man who has made a capital gain gets less benefit from that gain—part of it being taxed away—than he otherwise would. But it does not bring about a distribution of wealth as between classes—as between the owners of property and the proletariat, for example—because with real gains balancing one another automatically no such effect can be produced by a capital tax upon real gains. It is, therefore—
      Mr. Ron Thomas rose—
      Mr. Powell: I should like to finish my sentence and then I shall willingly give way to the hon. Gentleman. Indeed, I was complimenting and thanking him in his absence for the contribution which he made to the debate.
      It is arguable that there would be no fun at all in a capital gains tax unless there were inflation with no indexation for inflation, because it is the taxation of illusory capital gains which gives a certain distributional effect to the capital gains tax.
      Mr. Ron. Thomas: I must apologise to the right hon. Member for not being present to hear the beginning of his speech. I do not think that I have ever suggested that capital gains tax makes any contribution to the redistribution of wealth. What I tried to say was that a capital gain was income, just like any other income—just like a wage or salary increase. We do not say to the man who receives a wage or salary increase "You have only 12 per cent. You need 10 per cent. of that to meet the increase in the index of retail prices. Therefore, we shall
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      tax you only on the remaining 2 per cent." I see capital gains as a form of income, and I do not see why it should be excepted.
      Mr. Powell: At any rate, I am glad to learn that the hon. Member will not suffer the disappointment, which I feared, of finding that a capital tax on real gains is not redistributive, and I hope that he will forgive me—although it is a delightful temptation—if I do not in answer to his intervention attempt to deal with his effort to equate capital and income. It leads to some remarkable results, but it would take us far from the subject of this debate.
      At the outset, in introducing the new clause, the hon. Member for Blaby (Mr. Lawson) referred to the objection to any capital gains tax that I had voiced in earlier debates and which I suppose—for time goes on and Crossman diaries are published—I may now say I voiced in the Conservative Shadow Cabinet in 1965 when capital gains tax was introduced.
      But if we follow through the result of today's debate, we shall find that what we are debating is the attempt to abolish capital gains tax by a side wind and by the instrument of indexation. I would much sooner, as I think would the hon. Member for Wolverhampton, South-West, do it openly by recognising the futility of a true capital gains tax as a means of raising revenue and its inadequacy as a means of redistributing income if that is desired. We had better get rid of it altogether.
      I venture upon the prophecy that, not many years ahead, some Chancellor of the Exchequer will come to the conclusion that the cost of levying what will then be left of the capital gains tax, even in its present form, will not be worth the candle.
      Mr. Ridley: The objective of the new clause has been deserted by many of its friends last year. The Liberal Party was in favour of this principle and appears not to be in favour of it this evening. The Government were also in favour of it, and they seem to have retreated from it. So also, perhaps, has the right hon. Member for Down, South (Mr. Powell), and I want to take the directly opposite point of view to his last remark.
      Quite properly, the right hon. Member sees this attempt to index capital gains

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      tax as a way of ridiculing the tax itself, leading to its eventual abolition. I was not sure whether he intended to vote against the clause, but I shall vote for it for that reason. I think that it would be excellent to have the tax abolished.
      Taking matters the other way round, it is extraordinary not that the clause will cost £350 million, or whatever it is, but that, if it were passed, the entire yield of capital gains tax would be only £130 million. If one asked what would be the yield with a fully indexed capital gains tax on persons as opposed to companies, with which there are different considerations, it would be probably more in the region of £50 million or £60 million. It would be so small that it would not be worth the cost of collecting it. What is more, the economic damage which it causes is great, and I venture to suggest to the hon. Member for Bristol, North-West (Mr. Thomas) that the social good that it does is non-existent.
      There are two or three Government supporters who come here as what might be described as Robespierrian representatives of the people and tell us of the divisive effects of Tory tax policies. I include in that group the hon. Member for Ormskirk (Mr. Kilroy-Silk), who graced our debates last week on this same theme and who believes that the only way to look at any tax proposition is whether it will benefit people who are not taxpayers. That in itself is an impossible proposition. The hon. Member for Ormskirk told us about his constituents who would give their right arms to be taxpayers. All of the hundreds of thousands of one-armed taxpayers wandering round Ormskirk will not thank him, because it will not do a pennyworth of good to them to be told that the capital gains tax is to left as it is or that it is to be abolished. It will not help the so-called poor to abolish this tax. To leave the tax as it is will not do them any harm. It will not make any difference at all to the sort of considerations that the hon. Member for Ormskirk has in mind.
      What really affects all our constituents is whether this tax has done harm to the creation of jobs. I believe that it has. I believe that the effect of capital gains tax has been to delay investment decisions which should be taken, to stop switching
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      which should be done, to frighten people off from making investments, especially in this country, and perhaps even to drive them to go abroad to an extent which has damaged the one-armed taxpayers of Ormskirk and others too.
      The hon. Member for Bristol, North-West made another extraordinary remark. He equated capital gains with income, and I am afraid that the Minister of State made the same error. I took down his words. He said:
      "Capital gains are just spending power."
      Mr. Denzil Davies: I did not say that. I merely asked whether it could not be argued in certain circumstances that capital gains were different from income, because they conferred spending power. Indeed, the index used by the hon. Member for Blaby (Mr. Lawson) in his new clause is an index related to spending power.
      Mr. Ridley: The Minister of State must not disown his own arguments. He has a hard enough job disowning his own intention to adopt this policy last year. He is now attempting to disown what he said earlier today. He most certainly looks at it, as do his hon. Friends, as though any capital gain which is realised is spending power. But let us suppose that the capital which is realised is reinvested. Then it is not spending power.
      Mr. Ron Thomas: Let us suppose that the income that someone receives is reinvested. Then that is not spending power. But that tells us precisely nothing.
      Mr. Ridley: If I may develop the argument, it is that the evil about this tax is that it taxes, in some cases quite heavily, gains which are made when people simply wish to switch an investment.
      The evil about which the constituents of the hon. Member for Bristol, North-West complain is the spending of the gain. I do not agree with them. I am not an egalitarian, and I do not believe that envy and bitterness are the motive for tax policy or are in order, pointful or reasonable. But, if they are, it is the spending of the realisable gain which is offensive to the hon. Gentleman's constituents. In that case, the right way forward with capital taxation is to make clear that only that capital which is withdrawn and consumed, as opposed to being

      319
      reinvested, should be subject to the sort of taxation which the hon. Member likes to see. I am not advocating that myself. I am merely saying that it is a logical position for the hon. Member to take.
      Anything that we can do in this Committee to wreck the whole of capital gains tax should be done. I support the new clause, warts and all. Obviously, any attempt to index anything will have warts. I do not have any passion about indexation, but I have a passionate hatred of capital gains tax because of the harm that it does to all our constituents.
      7.0 p.m.
      Mr. Nelson: I, too, support the new clause. I recognise that of itself it will not cure the seemingly interminable problem of inflation, but it will concentrate the mind of the Government on so doing. There is nothing like indexation of Government receipts to make the Government more aware of the benefit that inflation provides in raising revenue. Perhaps they will deal more certainly with the problem if they are prevented from raising revenue by stealth, which is the present situation.
      Many hon. Members have spoken with care and restraint about the clause. They, too, recognise that it will not, in itself, cure inflation. But it seems to me that capital gains tax itself has changed radically since it was introduced in 1965. It is not that we are now proposing a radically different tax; all that we seek to do is to return to the situation that prevailed in 1965. The rate of inflation then was substantially less then than it is today, and it does seem inequitable, not that capital gains tax should be indexed and therefore compare favourably with earned income but that inflation and the failure to index capital gains tax should bring inequities between different forms of capital tax.
      It seems wrong that a man with a substantial amount of capital, just because he has been left it, may pay absolutely no tax on the income while he holds it whereas someone who sells the capital—it having produced a gain over a period of time, but not necessarily having produced an increase in real value—has his asset reduced in value. This seems to be inequitable treatment between two holders of a capital asset, which results solely from the accident of that wealth being transferred.
      320
      If we do not carry this new clause and capital gains tax is not indexed, we should at least change the name of the tax. It is not capital gains tax: it is more a selective wealth tax. It is not entirely a wealth tax, because it does not apply to all wealth. On the other hand, it is not a gains tax, because in the majority of cases it does not tax a real gain. It taxes selectively the wealth of those who choose, or are forced, to transfer or dispose of a capital asset. Therefore, to that extent it is inequitable between different categories of capital holders.
      It is this fundamental injustice of the tax that we seek to rectify with the new clause. It is nonsense that every year so many individuals and companies are involved in disposing of capital assets purely to realise a loss to set against their capital gain. This is a largely unproductive process, and the passage of the new clause would mean that if the gains that were realised were only paper gains, and not of a real nature, individuals and companies would not have to dispose of other assets for the purely technical reasons of incurring an off-setting loss. Surely, the hon. Member for Bristol, North-West (Mr. Thomas) would not be in favour of the substantial amounts of commission and the benefits which go to many individuals in the City from realising losses on behalf of asset-holders. Yet that is the situation that exists without indexation.
      If the new clause were to be carried, the only sort of losses that would be realised would be those genuinely going to offset real capital gains that have been made.
      For those reasons the continuation of this tax in its present form is inequitable. While we hope that we shall return to the days of lower inflation, there can be no certainty about this and there cannot be any accurate forecasts of Government receipts from capital gains tax. These receipts depend entirely on the growth of the economy, and where the economy expands at a substantial rate, the disposals that are made and the value of assets generally are bound to increase. In such circumstances, the real value of capital gains tax to the Government will increase. Therefore, receipts depend on many external factors as well as internal ones. Real economic growth and the growth of real personal disposable assets

      321
      are bound to be encouraged by the passage of the new clause or, better still, by the removal of capital gains tax altogether.
      I would go further than many of my hon. Friends in my approach to the taxation of capital. It seems to me entirely wrong that the whole of our system is orientated towards a swingeing tax on what people earn during their lifetime, but virtually nothing on what people happen to inherit if, by some quirk of circumstance, they can go the whole of their lifetime without disposing of it.
      I would be prepared to consider trading much lower levels of income tax for a system of capital tax, but as the system stands at present there are gross anomalies and inequities. I believe that the new clause will help at least to alleviate some of them.
      Mr. Lawson: We have had a valuable debate, or, in many ways, two debates. One was on the new clause and the other was initiated by my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen), followed by his predecessor, the Wolverhampton wanderer—the right hon. Member for Down, South (Mr. Powell). They were really concerned with showing that their opposition to this clause was a virility symbol indicating the strength of their hatred of inflation. All I can say is that if I thought for one moment that the passage of this clause would in any way impede the fight against inflation I would not propose it, vote for it or have my name attached to it in any way.
      The Minister of State asked me a number of technical questions about the clause itself. He asked me how we would deal with part disposals, share pools and enhancement. Of course, we have looked into these, and the form of the clause is one which would enable us to deal with them relatively simply. Although for a Government who have put as much complicated legislation on the statute book as this one, to say that there are certain complications in this clause is a bit rich.
      On share pools it is a matter of simple arithmetic to uplift the expenditure on all acquisitions by reference to the indices for all relevant years in order to compute the gain or loss.
      If there is a part disposal, the cost of the acquisition of the shares sold would
      322
      be calculated as the appropriate proportion of the uplifted cost. The remaining holding would then be carried forward at the uplifted value of assessment. I hope that the Minister of State has fully taken that in.
      As for enhanced expenditure, there are slight complications here, but basically the difficulty which is envisaged—which is in paragraph 45 of the Inland Revenue's memorandum—is in fact a difficulty that occurs anyway, irrespective of the indexation in the new clause.
      I have dealt with the Minister's technical objections. I thought that it was agreed on all sides that the Committee should follow the Inland Revenue paper. Having heard the devastating intervention of my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) on the point of stock appreciation, I feel that it is something to which the Minister ought to address himself. My hon. Friend the Member for Maldon (Mr. Wakeham) made an important point about the economic distortion in the capital market caused by this tax.
      In view of all that has been said, I hope, with renewed conviction, that the Committee will support the new clause.
      Mr. Denzil Davies: The hon. Member for Blaby (Mr. Lawson) has tried to deal with some of the technical inadequacies of the new clause. It is a pity that he did not write into the clause what he has just read out—although I suspect that if he had done so the clause would be more unintelligible than it is now. The hon. Member asked me to comment on stock appreciation. The right hon. Member for Down, South (Mr. Powell) gave the answer. I accept that stock appreciation is a form of indexation, but the lesson to be learned from the stock appreciation exercise is that in periods of high inflation pressure will be brought in favour of indexation in one way or another so as to benefit a group suffering from the effects of inflation.
      There are dangers in this line of argument. I believe that we should resist such pressure, because of the dangers that certain groups will secure a change in the law for their own benefit while others who do not have the muscle will be unable to get the law changed. That is why I believe indexation is unfair.

      323
      The hon. Member for Blaby told us of the grocer from Grantham—
      Mr. Lawson: Hinckley.
      Mr. Davies: Sorry. With the knowledge of indexation revealed in the letter, I thought that perhaps the grocer came from Grantham. This is a difficult case. I remind the hon. Gentleman that 75 per cent. of the yield arising from capital gains tax and corporation tax flows from the disposal of stocks and shares and not from the sale of small grocers' shops. Most business assets have the benefit of rollover relief and most people who retire have the benefit of retirement relief. The writer of the letter did not, unfortunately, have that benefit.
      The hon. Member for Blaby did not say from where he would get the £350 million. All that he did was to mention next year. He did not say where the money would come from next year. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) had it right when he said that ultimately the new clause was not about indexation; it was about abolishing the tax. If this new clause were to be accepted, the yield from the tax would be so small that the cost of collection would represent about 15 per cent. of that yield. Such a tax could not be sustained by any Government. I understand the implications of what I have said, but I also understand the fundamental objections of Tory Members to indexation. The new clause is about indexation and the vote upon it will, likewise, be about indexation.
      Leaving aside the passion of the hon. Member for Blaby for indexation, I can see that a consequence of the new clause would be the abolition of this tax. If that is what Opposition Members want they should table a new clause and make it clear, in election year—as the hon. Member for Wolverhampton, South-West (Mr. Budgen) said—that the Tory Party stands for no tax on capital gains. We are going back to the days before 1960. From 1960 onwards there were attempts in the Finance Acts to prevent people dressing up income as capital gains. This started in the Finance Act 1960. Since then there have been attempts to stop people converting
      income into capital and getting the benefit of the lower rate. If the Opposition want to go back to that, to the days when there were no taxes on capital, let them say so.
      7.15 p.m.
      Mr. Budgen: Will the right hon. Gentleman agree that the introduction of capital transfer tax has markedly changed the case to be made against these contrived capital gains since such a gain is only of value if it gives income or can be passed on?
      Mr. Davies: I heard the hon. Gentleman's speech. The point he made then, and which he makes again now, is that since capital transfer tax is presumably not as legally avoidable as estate duty was, perhaps there is less of an incentive to turn income into capital. The fundamental point is that there is now less of an incentive because there is a tax on capital gains. Before 1960 there was no such tax. If the Opposition want to return to those halcyon days, when a lot of people made a lot of money quickly and a lot of legal advisers made a lot of money—
      Mr. Budgen: Careful.
      Mr. Davies: I was not called to the Bar in 1960. The hon. and learned Member for Dover and Deal (Mr. Rees) was called to the Bar before 1960. If the Conservatives want to return to those halcyon days, let them table the appropriate new clause and argue the case before the Committee.
      The new clause is about indexation. In my opinion indexation for one group is unfair. I do not believe that it is an answer to inflation. There is a great danger that the more we spread indexation the greater will grow the feeling that somehow we can thereby cure the problems of inflation. I want to deal with the problems of inflation rather than propose palliatives.
      Question put, That the clause be read a Second time:—
      The Committee divided: Ayes 223, Noes 278.

      Division No. 209]

      AYES

      [7.17 p.m.

      Adley Robert

      Atkins, Rt Hon H. (Spelthorne)

      Bennett, Dr Reginald (Fareham)

      Aitken, Jonathan

      Atkinson, David (Bournemouth, East)

      Benyon, W.

      Alison, Michael

      Awdry, Daniel

      Biffen, John

      Amery, Rt Hon Julian

      Bell, Ronald

      Biggs-Davidson, John

      Arnold, Tom

      Bendall, Vivian (Ilford North)

      Blaker, Peter

      Body, Richard

      Hordern, Peter

      Percival, Ian

      Bowden, A. (Brighton, Kemptown)

      Howe, Rt Hon Sir Geoffrey

      Pink, R. Bonner

      Boyson, Dr Rhodes (Brent)

      Howell, David (Guildford)

      Prentice, Rt Hon Reg

      Braine, Sir Bernard

      Hunt, David (Wirral)

      Price, David (Eastleigh)

      Brittan, Leon

      Hunt, John (Ravensbourne)

      Pym, Rt Hon Francis

      Brotnerton, Michael

      Hurd, Douglas

      Raison, Timothy

      Bryan, Sir Paul

      Hutchison, Michael Clark

      Rathbone, Tim

      Buchanan-Smith, Alick

      Irving, Charles (Cheltenham)

      Rees, Peter (Dover & Deal)

      Buck, Antony

      James, David

      Rees-Davies, W. R.

      Bulmer, Esmond

      Johnson Smith, G. (E Grinstead)

      Renton, Rt Hon Sir D. (Hunts)

      Burden, F. A.

      Jones, Arthur (Daventry)

      Renton, Tim (Mid-Sussex)

      Butler, Adam (Bosworth)

      Jopling, Michael

      Rhodes, James R.

      Chalker, Mrs Lynda

      Joseph, Rt Hon Sir Keith

      Ridley, Hon Nicholas

      Churchill, W. S.

      Kaberry, Sir Donald

      Ridsdale, Julian

      Clark, Alan (Plymouth, Sutton

      Kershaw, Anthony

      Roberts, Wyn (Conway)

      Clark, William (Croydon S)

      King, Evelyn (South Dorset)

      Rossi, Hugh (Hornsey)

      Clarke, Kenneth (Rushcliffe)

      Kitson, Sir Timothy

      Rost, Peter (SE Derbyshire)

      Clegg, Walter

      Knight, Mrs Jill

      Royle, Sir Anthony

      Cockcroft, John

      Knox, David

      Sainsbury, Tim

      Cooke, Robert (Bristol W)

      Lamont, Norman

      St. John-Stevas, Norman

      Cope, John

      Langford-Holt, Sir John

      Scott-Hopkins, James

      Cormack, Patrick

      Latham, Michael (Melton)

      Shaw, Giles (Pudsey)

      Costain, A. P.

      Lawrence, Ivan

      Shaw, Michael (Scarborough)

      Crowder, F. P.

      Lawson, Nigel

      Shelton, William (Streatham)

      Dodsworth, Geoffrey

      Lester, Jim (Beeston)

      Shepherd, Colin

      Douglas-Hamilton, Lord James

      Lewis, Kenneth (Rutland)

      Shersby, Michael

      Drayson, Burnaby

      Lloyd, Ian

      Silvester, Fred

      du Cann, Rt Hon Edward

      Loveridge, John

      Sims, Roger

      Durant, Tony

      Luce, Richard

      Sinclair, Sir George

      Dykes, Hugh

      McAdden, Sir Stephen

      Skeet, T. H. H.

      Elliott, Sir William

      McCrindle, Robert

      Speed, Keith

      Eyre, Reginald

      Macfarlane, Neil

      Spence, John

      Fairbairn, Nicholas

      MacGregor, John

      Spicer, Jim (W Dorset)

      Fairgrieve, Russell

      MacKay, Andrew (Stechford)

      Spicer, Michael (S Worcester)

      Farr, John

      Macmillan, Rt Hon M. (Farnham)

      Sproat, Iain

      Fell, Anthony

      McNair-Wilson, M. (Newbury)

      Stainton, Keith

      Finsberg, Geoffrey

      McNair-Wilson, P. (New Forest)

      Stanbrook, Ivor

      Fisher, Sir Nigel

      Madel, David

      Stanley, John

      Fletcher, Alex (Edinburgh N)

      Marshall, Michael (Arundel)

      Steen, Anthony (Wavertree)

      Fookes, Miss Janet

      Marten, Neil

      Stewart, Ian (Hitchin)

      Forman, Nigel

      Mates, Michael

      Stokes, John

      Fowler, Norman (Sutton C'f'd)

      Mather, Carol

      Stradling Thomas, J.

      Fox, Marcus

      Maude, Angus

      Tapsell, Peter

      Fraser, Rt Hon H. (Stafford & St)

      Maudling, Rt Hon Reginald

      Taylor, Teddy (Cathcart)

      Fry, Peter

      Mawby, Ray

      Tebbit, Norman

      Galbraith, Hon T. G. D.

      Maxwell-Hyslop, Robin

      Temple-Morris, Peter

      Gardiner, George (Reigate)

      Mayhew, Patrick

      Thomas, Rt Hon P. (Hendon S)

      Gardner, Edward (S Fylde)

      Meyer, Sir Anthony

      Townsend, Cyril D.

      Gilmour, sir John (East Fife)

      Miller, Hal (Bromsgrove)

      Trotter, Neville

      Glyn, Dr Alan

      Mills, Peter

      van Straubenzee, W. R.

      Goodhart, Philip

      Miscampbell, Norman

      Vaughan, Dr Gerard

      Goodlad, Alastair

      Mitchell, David (Basingstoke)

      Viggers, Peter

      Gorst, John

      Moate, Roger

      Wakeham, John

      Gow, Ian (Eastbourne)

      Montgomery, Fergus

      Walder, David (Clitheroe)

      Gower, Sir Raymond (Barry)

      Moore, John (Croydon C)

      Walker, Rt Hon P. (Worcester)

      Grant, Anthony (Harrow C)

      More, Jasper (Ludlow)

      Walker-Smith, Rt Hon Sir Derek

      Gray, Hamish

      Morgan, Geraint

      Wall, Patrick

      Grist, Ian

      Morgan-Giles, Rear-Admiral

      Walters, Dennis

      Hall-Davis, A. G. F.

      Morris, Michael (Northampton S)

      Weatherill, Bernard

      Hamilton, Archibald (Epsom & Ewell)

      Morrison, Charles (Devizes)

      Wells, John

      Hamilton, Michael (Salisbury)

      Morrison, Hon Peter (Chester)

      Whitney, Raymond (Wycombe)

      Hampson, Dr Keith

      Mudd, David

      Wiggin, Jerry

      Hannam, John

      Nelson, Anthony

      Winterton, Nicholas

      Harrison, Col Sir Harwood (Eye)

      Neubert, Michael

      Wood, Rt Hon Richard

      Harvie Anderson, Rt Hon Miss

      Newton, Tony

      Young, Sir G. (Ealing, Acton)

      Haselhurst, Alan

      Onslow, Cranley

      Younger, Hon George

      Havers, Rt Hon Sir Michael

      Osborn, John

      Hayhoe, Barney

      Page, Rt Hon R. Graham (Crosby)

      TELLERS FOR THE AYES:

      Hicks, Robert

      Page, Richard (Workington)

      Mr. Michael Roberts and

      Hodgson, Robin

      Parkinson, Cecil

      Mr. Spencer Le Marchant.

      Holland, Philip

      Pattie, Geoffrey

      NOES

      Abse, Leo

      Beith, A. J.

      Brown, Hugh D. (Provan)

      Allaun, Frank

      Bennett, Andrew (Stockport N)

      Brown, Robert C. (Newcastle W)

      Anderson, Donald

      Bidwell, Sydney

      Brown, Ronald (Hackney S)

      Archer, Rt Hon Peter

      Bishop, Rt Hon Edward

      Buchan, Norman

      Armstrong, Ernest

      Blenkinsop, Arthur

      Buchanan, Richard

      Ashley, Jack

      Boardman, H.

      Callaghan, Jim (Middleton & P)

      Ashton, Joe

      Boothroyd, Miss Betty

      Campbell, Ian

      Atkins, Ronald (Preston N)

      Bottomley, Rt Hon Arthur

      Canavan, Dennis

      Barnett, Guy (Greenwich)

      Boyden, James (Bish Auck)

      Cant, R. B.

      Barnett, Rt Hon Joel (Heywood)

      Bradford, Rev Robert

      Carmichael, Neil

      Bates, Alf

      Bradley, Tom

      Carson, John

      Bean, R. E.

      Bray, Dr Jeremy

      Carter, Ray

      326

      327

      Carter-Jones, Lewis

      Irving, Rt Hon S. (Dartford)

      Price, William (Rugby)

      Cartwright, John

      Jackson, Colin (Brighouse)

      Radice, Giles

      Clemitson, Ivor

      Jackson, Miss Margaret (Lincoln)

      Reid, George

      Cocks, Rt Hon Michael (Bristol S)

      Janner, Greville

      Richardson, Miss Jo

      Cohen, Stanley

      Jay, Rt Hon Douglas

      Roberts, Albert (Normanton)

      Coleman, Donald

      Jeger, Mrs Lena

      Roberts, Gwilym (Cannock)

      Colquhoun, Ms Maureen

      Jenkins, Hugh (Putney)

      Robinson, Geoffrey

      Conlan, Bernard

      John, Brynmor

      Roderick, Caerwyn

      Cook, Robin F. (Edin C)

      Johnson, Walter (Derby S)

      Rodbers, George (Chorley)

      Corbett, Robin

      Johnston, Russell (Inverness)

      Rooker, J. W.

      Cowans, Harry

      Jones, Barry (East Flint)

      Roper, John

      Crawford, Douglas

      Jones, Dan (Burnley)

      Rose, Paul B.

      Crawshaw, Richard

      Kaufman, Gerald

      Ross, Stephen (Isle of Wight)

      Cronin, John

      Kelley, Richard

      Ross, Rt Hon W. (Kilmarnock)

      Crowther, Stan (Rotherham)

      Kerr, Russell

      Ross, William (Londonderry)

      Cryer, Bob

      Kilroy-Silk, Robert

      Ryman, John

      Cunningham, Dr J. (Whiteh)

      Kinnock, Neil

      Sandelson, Neville

      Dalyell, Tam

      Lambie, David

      Sedgemore, Brian

      Davidson, Arthur

      Lamborn, Harry

      Selby, Harry

      Davies, Rt Hon Denzil

      Lamond, James

      Sever, John

      Davies, Ifor (Gower)

      Latham, Arthur (Paddington)

      Shaw, Arnold (Ilford South)

      Davis, Clinton (Hackney C)

      Leadbitter, Ted

      Sheldon, Rt Hon Robert

      Deakins, Eric

      Lee, John

      Shore, Rt Hon Peter

      Dean, Joseph (Leeds West)

      Lestor, Miss Joan (Eton & Slough)

      Silkin, Rt Hon John (Deptford)

      de Freitas, Rt Hon Sir Geoffrey

      Lever, Rt Hon Harold

      Silkin, Rt Hon S. C. (Dulwich)

      Dell, Rt Hon Edmund

      Lewis, Ron (Carlisle)

      Silverman, Julius

      Dempsey, James

      Litterick, Tom

      Skinner, Dennis

      Dewar, Donald

      Lomas, Kenneth

      Smith, John (N Lanarkshire)

      Doig, Peter

      Loyden, Eddie

      Snape, Peter

      Douglas-Mann, Bruce

      Lyon, Alexander (York)

      Spearing, Nigel

      Dunlop, John

      Lyons, Edward (Bradford W)

      Spriggs, Leslie

      Eadie, Alex

      Mabon, Rt Hon Dr J. Dickson

      Stallard, A. W.

      Edge, Geof

      McCartney, Hugh

      Steel, Rt Hon David

      Ellis, John (Brigg & Scun)

      MacCormick, Iain

      Stewart, Rt Hon M. (Fulham)

      English, Michael

      McCusker, H.

      Stoddart, David

      Evans, Fred (Caerphilly)

      McDonald, Dr Oonagh

      Stott, Roger

      Evans, Gwynfor (Carmarthen)

      McElhone, Frank

      Strang, Gavin

      Evans, Ioan (Aberdare)

      MacFarquhar, Roderick

      Summerskill, Hon Dr Shirley

      Evans, John (Newton)

      MacKenzie, Rt Hon Gregor

      Swain, Thomas

      Ewing, Harry (Stirling)

      Mackintosh, John P.

      Taylor, Mrs Ann (Bolton W)

      Ewing, Mrs Winifred (Moray)

      Maclennan, Robert

      Thomas, Dafydd (Merioneth)

      Fernyhough, Rt Hon E.

      Madden, Max

      Thomas, Jeffrey (Abertillery)

      Fitch, Alan (Wigan)

      Magee, Bryan

      Thomas, Mike (Newcastle E)

      Fitt, Gerard (Belfast W)

      Mahon, Simon

      Thomas, Ron (Bristol NW)

      Flannery, Martin

      Mallalieu, J. P. W.

      Thompson, George

      Fletcher, L. R. (Ilkeston)

      Marks, Kenneth

      Thorne, Stan (Preston S)

      Fletcher, Ted (Darlington)

      Marshall, Dr Edmund (Goole)

      Tierney, Sydney

      Foot, Rt Hon Michael

      Marshall, Jim (Leicester S)

      Tilley, John (Lambeth, Central)

      Ford, Ben

      Maynard, Miss Joan

      Tinn, James

      Forrester, John

      Meacher, Michael

      Tomlinson, John

      Fowler, Gerald (The Wrekin)

      Mellish, Rt Hon Robert

      Torney, Tom

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

      Mendelson, John

      Tuck, Raphael

      Freeson, Rt Hon Reginald

      Mikardo, Ian

      Wainwright, Edwin (Dearne V)

      Freud, Clement

      Millan, Rt Hon Bruce

      Wainwright, Richard (Colne V)

      Garrett, John (Norwich S)

      Miller, Dr M. S. (E Kilbride)

      Walker, Harold (Doncaster)

      George, Bruce

      Mitchell, Austin

      Walker, Terry (Kingswood)

      Gilbert, Rt Hon Dr John

      Mitchell, R. C. (Soton, Itchen)

      Ward, Michael

      Ginsburg, David

      Molyneaux, James

      Watkins, David

      Golding, John

      Moonman, Eric

      Watt, Hamish

      Gould, Bryan

      Morris, Alfred (Wythenshawe)

      Weitzman, David

      Gourlay, Harry

      Morris, Rt Hon Charles R.

      Wellbeloved, James

      Graham, Ted

      Moyle, Roland

      Welsh, Andrew

      Grant, George (Morpeth)

      Murray, Rt Hon Ronald King

      White, Frank R. (Bury)

      Grant, John (Islington C)

      Newens, Stanley

      White, James (Pollock)

      Grocott, Bruce

      Noble, Mike

      Whitehead, Philip

      Hamilton, W. W. (Central Fife)

      Oakes, Gordon

      Whitlock, William

      Hardy, Peter

      Ogden, Eric

      Wigley, Dafydd

      Harrison, Rt Hon Walter

      O'Halloran, Michael

      Willey, Rt Hon Frederick

      Hattersley, Rt Hon Roy

      Orme, Rt Hon Stanley

      Williams, Alan Lee (Hornch'ch)

      Hayman, Mrs Helene

      Ovenden, John

      Williams, Rt Hon Shirley (Hertford)

      Healey, Rt Hon Denis

      Owen, Rt Hon Dr David

      Williams, Sir Thomas (Warrington)

      Henderson, Douglas

      Padley, Walter

      Wilson, Rt Hon Sir Harold (Huyton)

      Hooson, Emlyn

      Palmer, Arthur

      Wilson, William (Coventry SE)

      Horam, John

      Pardoe, John

      Wise, Mrs Audrey

      Howells, Geraint (Cardigan)

      Park, George

      Woodall, Alec

      Huckfield, Les

      Parker, John

      Woof, Robert

      Hughes, Rt Hon C. (Anglesey)

      Parry, Robert

      Wrigglesworth, Ian

      Hughes, Mark (Durham)

      Pavitt, Laurie

      Young, David (Bolton E)

      Hughes, Robert (Aberdeen N)

      Pendry, Tom

      Hughes, Roy (Newport)

      Penhaligon, David

      TELLERS FOR THE NOES:

      Hunter, Adam

      Powell, Rt Hon J. Enoch

      Mr. Joseph Harper and

      Irvine, Rt Hon Sir A. (Edge Hill)

      Price, C. (Lewisham W)

      Mr. James Hamilton.

      Question accordingly negatived.

    New Clause No. 2

      REDUCTION OF STAMP DUTY ON HOUSE PURCHASE
      'Section 55 of the Finance Act 1963 (rates of ad valorem duty on conveyance or transfer on sale) shall be amended as follows:
      (a) In subsection (1), for "subsections (2) and (3)" substitute "subsections (1A), (2) and (3)".
      (b) After subsection (1) there shall be inserted the following subsection:—
      "(1A) In any case of the conveyance or transfer on sale of land with a view to its use by the purchaser as his only or main residence, the stamp duty chargeable under the heading 'Conveyance or Transfer on Sale' in Schedule 1 to the Stamp Act 1891 shall be charged by reference to the amount or value of the consideration for the sale at the following rates, that is to say—

      (a) where the amount or value of the consideration is £20,000 or under and the instrument is certified within the meaning of section 34 of the Finance Act 1958 at £20,000 nil;

      (b) where the amount or value of the consideration is £21,000 or under and the instrument is certified as aforesaid at £21,000, 5p for every £50 or part of £50 of the consideration;

      (c) where the amount or value of the consideration is £22,000 or under and the instrument is certified as aforesaid at £22,000, 10p for every £50 or part of £50 of the consideration;

      (d) where the amount or value of the consideration is £23,000 or under and the instrument is certified as aforesaid at £23,000, 15p for every £50 or part of £50 of the consideration;

      (e) where the amount or value of the consideration is £24,000 or under and the instrument is certified as aforesaid at £24,000, 20p for every £50 or part of £50 of the consideration;

      (f) where the amount or value of the consideration is £25,000 or under and the instrument is certified as aforesaid at £25,000, 25p for every £50 or part of £50 of the consideration;

      (g) where the amount or value of the consideration is £30,000 or under and the instrument is certified as aforesaid at £30,000, 50p for every £50 or part of £50 of the consideration;

      (h) where the amount or value of the consideration is £35,000 or under and the instrument is certified as aforesaid at £35,000, 75p for every £50 or part of £50 of the consideration.

      (i) in any other case, £1 for every £50 or part of £50 of the consideration; and any duty chargeable by reference to that heading shall be charged accordingly."'.—[Mr. Peter Rees.]

      Brought up, and read the First time.
      7.30 p.m.
      Mr. Peter Rees: I beg to move, That the clause be read a Second time.
      The Chairman (Mr. Oscar Murton): We shall consider at the same time Amendment (a) to New Clause No. 2, in new subsection (1A), after 'land', leave out
      'with a view to its use by the purchaser as his only or main residence'.
      In addition, we shall take the following two new clauses:
      New Clause No. 3—Reduced rates of stamp duty on house purchase—
      'Section 55 of the Finance Act 1963 (rates of ad valorem duty on conveyance or transfer on sale), as amended by Schedule 11 to the Finance Act 1974, shall be further amended as follows:

      (a) In paragraph (a) of subsection (1), leave out "£15,000" and substitute "£20,000".

      (b) In paragraph (b) of subsection (1), leave out "£20,000" and substitute "£25,000".

      (c) In paragraph (c) of subsection (1), leave out "£25,000" and substitute "£30,000"

      (d) In paragraph (d) of subsection (1), leave out "£30,000" and substitute "£35,000".'

      New Clause No. 6—House purchase: reduction of stamp duty—
      In subsection (1) of section 55 of, and in Part I of Schedule 11 to, the Finance Act 1963, as amended, for "£15,000", "£20,000", "£25,000", and "£30,000" wherever occurring, there shall be substituted respectively "£20,000", "£25,000", "£30,000" and "£35,000".'
      Mr. Rees: New Clause No. 2 is uncontroversial, I venture to say—indeed, so uncontroversial that I hope that Treasury Ministers will accept it as an olive branch and take it as a chance to restore their shaken reputations.
      As the Committee knows, 2 per cent. ad valorem stamp duty is charged on conveyances, but there is a relief for conveyances of house properties to a certain value. As so often in our debates, one has to go back to a Liberal Administration to find the origin of this provision. I am sorry to catch the hon. Member for Cornwall, North (Mr. Pardoe) off his guard, but he and the rest of the Committee will recall how in 1910 Mr. Lloyd George doubled the rate of stamp duty and at the same time introduced certain reliefs at the bottom end of the scale. This, I recall, as will the Committee,

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      remained almost unaltered until 1958, when the then Conservative Chancellor introduced the threshold of £3,500, with graduated reliefs up to £6,000.
      That provision remained unaltered until 1974. As I recall, this was almost the only bright deed in a summer overshadowed by slag heaps and the imminence of a second General Election. On that occasion—I am happy to give full credit to him for it, although, of course, he was prompted by the Conservative Opposition at that time—the present Chancellor raised the threshold to £15,000, with graduated reliefs up to £30,000. One can only assume—indeed, I think that this can be extracted from our debates in 1974—that it was done in recognition of the rise in house prices, and I assume also, though the Minister of State will, no doubt, correct me if I go a little far here, that it was to demonstrate the Socialist Party's belief in house purchase, other than the purchase of council houses, of course.
      Since 1974, there has been an inexorable rise in house prices. I cull these figures from information given by the Building Societies Association, which, I hope, will be taken as incontrovertible. In 1974, the average price of a new dwelling was £11,340, and in the first quarter of 1978 it was £16,190.
      It is to take account of that trend and to continue the encouragement to house purchasers, especially first-time house purchasers, that New Clauses Nos. 2, 3 and 6 have been tabled by the Conservative Opposition.
      Mr. Pardoe: The hon. and learned Gentleman has just given some figures for the average price of a house. Do they apply to all houses, or do they apply only to the price of houses bought by first-time house purchasers? If they apply to all houses, as I think they do, will the hon. and learned Gentleman accept that the likely average price of a house bought by a first-time purchaser will be much lower than £16,000?
      Mr. Rees: I do not think that the Building Societies Association breaks the figures down between first-time house purchasers and those who may be buying their second or third house or wishing to upgrade their house. I do not necessarily accept the hon. Gentleman's conclusion that the average is likely to be
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      lower in respect of first-time purchasers. Perhaps he can draw certain inferences from the figures as relating to mortgages, on the assumption that a mortgage is likely to be taken out by a first-time purchaser, but it may be equally true that someone wanting to move into a larger or better house will wish to take out a mortgage.
      If the hon. Gentleman catches the eye of the Chair, I shall listen to his argument if he puts it on that basis, but so far, as he has expressed it, I do not think that I am prepared to accept his proposition.
      One recognises that there are wide regional variations. In Cornwall, North, perhaps the average price of a new dwelling is lower than that in the South-East. I have no doubt that the hon. Member for Ormskirk (Mr. Kilroy-Silk)—I am sorry that he is not taking part in our debates today—would rise with a lump in his throat and tell us that his constituents would be delighted to buy a new house costing £16,000. However, I leave him to make that point.
      I gave those figures to the Committee to demonstrate that since 1974 there has been an upward trend in house prices. We have put down these simple and relatively uncontroversial new clauses to take account of that upward trend. I shall now briefly explain New Clause No. 2. Again, to demonstrate our total responsibility in this matter and to assuage the susceptibilities of the Minister of State, it is limited in its scope to property purchases where the property is to be the purchaser's sole or main residence.
      The intention is that the threshold should be raised from £15,000 to £20,000 and that there should be graduated relief bands of £1,000 between £20,000 and £25,000, then a band between £25,000 and £30,000, finally a band between £30,000 and £35,000, and beyond that, of course, the full rate of 2 per cent.
      Mr. Denzil Davies: The hon. and learned Gentleman says that his new clause shall apply to a property being the only or main residence of the purchaser. How is that test to be met? What machinery does he propose?
      Mr. Rees: I see very many ways. It can be certified by the purchaser. Perhaps the great Department of State over which the Minister of State and his right hon.

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      Friends preside with such distinction will require an affidavit.
      Mr. Tony Newton: I think that I may be able to help my hon. and learned Friend here, since it is my recollection that this phrase is precisely the phrase used by the Government themselves in the Finance Act which limited the relief on mortgage interest to the figure of £25,000 and at the same time limited the relief on mortgage interest to certain houses so that the purchaser would qualify in respect of only one. The phrase "only or main residence" is used for that purpose. May I suggest to my hon. and learned Friend that it is up to the Government to explain why it cannot be used here?
      Mr. Rees: I am grateful to my hon. Friend, who, I know, has devoted a great deal of thought to this matter. Both the amendment to New Clause No. 2 and New Clause No. 6 stand in his name. I hope that he will make his usual important and helpful contribution.
      I remind the Minister of State that not only is this phrase to be found in relation to mortgage interest relief but it is to be found also in capital gains legislation. So the concept is certainly not unknown to the Inland Revenue, and I have no doubt that the Stamp Duty Office will be able to cope with it. Moreover, I remind the Minister of State that one has to certify in respect of certain transactions for stamp duty purposes that a transaction is not part of the complex of another range of transactions. Plainly, the purchaser could be asked to certify that the property was his sole or main residence.
      I do not think that the Minister of State need be oppressed by the difficulties. I know that he is deeply conscientious and is worried about the prospects of avoidance and evasion, and such thoughts are always uppermost in his mind. However, he usually takes a broad and tolerant view of these problems. If it is the Committee's wish that the new clause should be passed into law, I have no doubt that it would be relatively easy for the Stamp Duty Office to devise some—I will not say totally, but at any rate relatively, foolproof mechanism to meet this point.
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      The question is whether there is the will. The Minister of State will no doubt demonstrate in a few minutes whether he and his right hon. and hon. Friends have the will. I see sitting behind him one of his hon. Friends who has great knowledge of this matter, both professionally and politically. It may well be that he can make a contribution on this question. I have no doubt that he has dealt with many conveyances and will be able to help us with some of the practical details. His branch of the legal profession is much more adept at these matters than my branch and regards us as dilettantes in this field.
      That is the objective of New Clause No. 2. The cost would be relatively small. This, again, has been elicited through the assiduity of my hon. Friend the Member for Braintree (Mr. Newton) in a recent answer to a Parliamentary Question. I understand that if New Clause No. 2 were enacted the cost in this present year would be only £25 million and in a full year would be £30 million. That is without the restriction that we would seek to introduce. If that restriction proved to be workable, it could be—I am sure that the Minister of State will confirm this—that the cost would be much less.
      New Clause No. 3 differs, though not in a very marked degree, from New Clause No. 2. It has slightly wider bands. It raises the threshold to £15,000. Then there are bands from £15,000 to £20,000, from £20,000 to £25,000, from £25,000 to £30,000, and from £30,000 to £35,000. Further, there is not a restriction in favour of purchasers whose sole or main residence the house in question is designed to be. I understand—again, the Minister of State can confirm this—that the cost this year would be £25 million and in a full year would be £35 million.
      I read on the tapes this afternoon that at a Press luncheon today the Chancellor expressed his concern about the position of house purchasers. He has turned his massive mind to the question of mortgage interest rates, which, of course, are now moving upwards. I think he said that everyone expects things to get better.
      Mr. Denzil Davies: Is that true?
      Mr. Rees: It may be that the Minister of State was not privileged to enjoy the same invitation, but he can check through his right hon. and hon. Friends.
      Mr. Denzil Davies: The hon. and learned Gentleman said that mortgage rates were moving upwards. Will he give an example of this happening? I did not know that they were.
      Mr. Rees: I think it is very likely. The Minister of State will have had, perhaps, some small hand in the debates on what the minimum lending rate shall be. He cannot be entirely unaware of the facts of life. I know that sometimes Treasury Ministers are cocooned—sheltered—from the outside world by their devoted civil servants. If the right hon. Gentleman tells the Committee that there is no risk of mortgage interest rates rising, that will be a very interesting proposition
      As I say, the Chancellor was concerned. I have not been privileged to see the full report of the speech, but he also made the challenging statement that everyone expects things to get better. As I said, I think that people may be disappointed in regard to mortgages. Therefore, at least the Chancellor and his right hon. and hon. Friends might consider a douceur, some balm to home buyers in the form of these new clauses.
      The amounts involved for home purchasers may not seem very great. I shall give a few simple calculations which are true either of New Clause No. 2 or of New Clause No. 3. A person buying a house for £16,000 would incur no stamp duty, or perhaps a fixed stamp duty of 50p. A person buying a house for £27,000, whereas previously he would have paid stamp duty of £405, would under these proposals pay stamp duty of £270. A person buying a house for £32,000, whereas previously he would have paid stamp duty of £640, would, if these clauses were accepted, pay stamp duty of £480.
      These may seem relatively small amounts to the hon. Member for Luton, West (Mr. Sedgemore), who, I know, in his close acquaintance with Private Eye, is used to considering a rather wider range of transaction with rather bigger sums involved. All the same, for home buyers these are important amounts and I have no doubt that my hon. Friends will be able to draw on their constituency experience and demonstrate that the rates of stamp duty currently in force are having a slightly deterrent effect.
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      7.45 p.m.
      These clauses would not bite in favour of those at one end of the range. When the hon. Member for Bristol, North-West (Mr. Thomas)—I am sorry that he is no longer in his seat—bought his council house, presumably with a discount in favour of the sitting tenant, it may well be that he paid less than £16,000. Below that end of the range, obviously no great savings would be achieved.
      At the other end of the range the Chancellor, selling his mansion in Hampstead and reinvesting the proceeds in a country house in Sussex, will be outside the scope of the new clause. However, in between there is a wide range of people who cannot by any stretch of the imagination be described as plutocrats, representatives of the capitalist class, paid-up members of the Conservative Party. They are simply ordinary home buyers. It is to benefit them, to help them, that the Opposition have tabled these two new clauses.
      We are giving the Government a chance to demonstrate that they believe in the diffusion of wealth, that their morale is unimpaired and that their motives are of the purest and their generosity untarnished. On that basis, I commend these new clauses to the Committee.
      Mr. Bruce Douglas-Mann: I am not particularly concerned whether the new clause as it stands is accepted by the Committee. I should like to ask my right hon. Friend to consider to what extent it is desirable to retain any provision for stamp duty on a conveyance of a private house for residential purposes. Whether the limit is £30,000 or £50,000 seems to me to be relatively immaterial.
      We have in many ways an almost excessive contribution to be benefit of the person who is buying or owning his house. The higher rates of tax relief on mortgage interest are a case in point, but that is a separate point from this. I see no reason why there should be a tax of £800 on someone wishing to move from a flat in London which sells at £40,000. That is an average price for a modest three-bedroomed flat in many parts of central London. There is no economic case for this measure of taxation. There is a revenue case for it, of course, but there are many other sources

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      from which we could gain the relatively small amount of revenue involved. In particular, I suggest that there should be some inroad into the level of tax relief on mortgage interest, which is a very highly regressive tax.
      If we are to have the tax, however, it would obviously be preferable for there to be regional variations of it. The difference between the quality of accommodation that can be purchased for £30,000 in the area where most of us may need to acquire accommodation and the quality of accommodation that can be obtained for that sum in other parts of the country is so great as to make the differential of a tax of £600 on the one and nil on the other for identical accommodation—except for the area in which it is situated—ludicrous.
      It is not in the interests of the country that there should be such a handicap to mobility. It is desirable that people should be able to move from one part of the country to another without paying such a tax. I urge my right hon. Friend to take the earliest opportunity to abolish the stamp duty on the conveyance of a principal residence. The change proposed by the Opposition is merely a palliative to this and may deter its total abolition. It is a matter towards which I feel neutral, though I hope that my right hon. Friend will feel able to accept it. Whether or not he does, I urge him to embark on a more serious and fundamental review of the whole principle of taxing the transaction of a conveyance on the sale of a principal residence.
      Mr. Michael Shersby: I want to speak only briefly in the debate. The imposition of stamp duty has been something against which I have campaigned since I entered the House of Commons. It is a monstrous tax. I agree with the hon. Member for Mitcham and Morden (Mr. Douglas-Mann) that it should be abolished. My only regret is that the new clause does not bring about its abolition. I can only hope that the next Conservative Government will lose no time in abolishing it at the first possible opportunity.
      Stamp duty is a burden that faces every prospective house purchaser buying a property in the London area and in many other parts of the country where the rates
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      are becoming acute. It is a factor which every family wishing to move has to take into account. If one calculates the burden of the estate agent's fees and the solicitor's fees for conveyance of the property, plus a removal and all the other hidden expenses of moving home, the addition of stamp duty is often the straw which breaks the camel's back and makes a person decide that it is not worth moving after all.
      As was pointed out by the hon. Member for Mitcham and Morden, it discourages mobility, particularly among those who occupy houses in the higher price brackets to which reference is made in the table. The result is that fewer houses come on to the market. People stay where they are and extend their existing houses. Therefore, prices go up considerably, as they have been doing all over the country during the past few months.
      I suggest that stamp duty, coupled with the other expenses which a prospective purchaser has to bear, has affected the property market. It is a considerable expense which the Government should take into account in their desire to stabilise the cost of property.
      I believe that, with the inflation in house prices that has taken place over the past few years, stamp duty has now become a severe burden and is a tax that can no longer be tolerated. It is a tax that it not so widely known as income tax, corporation tax or value added tax. That is because it hits the average member of the public only when he or she decides to move home. By the time that he or she has found out about it, there is often very little that can be done except to write letters to Members of Parliament urging them to do something about it when the chance comes their way.
      I have that chance tonight. Therefore, I propose to vote for the new clause on behalf of my constituents who are burdened by this ridiculous tax. I hope that the Committee will agree to the new clause. If so, it will be a major step towards improving mobility and stabilising the cost of property.
      Mr. Cronin: I would not go so far as to vote for the new clause, but it is not entirely without merit.
      New Clause No. 1 was clearly a facelift for the unacceptable face of capitalism. It showed the Tory Party at

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      its most rapacious in trying to help the higher income groups to a large extent. But New Clause No. 2 seems to be an honest attempt to secure some mitigation for people of moderate incomes who wish to buy new houses. I think that this is in many ways desirable.
      When people buy houses they go through a period when they incur severe expenses. Conveyancing fees are becoming more onerous, as I think my hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann) would agree. In addition, there are countless expenses associated with moving. Stamp duty is an additional intolerable nuisance. As has been said, it may stop people buying new houses or moving. In any event, even for people who can afford the money for stamp duty, it seems to be an irritating tax. It is a small irritant to some people, but it is a source of real distress and nuisance to others.
      Another important point is that stamp duty impairs mobility, particularly among working people who have to move to another district. For instance, miners in Scotland who have been working in mines which have closed and who decide to move, say, to Loughborough to work in an active mine find that they have to pay this additional impost merely to keep their jobs. It cannot be helpful to impair the mobility of labour in that way.
      I ask my right hon. Friend the Minister of State to consider this whole question. I should be glad if, when he replies, he would let us know the cost of abolishing stamp duty completely on purchases up to, say, £25,000. I am sure that the cost would be trifling. The hon. and learned Member for Dover and Deal (Mr. Rees) said that the total cost of the new clause would be only £35 million a year. If it were confined to purchases up to £25,000, I am sure that the cost would be negligible. The social and economic benefit of getting rid of stamp duty below that figure would be great indeed.
      Mr. Newton: Having had something to do with these new clauses—New Clause No. 6 being in my name—I particularly welcome the all-party agreement that seems so far to have pervaded the Committee. However, I suspect that the hon. Member for Mitcham and Morden (Mr. Douglas-Mann), who has spoken so favourably, may not be in the same
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      Division Lobby if it comes to a Division later.
      I entirely endorse what has been said by the hon. Member for Mitcham and Morden. That was indeed where I intended to start. It is absurd that we should have a tax on house purchase. We have a whole range of measures designed to encourage people to buy their homes—interest relief, option mortgages, relief from capital gains tax and domestic rates relief. Indeed, there is a Bill before the House of Commons to provide further subsidies to first-time buyers. To have that armoury on one side and then, on the other, to tax people when they buy houses, is the kind of thing that would strike anyone coming fresh to the scene as utterly ludicrous.
      The new clauses are essentially the same in their major elements. They would raise the exempt slice from £15,000 to £20,000 and raise all the reduced rate slices by £5,000 each. The only significant difference is that New Clause No. 2 introduces an element of greater subtlety, and sophistication by grading in at the beginning of the reduced rates between £20,000 and £25,000.
      I should like to refer to my Amendment (a) to New Clause No. 2. That was designed solely to anticipate the objection with which the Minister of State came forward—that to confine it to
      "his only or main residence"
      would be administratively complicated. I thought that, anticipating that argument, we would table that amendment so that the right hon. Gentleman could not resist the new clause on that basis but could accept both the new clause and the amendment if that were to be his line of argument. For once I seem to have anticipated him accurately.
      There has been some reference to the effect of the new clause. I shall not attempt to elaborate the figures, but we are not talking about large sums of money. As has been helpfully emphasised by the hon. Member for Loughborough (Mr. Cronin) and my hon. Friend the Member for Uxbridge (Mr. Shersby), although the sums are not large in absolute terms or in relation to the value of a house, they can be very large at the margin, as it were, in increasing the friction of moving and the pain and cost of transfers in the housing market. At the

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      £20,000 level, which under any of these proposals would be exempt, we are talking of stamp duty of £100. If one of the new clauses were carried, no tax would be payable at all. The sum is a little larger further up the scale, but it is that kind of sum about which we are talking.
      8.0 p.m.
      I calculate that New Clause No. 2 would cost £39 million in a full year and that New Clauses Nos. 3 and 6 would cost £35 million. There is not a great deal of difference between them, therefore, but both figures would be reduced in the present year because we are already part way into the year. Those are not negligible sums. They are certainly not immense, however, in the context of other matters that we have discussed on the Bill.
      I turn now to the reasons for the new clauses that have not already been explained. As my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) said, the current levels of exemption were set in May 1974. Studying the Standing Committe debates of July of that year has brought back happy memories of the days when, on my first Standing Committee on the Finance Bill, I had the inestimable privilege of watching the right hon. Gentleman who is now the Minister of State, Ministry of Defence, display his invaluable ability to generate many hours of unnecessary argument.
      I recently tabled a series of parliamentary Questions to establish what those 1974 limits would be now if indexed. On the basis of prices or earnings, that £15,000 figure for exemption would be more than £26,000, and the £30,000 figure, which is where the reduced rates run out, would now stand at more than, £50,000. In that context the new clauses are quite modest. I am well aware that Ministers tend to argue that the right index to take for this purpose is not general prices or earnings, but house prices. I asked about that, too. The answer was interesting. It established that if the £15,000 exemption had been increased in line with the rise in house prices it would now stand at £20,100.
      The figure that we have proposed in the new clause is almost exactly right for preserving the level set in May 1974. Further
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      up the scale the £30,000 figure should be, on that basis, more than £40,000. We are proposing to raise the figure to £35,000, and we are therefore not going so far as would be justified by indexation based on house price increases.
      By no stretch of the imagination, therefore, can Ministers argue that these proposals are wildly generous to the better off, or wildly beyond what would be justified by what has happened in the housing market during that period.
      My hon. and learned Friend has already referred to what has happened to average house prices. However, the figure he gave was for new dwellings, not for all dwellings, on which the figure is slightly lower. It is likely that on the average price of new dwellings at March 1978—the figure of £16,556, based on prices approved for new mortgages—significant numbers of young couples buying homes will have to pay stamp duty.
      Those average national figures, significant though they are, conceal the fact that the figures for London and the South-East are much higher. The data published by the Department of the Environment for that region is somewhat out of date, but it is clear from the figures for the third quarter of 1977 that, given the rise in prices that we know has taken place in this area since then, the average price of dwellings, judging from completed mortgages in the last month or two, may well be nearer £18,000. We therefore are not talking about a minority of wealthy people but of significant numbers of ordinary people buying average-priced homes. That fact is borne out by the statistic given in a recent issue of Building Society Affairs, which shows that the percentage of houses mortgaged to building societies at a cost of more than £15,000 was only 16 per cent. in 1974 and, by the third quarter of last year, had reached 30 per cent.
      There is a yo-yo effect here, as much as there is with tax allowances in the income tax system. If, on an index, average house prices have risen from £15,000 value in 1974 to £20,000 now, virtually all the houses that are now in the bracket that attracts stamp duty are the same houses that were taken out of it in 1974 on the ground that that was needed to assist young couples and others to buy

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      their own homes. The houses that the Government thought should be exempt from stamp duty in 1974 have been made liable to it by inflation. We are doing no more than argue that they should be exempted again, in line with the case that the Government made in 1974.
      I appreciate that the Committee is anxious to make progress and I therefore sum up simply by saying that I should like stamp duty on house purchase to be abolished. It is absurd to have an army of measures to encourage home ownership and then put a tax on people when they buy a house. If we cannot abolish the tax altogether because the Government say they need the money, the least we can do is to make sure that the tax is not levied on many young couples, especially in London and the South-East. We can do that by raising the exemption level from £15,000 to £20,000 and making the other modest reductions proposed in the new clauses. That is the central purpose of what we are proposing. I believe that that move commands the support of common sense and of social justice, and I hope that it will command the support of the Committee.
      Mr. John Moore: I have great pleasure in following up the remarks of my hon. Friend the Member for Braintree (Mr. Newton). He said little with which I disagree. I take particular pleasure in the debate, knowing that we have a semblance of all-party support and interest in the clauses. It is crucial to secure that, because our clauses are an attack on the impact of inflation and on a tax that at the best of times is not an intelligent revenue raiser.
      I wish to advance two brief arguments, both of them germane to the debate and both obviously picking up points that are important to those who have constituencies in the London area and the South-East. I know that the hon. Member for Mitcham and Morden (Mr. Douglas-Mann) will understand and recognise the points that I shall make.
      I want to be a bit more particular about this tax's impact on individuals. I accept what my hon. Friend the Member for Braintree said about the impact of the tax on young couples buying and selling houses that in 1974 were exempt from the tax.
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      I have checked today with the Nationwide Building Society to get the up-to-date picture on average house price increases throughout the country. The figure is 44 per cent. between the beginning of 1974 and today. But it is worth considering an example from my constituency. There is there an estate known as Forestdale. The houses were built by Wates and they are in most cases three or four years old. They are medium-sized, with three bedrooms. I have had constituents specifically complaining about the implications of the stamp duty tax. I checked on two specific houses. One was a very small three-bedroomed house priced in 1974 at £12,750. Stamp duty in that year on that house was nil. Last week that house was priced at £20,100 and it now carries stamp duty of £210.
      I talked to another couple about a similar property on the same estate. It was slightly larger, but nevertheless still quite modest. In 1974 it was priced at £16,500. Stamp duty then was £82·50. Today that house will cost £27,000 and the stamp duty will be £405. That sort of figure has more than marginal implications for most families when they are moving house, and for the question of mobility to which the hon. Member for Mitcham and Morden referred as a key and crucial factor. We must understand the importance that that figure assumes when added to all the other costs, such as conveyancing charges, in providing a marginal disincentive to people to move.
      I would prefer to go far beyond the raising of the threshold for stamp duty and to see the complete abolition of the tax, which is unsound. I should like also to consider the implications of the tax for the revenue as a whole.
      Whichever party is in office, quite legitimately the question is frequently asked, "All right. There is a revenue loss on your proposal X. Where will the money come from?" We ought to understand the revenue implications in more detail.
      Looking at the stamp duty on house transfers as a whole, one sees that the supposed revenue loss would be £80 million if it were abolished in toto. I have looked at that theoretical revenue loss and have tried to analyse it in more detail. I have tried to analyse it by talking, this

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      morning, for example, to the Home Builders Federation, because I wanted to try to work out the degree to which that revenue loss was a static revenue loss, taking no account of the dynamics of how many more houses might be built if we did not have the marked disincentive feature added to by this stamp duty.
      We must examine this matter with care. I see in today's edition of the Financial Times a very brief article that refers to the degree to which the loan curbs that the Government have introduced have hit hopes for a housebuilding revival. I am not making a party-political point; I want to illustrate the extraordinary effect, at the margin, that a change can have in housing starts.
      Until this activity was taking place there was, happily, a suggested increase of up to 165,000 in private sector housing starts this year—1978. That was very good. We would all be very pleased about that, on whichever side of the House we sit. However, that figure, it is now suggested, has been dropped to 150,000, so we are talking about a loss of about 15,000 in housing starts.
      If that sort of factor has that kind of marginal effect, we ought to examine the revenue implications of what 15,000 houses mean to the State. Let us look at the people employed in constructing those houses. Again, I asked the Home Builders Federation this morning what were the average man-years of labour taken in the construction of a new house. I was given an approximate figure, obviously, for the construction of an average house, of two man-years. Five thousand new houses would involve about 10,000 construction jobs.
      On the assumptions about which I was talking, of the marginal impact that we see today, let us suppose that we could see an increase of 15,000 private sector housing starts. That would mean 30,000 construction jobs—for 30,000 people currently unemployed. The revenue implications of that are quite profound. They are important and serious implications. Looking at those implications, my assumption is that the cost to the revenue of 30,000 unemployed people—this is all from Treasury statistics, obviously—on the national insurance charge, with revenue loss and benefits paid out, is
      346
      about £40·5 million for the fiscal year 1978–79.
      Supposing those 30,000 people, happily, were back in work constructing those 15,000 houses, excluding, of course, any Finance Bill changes and assuming an average gross weekly wage—I have done it on these figures specifically—for adult male manual workers in the construction industry, including losses through absence, of approximately £76·23 a week, and taking the case of a married man with no children, the loss in taxation revenue would be about £25·5 million.
      In toto, therefore, one has a net loss to the revenue—including the losses caused by those people being out of work and forgetting all the implications of getting unemployed people back into work, and all the social implications because of that—of £66 million.
      Therefore, the notional costs of the abolition of stamp duty to the revenue—I know that this is a somewhat specious analysis, but it is assuming that the people concerned could have that marginal impact in the creation of 15,000 new homes—is £80 million, which becomes a notional total loss of £14 million only. That, of course, does not take into account from the very beginning all the attractions through the multiplier of the impact of all those new home constructions and the impact right through the economy.
      All that I would say, in a very nonpolitical way, is that this is a particular example of a new clause which, frankly, does not go far enough but on which, in a debate, we ought to be able to get beyond merely the supposed loss of revenue and understand the implications for individuals and for the revenue and society as a whole if we could abolish stamp duty on home property—a duty that is really irrelevant.
      8.15 p.m.
      Mr. Roger Moate: I, too, shall be very brief. I endorse the remarks made by my hon. Friends in support of the new clause.
      I have long regarded stamp duties generally as a very anachronistic and rather absurd form of taxation. Indeed, I had hoped that we would move to their total abolition. Up to 1974, stamp duties had been reduced, and had been eliminated in some respects—on cheques, for

      347
      example—to the point at which the revenue yield from them was so little that we could have eliminated them altogether from our taxation system with one further step.
      It is a matter of great regret, therefore, that in 1974 stamp duties on properties were raised. They now produce a revenue that is hard to eliminate from our taxation system at one go. I still hope that one day we shall get rid of stamp duties altogether. I do not believe that there is an economic justification for them. I certainly do not think that there is a social argument in their favour in terms of house purchase.
      I wish to emphasise particularly the nature of the burden on people buying their homes. It has been argued that stamp duty represents a disincentive for such people. That may be so, but, as often as not, it comes as a rather nasty surprise after people have committed themselves to buying their homes. That applies particularly in the case of first-time buyers. Often they do not stop to think of the extra costs, conveyancing costs, estate agents' fees and the like, and the increased costs of moving in these days, and in addition to that they then get a bill of £100 or £200 for stamp duty. They have usually strained their resources completely to buy the house. Suddenly, they get this other very nasty blow of an extra couple of hundred pounds for stamp duty. This is a great burden on the house purchaser. I cannot see how it can be justified in social terms by the Government.
      Briefly, my next point concerns the question of the unfairness of the tax in two particular respects. One is that, despite the fact that we have higher stamp duties on higher value properties, it still seems grossly unfair that the higher rate of duty applies to the whole of the consideration of the property. One could argue for the higher rate to apply to the higher bands of value, but to apply the 1 per cent., 1½ per cent. and 2 per cent. on the whole value, down to nil, is grossly unfair. I have not yet heard any argument in favour of applying it in that way.
      The other unfairness lies in the fact that if one were trying to argue that richer people buying more valuable property should pay higher tax, that would be an understandable argument, though one would not necessarily accept it in
      348
      this context. But, of course, it does not work in that way. A £10,000 house, perhaps in the West Country, might be the sort of home that could be afforded by a young couple, but to get that same sort of house in certain parts of London, that same young couple might have to pay £25,000, £30,000 or even £40,000. Why are we penalising those people in the same sort of income group? In one case, someone buying his or her first home may pay no stamp duty, but the same sort of family in other parts of the country may have to pay £200. It seems to be a grossly unfair tax. I hope that we shall move to its total abolition.
      However, as a first very modest step, we have the new clause before us. It has been commended in all the speeches made in the debate so far, from Members in all parts of the Committee. I hope that the Government will feel that this is something that can be accepted as a sign of good intentions. If not, I hope that at least the speeches by my hon. Friends will indicate that it is the long term intention of the Conservative Party to lift this very real burden on home purchasers.
      Mr. Denzil Davies: We have had an interesting debate on the new clauses plus the amendment to one of them. Perhaps I may deal with cost figures again. Broadly they have been given, and given correctly.
      New Clause No. 2 would cost £35 million. New Clause No. 3, which, of course, is not confined to residential property, would cost about £38 million.
      My hon. Friend the Member for Loughborough (Mr. Cronin) asked about the costs of abolishing stamp duty on, I think, land and buildings up to £25,000, although that might not be entirely residential property. The cost would be above £20 million. How much above that sum is not clear at present, but it would be in excess of £20 million.
      New Clause No. 2 attempts to deal with people who buy their own homes. It does not go further and deal with all property in those bands of value. When I asked the hon. and learned Member for Dover and Deal (Mr. Rees) how he proposed to ensure that a person was buying with a view to use as his only or main residence, I was not trying to

      349
      be clever or to catch him out or raise simply an administrative problem.
      There is a slight problem. The hon. Member for Braintree (Mr. Newton) anticipated that I would use this argument, but it is not used for its own sake. The test for capital gains tax, although it might be difficult in a particular case, is generally easy to determine, as it is in the case of interest. With stamp duty, however, someone may not have moved into the residence, because stamp duty has to be paid within 30 days of the conveyance. The title is not valid unless properly stamped, so a person may not have moved into residence. Presumably, he would have to declare that he intended the house to be his only or main residence, and on that basis he would get a tax exemption which might not turn out to be correct.
      There is a difficulty, therefore, in attaching to stamp duty, which is quite different from capital gains tax and interest, a test which would be difficult in practice.
      Mr. Pardoe: It is not a very good objection.
      Mr. Davies: One must consult the Stamp Duty Office which has to deal with these matters. The point is that this would create problems and introduce into stamp duty some tests which are not suited to it, with very few exceptions. It is not a major point, but it is a factor.
      Mr. Pardoe: I hope that the Minister has better arguments than that, or he had better sack his advisers. Whoever wrote that nonsense should be sacked. As he knows, one can change one's mind about which is one's private or main residence or one's second home every other year. That affects capital gains tax. One has to tell the Inland Revenue every year which is which. Members of Parliament are constantly changing their main residence from their constituency to London or back again. That argument would apply to capital gains tax and to income tax relief as well.
      Mr. Davies: The hon. Gentleman is very clever and extremely arrogant. He has got it wrong about capital gains tax. When one sells one's house, it is then that one must determine liability to
      350
      capital gains tax and the question must be asked whether the house is the person's sole or main residence. What he did in the previous year is another matter, but when the question is asked it can be determined in the case of capital gains tax.
      It is not easy to determine it for stamp duty. The hon. Gentleman should not be so arrogant in talking about sacking advisers. When one gets advice from people who have dealt with this area for a long time, he should not make such silly statements. But, then, it is not unusual for him to make silly statements on taxation.
      New clause No. 3 would cost £38 million because it would include not only residential accommodation.
      The main argument is the argument of cost. The sum of £35 million may not seem very much, although the hon. Member for Braintree accepted that it was not negligible.
      Mr. Newton: It cannot be as much as that in the present year, given that there is no date in the new clauses and that they would therefore not come into effect until the Finance Bill took effect. The Minister should make clear what year he has in mind.
      Mr. Davies: I suspect that that is a full-year cost, although the hon. Gentleman is right to point out that the Provisional Collection of Taxes Act does not apply to stamp duty, so the relief would not come into operation until, normally, 1st August, when the Finance Bill becomes law. Nevertheless, putting this into next year, as the Opposition say, the full-year cost would be £35 million.
      The question is whether an extra £35 million should be used for this or for some other worthy purpose. Even if the new clauses were rejected, four out of five houses would still be exempt from stamp duty. I accept that a small flat in London can cost £15,000 and a threebedroomed house £20,000 to £25,000. But 80 per cent. of houses would still be exempt. One is therefore concerned with 20 per cent. of houses at present values.
      We already have reliefs from capital gains tax and mortgage interest for housing. We do not even have £35 million, but, if we did, is this the best use of scarce resources? The resources from the

      351
      tax system devoted to housing are considerable at the moment. My hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann) made a valid point when he suggested doing away with interest relief on higher rate tax. At least he was addressing his mind to the problem, which is, whether we should devote an extra £35 million to housing or should look at the total sum and perhaps decide that there are other areas where that money could be better spent.
      Mr. Douglas-Mann: Is my right hon. Friend aware that, under the Home Purchase Assistance and Housing Corporation Guarantee Bill at present going through the House, we should give assistance to house purchasers up to the value of £16,000-odd in London and the South-East, so we should be taking with one hand and giving with the other in the most ludicrous way?
      Mr. Davies: There are, of course, a couple of "ifs" in that statement. First of all, that Bill is intended to benefit first-time buyers. Secondly, it is not intended to come into operation for some time. If the Bill were law, it would be a different matter, but at the moment we are concerned with 20 per cent. of houses and an extra £35 million.
      The present reliefs for housing are very generous, especially compared with other countries. The fact that stamp duty is the one tax which has to be paid does not mean that it has to be done away with.
      Mr. John Moore: I agree with what the Minister said about generosity, but would he comment on what so many of us have said about mobility and those seeking to get into the housing market for the first time?
      Mr. Davies: I accept that there are good arguments for the two new clauses, including the mobility argument, but in the end we must decide whether to give this extra priority to housing. We already give it high priority in our tax system. If the Opposition feel that another £35 million is available within the Government's plans, should that go to housing as well? I submit that that would not be right in the present situation. The Government's Budget and their attempt to concentrate all tax reliefs on income was right in the present circumstances.
      352
      For those reasons, I ask the Committee to reject the new clauses.
      Mr. Peter Rees: We have had a short, helpful and constructive debate. What has emerged clearly from interventions from both sides of the Committee is that there is almost unanimity on the principles involved. I say "almost" because the Minister of State, concealing his innate generosity, has stuck closely to his administrative brief. The principles have been well ventilated and I shall not repeat them. There have been useful contributions from both sides of the Committee. The discussion has been almost entirely free from partisan bias.
      It has been demonstrated beyond argument that, on the figures, the amendments are justified. My hon. Friend the Member for Braintree (Mr. Newton), who made the subject particularly his own, has produced incontrovertible evidence. My hon. Friend the Member for Croydon, Central (Mr. Moore) has demonstrated the absurdity of the present position that a married couple who bought a house in 1974 or 1975 might have been free of stamp duty, yet another couple buying the same house now will have to pay stamp duty. There cannot be any logic or reason in that.
      8.30 p.m.
      The Minister of State drew attention to certain practical difficulties in New Clause No. 2. May I say, without the self-confidence of the hon. Member for Cornwall, North (Mr. Pardoe)—unlike him, I am not opposed by the practical difficulties, which can be met—that there are examples of other reliefs in stamp duty. I instance Section 55 of the Finance Act 1977, whereby stamp duty can be clawed back if circumstances alter.
      If this were the sole argument, the Committee would recognise that it was not a good enough case for rejecting either of the proposals. However, I am always happy to defer to the Minister of State, who does his best to meet a legitimate case. If he feels that New Clause No. 2 is objectionable on that ground, I shall invite my hon. Friends to support New Clause No. 3. By our doing so, the Minister of State would be purchasing administrative simplicity at a cost of £3 million against Government expenditure of £60 billion. If the administrators want simplicity, let them buy it at

      353
      that very small figure. I see the Minister of State, with his habitual courtesy, nodding. On reconsideration, he is obviously going to accept New Clause No. 3.
      If the Minister of State will not accept New Clause No. 3, it means that the Administration do not put house buyers high on their list of priorities. There is continual emphasis in the speeches of Labour Members and in their allocation of public finance that they are not over-concerned with the building industry or employment in the building industry. For those reasons, I invite my hon. Friends and Labour Members to support me in the Lobby tonight in pressing New Clause No. 3.
      I am sorry that I have to take the matter to a Division. I had hoped that the Minister of State would have been able to offer some glimmer of hope for these two important sections of our community, but he cannot. I hope that the whole Committee will support New Clause No. 3. On New Clause No. 2, I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn.

    New Clause No. 3

      REDUCED RATES OF STAMP DUTY ON HOUSE PURCHASE
      "Section 55 of the Finance Act 1963 (rates of ad valorem duty on conveyance or transfer on sale), as amended by Schedule 11 to the Finance Act 1974, shall be further amended as follows:

      (a) In paragraph (a) of subsection (1), leave out "£15,000"and substitute "£20,000".

      (b) In paragraph (b) of subsection (1), leave out £20,000" and substitute "£25,000".

      (c) In paragraph (cI of subsection (1), leave out "£25,000" and substitute "£30,000".

      (d) In paragraph (d) of subsection (1) leave out "£30,000"and substitute "£35,000"."—[Mr. Peter Rees.]

      Brought up, and read the First time.
      Question put, That the clause be read a Second Time:—
      The Committee divided: Ayes 227, Noes 266.

      Division No. 210]

      AYES

      [8.33 p.m.

      Adley Robert

      Crowder F. P.

      Harrison, Col Sir Harwood (Eye)

      Aitken, Jonathan

      Dodsworth, Geoffrey

      Harvie Anderson, Rt Hon Miss

      Alison, Michael

      Drayson, Burnaby

      Haselhurst, Alan

      Amery, Rt Hon Julian

      du Cann, Rt Hon Edward

      Hayers, Rt Hon Sir Michael

      Arnold, Tom

      Dunlop, John

      Hayhoe, Barney

      Atkins, Fit Hon H. (Spelthorne)

      Durant, Tony

      Hicks, Robert

      Atkinson, David (Bournemouth, East)

      Dykes, Hugh

      Hodgson, Robin

      Awdry, Daniel

      Elliott, Sir William

      Holland, Philip

      Bell, Ronald

      Emery, Peter

      Hordern, Peter

      Bendall, Vivian (Ilford North)

      Eyre, Reginald

      Howe, Rt Hon Sir Geoffrey

      Bennett, Dr Reginald (Fareham)

      Fairbairn, Nicholas

      Howell, David (Guildford)

      Benyon, W.

      Fairgrieve, Russell

      Hunt, David (Wirral)

      Biffen, John

      Farr, John

      Hunt, John (Ravensbourne)

      Biggs-Davidson, John

      Fell, Anthony

      Hurd, Douglas

      Blaker, Peter

      Finsberg, Geoffrey

      Hutchison, Michael Clark

      Body, Richard

      Fisher, Sir Nigel

      Irving, Charles (Cheltenham)

      Bowden, A. (Brighton, Kemptown)

      Fletcher, Alex (Edinburgh N)

      James, David

      Boyson, Dr Rhodes (Brent)

      Fookes, Miss Janet

      Johnson Smith, G. (E Grinstead)

      Bradford, Rev Robert

      Forman, Nigel

      Jones, Arthur (Daventry)

      Braine, Sir Bernard

      Fowler, Norman (Sutton C'f'd)

      Jopling, Michael

      Brittan, Leon

      Fox, Marcus

      Kaberry, Sir Donald

      Brotherton, Michael

      Fraser, Rt Hon H. (Stafford & St)

      Kershaw, Anthony

      Bryan, Sir Paul

      Fry, Peter

      King, Evelyn (South Dorset)

      Buchanan-Smith, Alick

      Galbraith, Hon T.G. D.

      Kitson, Sir Timothy

      Buck, Antony

      Gardiner, George (Reigate)

      Knight, Mrs Jill

      Budgen, Nick

      Gardner, Edward (S Fylde)

      Knox, David

      Bulmer, Esmond

      Gilmour, Sir John (East Fife)

      Lamont, Norman

      Burden, F. A.

      Glyn, Dr Alan

      Langford-Holt, Sir John

      Butler, Adam (Bosworth)

      Goodhart, Philip

      Latham, Michael (Melton)

      Carson, John

      Goodlad, Alastair

      Lawrence, Ivan

      Chalker, Mrs Lynda

      Gorst, John

      Lawson, Nigel

      Churchill, W. S.

      Gow, Ian (Eastbourne)

      Le Merchant, Spencer

      Clark, Alan (Plymouth, Sutton)

      Gower, Sir Raymond (Barry)

      Lester, Jim (Beeston)

      Clark, William (Croydon S)

      Grant, Anthony (Harrow C)

      Lewis, Kenneth (Rutland)

      Clarke, Kenneth (Rushcliffe)

      Gray, Hamish

      Lloyd, Ian

      Clegg, Walter

      Grist, Ian

      Loverldge, John

      Cockcroft, John

      Hall-Davis, A. G. F.

      Luce, Richard

      Cooke, Robert (Bristol W)

      Hamilton, Archibald (Epsom & Ewell)

      McAdden, Sir Stephen

      Cope, John

      Hamilton, Michael (Salisbury)

      McCrindle, Robert

      Cormack, Patrick

      Hampson, Dr Keith

      McCusker, H.

      Costain, A. P.

      Hannam, John

      Macfarlane, Neil

      MacGregor, John

      Pattie, Geoffrey

      Spicer, Jim (W Dorset)

      MacKay, Andrew (Stechford)

      Percival, Ian

      Spicer, Michael (S Worcester)

      Macmillan, Rt Hon M. (Farnham)

      Pink, R. Bonner

      Sproat, Iain

      McNair-Wilson, M. (Newbury)

      Powell, Rt Hon J. Enoch

      Stainton, Keith

      McNair-Wilson, P. (New Forest)

      Prentice, Rt Hon Reg

      Stanbrook, Ivor

      Madel, David

      Price, David (Eastleigh)

      Stanley, John

      Marshall, Michael (Arundal)

      Pym, Rt Hon Francis

      Steen, Anthony (Wavertree)

      Marten, Neil

      Raison, Timothy

      Stewart, Ian (Hitchin)

      Mates, Michael

      Rathbone, Tim

      Stokes, John

      Mather, Carol

      Rees, Peter (Dover & Deal)

      Stradling Thomas, J.

      Maude, Angus

      Rees-Davies, W. R.

      Tapsell, Peter

      Maudling, Rt Hon Reginald

      Renton, Rt Hon Sir D. (Hunts)

      Taylor, Teddy (Cathcart)

      Mawby, Ray

      Renton, Tim (Mid-Sussex)

      Tebbit, Norman

      Maxwell-Hyslop, Robin

      Rhodes, James R.

      Temple-Morris, Peter

      Mayhew, Patrick

      Ridley, Hon Nicholas

      Thomas, Rt Hon P. (Hendon S)

      Meyer, Sir Anthony

      Ridsdale, Julian

      Townsend, Cyril D.

      Miller, Hal (Bromsgrove)

      Roberts, Michael (Cardiff NW)

      Trotter, Neville

      Miscampbell, Norman

      Roberts, Wyn (Conway)

      van Straubenzee, W. R.

      Mitchell, David (Basingstoke)

      Ross, William (Londonderry)

      Viggers, Peter

      Moate, Roger

      Rossi, Hugh (Hornsey)

      Wakeham, John

      Molyneaux, James

      Rost, Peter (SE Derbyshire)

      Walder, David (Clitheroe)

      Montgomery, Fergus

      Royle, Sir Anthony

      Walker, Rt Hon P. (Worcester)

      Moore, John (Croydon C)

      Sainsbury, Tim

      Walker-Smith, Rt Hon Sir Derek

      More, Jasper (Ludlow)

      St. John-Stevas, Norman

      Wall, Patrick

      Morgan, Geraint

      Scott-Hopkins, James

      Walters, Dennis

      Morris, Michael (Northampton S)

      Shaw, Giles (Pudsey)

      Weatherill, Bernard

      Morrison, Charles (Devizes)

      Shaw, Michael (Scarborough)

      Wells, John

      Morrison, Hon Peter (Chester)

      Shelton, William (Streatham)

      Whitney, Raymond (Wycombe)

      Mudd, David

      Shepherd, Colin

      Wiggin, Jerry

      Nelson, Anthony

      Shersby, Michael

      Winterton, Nicholas

      Neubert, Michael

      Silvester, Fred

      Wood, Rt Hon Richard

      Newton, Tony

      Sims, Roger

      Younger, Hon George

      Onslow, Cranley

      Sinclair, Sir Georgs

      Osborn, John

      Skeet, T. H. H.

      TELLERS FOR THE AYES:

      Page, Rt Hon R. Graham (Crosby)

      Speed, Keith

      Lord James Douglas-Hamilton and

      Page, Richard (Workington)

      Spence, John

      Sir George Young.

      NOES

      Abse, Leo

      Crawshaw, Richard

      Gourlay, Harry

      Allaun, Frank

      Cronin, John

      Graham, Ted

      Anderson, Donald

      Crowther, Stan (Rotherham)

      Grant, George (Morpeth)

      Archer, Rt Hon Peter

      Cryer, Bob

      Grimond, Rt Hon J.

      Armstrong, Ernest

      Cunningham, Dr J. (Whiteh)

      Grocott, Bruce

      Ashley, Jack

      Dalyell, Tam

      Hamilton, James (Bothwell)

      Ashton, Joe

      Davidson, Arthur

      Hamilton, W. W. (Central Fife)

      Atkins, Ronald (Preston N)

      Davies, Rt Hon Denzil

      Hardy, Peter

      Barnett, Guy (Greenwich)

      Davies, Ifor (Gower)

      Harrison, Rt Hon Walter

      Barnett, Rt Hon Joel (Heywood)

      Davis, Clinton (Hackney C)

      Hattersley, Rt Hon Roy

      Bates, Alf

      Deakins, Eric

      Hayman, Mrs Helene

      Bean, R. E.

      Dean, Joseph (Leeds West)

      Healey, Rt Hon Denis

      Beith, A. J.

      de Freitas, Rt Hon Sir Geoffrey

      Henderson, Douglas

      Bennett, Andrew (Stockport N)

      Dempsey, James

      Hooson, Emlyn

      Bidwell, Sydney

      Dewar, Donald

      Horam, John

      Bishop, Rt Hon Edward

      Doig, Peter

      Howells, Geraint (Cardigan)

      Blenkinsop, Arthur

      Douglas-Mann, Bruce

      Hoyle, Doug (Nelson)

      Boardman, H.

      Eadie, Alex

      Huckfield, Les

      Boothroyd, Miss Betty

      Edge, Geoff

      Hughes, Rt Hon C. (Anglesey)

      Bottomley, Rt Hon Arthur

      Ellis, John (Brigg & Scun)

      Hughes, Mark (Durham)

      Boyden, James (Bish Auck)

      English, Michael

      Hughes, Robert (Aberdeen N)

      Bradley, Tom

      Evans, Fred (Caerphilly)

      Hughes, Roy (Newport)

      Bray, Dr Jeremy

      Evans, Gwynfor (Carmarthen)

      Hunter, Adam

      Brown, Hugh D. Provan)

      Evans, Ioan (Aberdare)

      Irvine, Rt Hon Sir A. (Edge Hill)

      Brown, Robert C. (Newcastle W)

      Evans, John (Newton)

      Irving, Rt Hon S. (Dartford)

      Brown, Ronald (Hackney S)

      Ewing, Harry (Stirling)

      Jackson, Colin (Brighouse)

      Buchanan, Richard

      Ewing, Mrs Winifred (Moray)

      Jackson, Miss Margaret (Lincoln)

      Callaghan, Jim (Middleton & P)

      Fernyhough, Rt Hon E.

      Janner, Greville

      Campbell, Ian

      Fitch, Alan (Wigan)

      Jay, Rt Hon Douglas

      Canavan, Dennis

      Fitt, Gerard (Belfast W)

      Jeger, Mrs Lena

      Cant, R. B.

      Flannery, Martin

      Jenkins, Hugh (Putney)

      Carmichael, Neil

      Fletcher, L. R. (Ilkeston)

      John, Brynmor

      Carter, Ray

      Fletcher, Ted (Darlington)

      Johnson, Walter (Derby S)

      Carter-Jones, Lewis

      Foot, Rt Hon Michael

      Johnston, Russell (Inverness)

      Cartwright, John

      Ford, Ben

      Jones, Barry (East Flint)

      Castle, Rt Hon Barbara

      Forrester, John

      Jones, Dan (Burnley)

      Clemitson, Ivor

      Fowler, Gerald (The wrekln)

      Kaufman, Gerald

      Cocks, Rt Hon Michael (Bristol S)

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

      Kelley, Richard

      Cohen, Stanley

      Freeson, Rt Hon Reginald

      Kerr, Russell

      Coleman, Donald

      Freud, Clement

      Kilroy-Silk, Robert

      Colquhoun, Ms Maureen

      Garrett, John (Norwich S)

      Kinnock, Neil

      Conlan, Bernard

      George, Bruce

      Lambie, David

      Cook, Robin F. (Edin C)

      Gilmour, Rt Hon Ian (Chesham)

      Lamborn, Harry

      Corbett, Robin

      Ginsburg, David

      Lamond, James

      Cowans, Harry

      Golding, John

      Latham, Arthur (Paddington)

      Crawford, Douglas

      Gould, Bryan

      Lee, John

      356

      357

      Lestor, Miss Joan (Eton & Slough)

      Owen, Rt Hon Dr David

      Strang, Gavin

      Lever, Rt Hon Harold

      Padley, Walter

      Summerskill, Hon Dr Shirley

      Lewis, Ron (Carlisle)

      Palmer, Arthur

      Swain, Thomas

      Litterick, Tom

      Pardoe, John

      Thomas, Dafydd (Merioneth)

      Lomas, Kenneth

      Park, George

      Thomas, Jeffrey (Abertillery)

      Loyden, Eddie

      Parker, John

      Thomas, Mike (Newcastle E)

      Lyon, Alexander (York)

      Parry, Robert

      Thomas, Ron (Bristol NW)

      Lyons, Edward (Bradford W)

      Pavitt, Laurie

      Thompson, George

      Mabon, Rt Hon Dr J. Dickson

      Pendry, Tom

      Thorne, Stan (Preston S)

      McCartney, Hugh

      Penhaligon, David

      Tierney, Sydney

      MacCormick, Iain

      Price, C. (Lewisham W)

      Tilley, John (Lambeth, Central)

      McDonald, Dr Oonagh

      Price, William (Rugby)

      Tinn, James

      McElhone, Frank

      Radice, Giles

      Tomlinson, John

      MacFarquhar, Roderick

      Reid, George

      Torney, Tom

      MacKenzie, Rt Hon Gregor

      Richardson, Miss Jo

      Wainwright, Edwin (Dearne V)

      Mackintosh, John P.

      Roberts, Albert (Normanton)

      Wainwright, Richard (Colne V)

      Maclennan, Robert

      Roberts, Gwilym (Cannock)

      Walker, Harold (Doncaster)

      Madden, Max

      Robinson, Geoffrey

      Walker, Terry (Kingswood)

      Magee, Bryan

      Roderick, Caerwyn

      Ward, Michael

      Mahon, Simon

      Rodgers, George (Chorley)

      Watkins, David

      Mallalieu, J. P. W.

      Rooker, J. W.

      Watt, Hamish

      Marks, Kenneth

      Roper, John

      Weitzman, David

      Marshall, Dr Edmund (Goole)

      Rose, Paul B.

      Wellbeloved, James

      Marshall, Jim (Leicester S)

      Ross, Stephen (Isle of Wight)

      Welsh, Andrew

      Maynard, Miss Joan

      Ross, Rt Hon W. (Kilmarnock)

      White, Frank R. (Bury)

      Meacher, Michael

      Ryman, John

      White, James (Pollock)

      Mellish, Rt Hon Robert

      Sandelson, Neville

      Whitehead, Philip

      Mendelson, John

      Sedgemore, Brian

      Whitlock, William

      Mikardo, Ian

      Selby, Harry

      Wigley, Dafydd

      Millan, Rt Hon Bruce

      Sever, John

      Willey, Rt Hon Frederick

      Miller, Dr M. S. (E Kilbride)

      Shaw, Arnold (Ilford South)

      Williams, Alan Lee (Hornch'ch)

      Mitchell, Austin

      Sheldon, Rt Hon Robert

      Williams, Rt Hon Shirley (Hertford)

      Mitchell, R. C. (Soton, Itchen)

      Shore, Rt Hon Peter

      Williams, Sir Thomas (Warrington)

      Moonman, Eric

      Silkin, Rt Hon John (Deptford)

      Wilson, Rt Hon Sir Harold (Huyton)

      Morris, Alfred (Wythenshawe)

      Silkin, Rt Hon S. C. (Dulwich)

      Wilson, William (Coventry SE)

      Morris, Rt Hon Charles R.

      Silverman, Julius

      Wise, Mrs Audrey

      Moyle, Roland

      Skinner, Dennis

      Woodall, Alec

      Murray, Rt Hon Ronald King

      Smith, John (N Lanarkshire)

      Woof, Robert

      Newens, Stanley

      Snape, Peter

      Wrigglesworth, Ian

      Noble, Mike

      Spearing, Nigel

      Young, David (Bolton E)

      Oakes, Gordon

      Spriggs, Leslie

      O'Halloran, Michael

      Stallard, A. W.

      TELLERS FOR THE NOES:

      Orme, Rt Hon Stanley

      Stoddart, David

      Mrs. Ann Taylor and

      Ovenden, John

      Stott, Roger

      Mr. Joseph Harper.

      Question accordingly negatived.

    New Clause No. 4

      INTEREST ON TAX OVERPAID
      "(1) Section 47 of the Finance (No. 2) Act 1975 shall be amended as follows:—

      (a) In subsection (1) (a) for the words "twelve months following that year of assessment" there shall be substituted the words "relevant time".

      (b) In subsection (3) (a) for the word "in" there shall be substituted the words "on the last day of".

      (c) In subsection (3) (b) for the words "for the year of assessment in which the contingency mentioned in that section happened" there shall be substituted the words "on the last day of the tax month in which the contingency mentioned in that section happened or on the last day of the tax month in which the claim was made, whichever is the later".

      (d) For subsection (4) there shall be sub-stituted—

      (4) For the purposes of subsection (1) above—

      (a) if the repayment is of tax that was paid on or before the reckonable date under section 86 of the Taxes Management
      358
      Act 1970, the relevant time is the reckonable date in relation to that tax;

      (b) if the repayment is of the special charge, the relevant time, as regards so much of the charge as was paid before the end of the year 1969–70, is the end of that year, and, as regards so much of the charge as was paid in any later year of assessment, is the end of the year of assessment in which it was paid;

      (c) in any other case, the relevant time is the last day of the tax month in which the tax comprised in the repayment was paid;

      and, subject to subsection (6) below, where a repayment to which subsection (1) above applies is of tax paid on different dates, the repayment shall as far as possible be treated for the purposes of this subsection as a repayment of tax paid on a later rather than an earlier date among those dates.
      (e) In subsection (5) for the word "for" there shall be substituted the words "on the last day of".
      (2) Section 48 of the Finance (No. 2) Act 1975 shall be amended as follows:—

      (a) In subsection (2) there shall be omitted the words "the end of the twelve months beginning with"

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      (b) For subsection (4) (a) and (b) there shall be substituted

      (a) if the payment is a repayment of corporation tax that was paid on or before the material date, the relevant date is the material date;

      (b) in any other case, the relevant date is the last day of the tax month in which the corporation tax comprised in the repayment was paid;

      (c) In subsection (5) (a) for the word "for" there shall be substituted the words "on the last day of".

      (d) In subsection (5) (b) for the word "for" there shall be substituted the words "on the last day of"."—[Mr. Peter Rees.]

      Brought up and read the First time.
      8.45 p.m.
      Mr. Peter Rees: I beg to move, That the clause be read a Second time.
      At first sight the new clause may seem to be rather complex, but it has a fairly simple objective. It is to amend Section 47 of the Finance (No. 2) Act 1975, which, the Committee will recall, altered the arrangements with regard to interest on overdue tax and also provided for a "repayment supplement" where tax had been overpaid and had to be repaid by the Revenue. The difficulty was that the repayment supplement is not calculated, at any rate in point of time, on the same basis as interest on tax underpaid. Interest on tax underpaid or overdue is calculated, as it is charmingly described in the statute, from "the relevant date", which is normally a date just in or just after the year of assessment.
      On the other hand, the repayment supplement, which in spite of its name is, in effect, interest, although not subject to tax, is to be calculated from a time running from at least one year later from the date the tax was paid. Again, that is another asymmetry between interest on tax overdue and underpaid and the repayment supplement in that the Revenue has the right to waive up to £10 of interest on tax overdue but has the right to ignore the first £25 of any repayment supplement.
      It is to correct the greater of these two imbalances that my right hon. and hon. Friends and I have tabled the new clause. Of course, the imbalance is greater than might at first sight appear, because it is often very difficult to calculate the tax which a taxpayer may have to pay inside the year of assessment. For instance, in the commencement years under Schedule
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      3 it is often difficult for a taxpayer to determine, on quite innocent and honourable motives, what the tax due might be. He may well find himself, for quite innocent reasons, paying interest on the tax that is eventually found due.
      In the case of partnerships, it is difficult for the individual partners to determine their own liability because it so often depends on the shifting circumstances of the partnership, such as, partners joining and leaving. The same is true of capital gains tax and capital transfer tax where complex valuations are in point. Therefore, so far as my right hon. and hon. Friends and I can detect, there is unease about the operation of these two provisions. Clearly, if there is to be equity the repayment supplement provisions should be the mirror image of the interest provisions.
      The unease is not confined to taxpayers. To reassure Government supporters below the Gangway, who I am sure intend to support the new clause, there is also unease at Somerset House. I know that the hon. Member for Bristol, North-West (Mr. Thomas) is very tender of the susceptibilities of Somerset House, although he may not be so tender of the susceptibilities of the Opposition. But I am sure he would wish to put the consciences of those at Somerset House at rest, and we shall listen with great interest to what he has to say.
      Mr. Ron Thomas: How many votes have they?
      Mr. Rees: That is a very crude intervention. The hon. Member may find that in his constituency, for instance, there are a considerable number of Inland Revenue staff.
      Despite the slightly acrimonious exchange between the Chief Secretary and my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), it has emerged fairly clearly that the business of revenue collection is a growth industry and that the number of people getting drawn into it year by year, certainly under a Labour Administration, is increasing.
      Mr. Thomas: Tax avoidance is a growth industry, too.
      Mr. Rees: Indeed it is, and tax evasion is, too. If the hon. Member is concerned about tax avoidance and tax

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      evasion, he might consider why it is a growth industry. He may consider the complexity of the tax system. He may also consider the rates.
      Mr. Thomas indicated dissent.
      Mr. Rees: I see that the hon. Member does not agree. It may be that he finds the tax system simple. He may be a person of luminous intellect. So far, I have not heard any very carefully considered speeches from him on fiscal matters. I had occasion to listen to a certain amount of his contribution to our debate on the indexation of capital gains. Although I shall take care to reread his lapidary words in Hansard tomorrow, if it is printed, it did not strike me that he had shown a very profound knowledge of the tax system.
      We know that the hon. Member knows a certain amount about housing, and I was sorry that he did not contribute to our recent debate on stamp duty and housing. If he had, he might have told us whether, for example, there should be a special exemption for those who are buying council houses as sitting tenants. I know that many of those who are doing so are below the threshold. It may be that the hon. Member was lucky enough to pay a price well below the threshold. But let me remind him, although he is drawing me a little off course—it is one of the charms of these debates in Committee on Finance Bills—that, whatever happens in the noble city of Bristol, a great number of council houses in the Greater London area are worth considerably more than £20,000, so questions of stamp duty are of great concern.
      Mr. Cronin: On a point of order, Mrs. Butler. The hon. and learned Member is making a very entertaining speech, but I cannot see what relevance it has to the new clause.
      The Temporary Chairman (Mrs. Joyce Butler): I hope that the hon. and learned Member will make his meaning clear.
      Mr. Rees: I am perhaps at times a little obscure in my contributions, and perhaps I was tempted by the hon. Member for Bristol, North-West. I know that it is always unwise to consider his interventions at all seriously, especially those
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      which he makes from a sedentary position. Whether he will make a serious contribution on his feet remains to be seen.
      To reassure the Committee and particularly the hon. Member for Bristol, North-West and his hon. Friends—this is absolutely germane to our debate—I was about to say that there is unease not only among the general body of taxpayers but also at Somerset House and in the mind of the Ombudsman. I refer the Committee to the report of the Ombudsman for 1976. In paragraph 8 he said:
      "Another particular source of complaint during 1976 was the charging of interest on unpaid tax. The Finance (No. 2) Act 1975 tightened up considerably the provision relating to such charges. In particular it did away with the two-month period of grace …. In other, more recent, cases in which I have not yet completed my investigations, the situation giving rise to the interest charge may have involved some official error. At the end of the year I was still considering whether the Department's present policy of interest charges—as expressed in relation to cases which I investigate—is one I would be justified in accepting without further comment."
      Those are interesting words.
      The Ombudsman thought a little further in 1977 on that subject, and in paragraph 36 he said:
      "the Chairman of the Board informed me on 18th October 1977 that he had decided that the time had come to review the provisions on interest on late payment (and repayment) of tax, two years having elapsed since their introduction. The departmental committee conducting the review had not completed its report at the time this present Report went to print."
      We have both the Ombudsman and the chairman of the Board of the Inland Revenue concerned about this. Of course, to the frivolous mind of the hon. Member for Bristol, North-West these matters are of small moment. But I am a little concerned about these matters, and this is one of the reasons why we have put down this provision.
      Following up this theme, I should point out that this matter was taken up by the Select Committee on the Parliamentary Commissioner for Administration. Members of the Committee asked Sir William Pile what he had done about this and how the departmental review had proceeded. He was unable to give a clear answer and said that there was one matter—a matter of forms—which he

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      regarded as within his administrative competence. He said that he would be designing new forms. I am sure that this will be a matter of great reassurance to the general body of taxpayers. He went on to say that there were two other matters, which would involve legislative changes, which he was putting to the Ministers responsible for his Department. Therefore, we are entitled to ask the Financial Secretary, in the context of this debate, the outcome of the departmental review.
      Does the Financial Secretary share the concern of Sir William Pile and Sir Idwal Pugh? If not, why does he take a blander and more robust view of these problems? Does he think that they can be swept under the carpet, or does he think that something should be done? It is to give the Financial Secretary an opportunity to make amends to the general body of taxpayers who may be unfortunate enough to incur interest on taxes that are overdue or who may be lucky enough to have a repayment supplement due to them that we have put down this new clause.
      The public unease about the administration of the tax system goes a little wider than that. I do not level by criticism at the devoted servants of Somerset House, almost all of whom are courteous and incorruptible. But we know and they know in their heart of hearts, although they would be much too loyal to say so publicly, that they have had heaped on their shoulders of late a quite impossible task—complex legislation with penal rates.
      In imposing this legislation, the unattractive consequences are that there will be many cases where a person will, quite unwittingly, find himself having to pay interest on tax that he cannot even reasonably calculate within the year of assessment. Equally, of course, he may be fortunate enough to have due to him this repayment supplement, but the supplement will not be calculated on the same basis as interest on tax overdue.
      In this process of destroying public confidence in the tax system and heaping even more unconscionable burdens on the taxpayers, the Government have been egged on by Lord Plant and Mr. Christopher, who seem to regard it as their particular duty to incite the Government to ever-fresh flights of fancy in turning
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      the screw even harder and exacting more and more tax from the general body of taxpayers.
      The hon. Member for Bristol, North-West may find that these are matters for complete hilarity. I do not know how many taxpayers there are in his constituency. Perhaps there are none—which would be most unusual. But it is difficult to know how he will explain his frivolity to those who return him to this place. Perhaps they will not be returning the hon. Gentleman for much longer and his hilarity is, therefore, of a certain forced and hysterical note.
      9.0 p.m.
      The Government have started what appears to be a vendetta against the self-employed. Their motives are a little hard to fathom. It may be that in their simple, Marxist minds we can all be categorised into sharply defined classes—self-employed, employees, kulaks. Of course the self-employed are those marked down for disapprobation and destruction. Those Members in the Committee who have a slightly closer acquaintance with the facts of life and the operation of the tax system will know that the self-employed are not a clearly defined body of taxpayers. They will know that a great number of people who pay part of their tax under Schedule E also have self-employed jobs on the side.
      Mr. Ron Thomas: Such as Members of Parliament.
      Mr. Rees: Perhaps. I do not know. It may be that the hon. Gentleman is lucky enough to have some other form of occupation. I doubt it. It is not, perhaps, profitable for me to speculate on the contribution that the hon. Gentleman can make outside this Committee. I suspect that it is rather limited.
      The Committee will recall that it is possible for people to move in and out of the category of self-employed. For instance, in the Finance Bill there is an interesting clause that takes divers out of the ranks of the employed and puts them into the ranks of the self-employed. This is, perhaps, a welcome move and I suspect that we had one or two debates on this last year. It will be important to determine why it is that the Financial Secretary has chosen to introduce this interesting provision.

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      Whether a person is employed or self-employed he is entitled to be treated with a modicum of care and courtesy. There have been interesting reports circulating of the most extraordinary series of questions being administered to the self-employed. My hon. Friend the Member for Somerset, North (Mr. Dean) tabled Questions about this but the Financial Secretary has not given a clear or convincing answer. I do not know whether it is that he is unaware of what is being done in his name in various tax districts or whether it is because he is a little coy about the questions that are being administered. No doubt he will be able to enlighten the Committee this evening.
      I should like to tell the Committee—because there are obviously some Labour Members below the Gangway who are unaware of the situation—what is being done in the name of the Government to perhaps quite innocent taxpayers. A range of personal questions are being administered. They are placed under certain general headings. These are questions apparently being administered to the self-employed by inspectors. I have no doubt that they are being administered extremely reluctantly, because I know a number of Inland Revenue staff and I know that they find the process extremely distasteful.
      The Temporary Chairman: Order. Will the hon. and learned Gentleman relate what he is saying to the new clause? It is difficult to find a connection at present.
      Mr. Rees: If you will bear patiently with me, Mrs. Butler, you will see the connection, because we are concerned here with the relationship between interest on tax overdue and the repayment supplement.
      The questions to be administered to the self-employed, as I understand it—perhaps the Financial Secretary will correct me—will go very much to the question of whether they have paid their full measure of tax. In other words, the inspectors are groping around trying to find out whether there has been tax underpaid. If so, the unfortunate taxpayer will be charged interest. The essence of this debate is the harmonisation of the provisions relating to the repayment supplement to the provisions relating to tax
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      underpaid. That is why I feel it is important—
      The Temporary Chairman: Order. The new clause relates to tax overpaid.
      Mr. Rees: As you will have heard, Mrs. Butler, the burden of our case is that it is crucially important, if there is to be equity in the tax system and if taxpayers are to have confidence in the system, that these two provisions should be a mirror image of each other. In other words, interest on tax underpaid should be calculated in exactly the same way and on the same basis as the repayment supplement. Therefore, it is important to discover what steps the Inland Revenue is taking in this respect.
      I hope that you will bear with me, Mrs. Butler, because all will become clear in due course. I hope that you will allow me to investigate a little the techniques employed by the Inland Revenue to force out of the reluctant, perhaps ignorant, individual taxpayer the basis of his affairs. I hope that you will let me proceed.
      On the subject of tax underpaid, let me explain the range of questions that are being put. The Financial Secretary may say that this is not the case. For example, taxpayers are being asked about their general housekeeping.
      Mr. A. J. Beith: I am trying to work out in what way the practices of the Inland Revenue will be changed if the new clause is carried. Some of the allegations which the hon. and learned Gentleman seems to have got hold of may be serious, but how can we be sure that the effect of the clause would be to stop these practices?
      Mr. Rees: It may be that the Inland Revenue will be a little more concerned to see that, where tax is overpaid, it is repaid with a little more promptness. I apologise to the Committee if I am being a little obscure in my presentation. I am sorry that the Liberal Party appears to be not over-concerned about these matters.
      Mr. Beith: How will this clause help?
      Mr. Rees: We know that the hon. Gentleman does not contribute a great deal to these debates and takes his line in this subject from his hon. Friend the

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      Member for Cornwall, North (Mr. Par-doe). I am sorry that that hon. Gentleman is not present. I know that it must be difficult for the hon. Member for Berwick-upon-Tweed (Mr. Beith) to deputise for such an ebullient and expansive figure, but he must do his best. No doubt he will catch the eye of the Chair a little later.
      Mr. Ron Thomas: Is the hon. and learned Gentleman saying that if people have overpaid tax and get back a little more interest, they will not mind these questions being asked?
      Mr. Rees: I thought that the hon. Gentleman was not following the debate very closely, and I now know that to be the case. The hon. Gentleman must be patient. I know that he is a newcomer to these problems. He will have his chance and his moment of glory. For the moment, he should be patient and leave the banner to be carried by his right hon. Friend the Financial Secretary, who is looking a little uneasy at having to carry the burden.
      I do not wish to detain the Committee for long, but I believe that the right hon. Gentleman should put our minds at rest. For example, does the Financial Secretary feel it right that a taxpayer should be asked about the clothing of his family, including shoe repairs, school uniforms and sports equipment, or that the cross-examination should go on to question the school fees for children at dancing classes? Finally one comes to capital items, including the major furniture for each room in the house. These are deeply personal and intrusive questions.
      It is all very well for the hon. Lady the Member for Thurrock (Dr. McDonald) to make muttered comments. I do not know her personal circumstances. I wonder how she would like it if she were cross-examined about outings and visits, including those to relations. Would she be very happy if she were cross-examined about the scale of her entertaining or her contribution to charities? For all I know, the hon. Lady may make none. What will be a matter of particular concern to the hon. Lady is being questioned about her expenditure on hairdressing and cosmetics. Does she think that that is the kind of question to be put to a taxpayer? She is now beginning to look
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      a little uneasy, and naturally so. She cannot be happy that that type of question is administered to a taxpayer, who must be presumed to be innocent.
      Mr. Eddie Loyden: Are not these questions posed to every applicant for supplementary benefit'? Does not the hon. and learned Member realise that in many cases the questioning is even closer and that the authorities, before they make a decision, require to see the shoes, the clothes and the furniture in question?
      Mr. Rees: The hon. Gentleman is getting a little carried away. I cannot speak—of course, I cannot—of what the Supplementary Benefits Commission may do in his constituency.
      Mr. Loyden: Not just my constituency.
      Mr. Rees: I have never had evidence that in my constituency—
      The Temporary Chairman: Order. I am sorry to interrupt the hon. and learned Gentleman again, but we are getting very wide of the new clause. Other hon. Members wish to speak, and I hope that he will confine his remarks rather more closely to the clause.
      Mr. Rees: I am afraid that it was the hon. Member for Liverpool, Garston (Mr. Loyden) who trespassed a little on my good nature, and I was led into matters which, I agree, are not entirely germane to this provision. I am sure, Mrs. Butler, that, had you checked the question, I should not have fallen into the trap, but, as I say, I am always rather prone to that kind of self-indulgence.
      I have given an indication of the type of approach which, apparently, the Revenue is adopting in this area of taxation. I wish only to identify certain areas of unease, and perhaps the Financial Secretary will be able to reassure the Committee and say "No, this is done entirely without my concurrence and consent. These are only one or two over-enthusiastic officers, and the general run of inspector never has any truck with that type of questionnaire."
      I wish now to move on, if I may—
      Mr. Ron Thomas: Keeping to the point, I hope.
      Mr. Rees: The hon. Gentleman must contain himself. If he wishes to make an intervention, let him do so on his feet, He will have ample opportunity, and I think it the grossest discourtesy—
      Mr. Thomas rose—
      Mr. Rees: I have given way to the hon. Gentleman on every possible occasion, and I shall not do so again because, as you rightly pointed out, Mrs. Butler, I may get led into interesting byways which, perhaps, are of no direct relevance to this important new clause.
      I come now to the report of the Ombudsman. In 1976 there were 114 complaints against the Inland Revenue. Of these, 39 were rejected, 75 were accepted and the Ombudsman found 26 cases of maladministration. In 1977 he investigated 89 cases. Thirty complaints he did not uphold, but he criticised the Department concerned and in 32 cases he upheld the complaint.
      Since the Committee is obviously avid for evidence. I refer it to the report of the Parliamentary Commissioner for Administration on the investigations completed from November 1977 to January 1978. There are about eight or nine cases there, and I am sorely tempted to take the Committee through them in some detail, since there is a rich vein of ore to be exploited. [HON. MEMBERS: "GO on."] Now I am being encouraged by hon. Members on the Government side. They are changing their tune. A moment ago they affected boredom and disbelief. Now, evidently, they are breast high with me, they have had a change of heart and they are beginning to realise that there may well be substance in the complaints which we are making.
      With that encouragement, how can I possibly refuse? Obviously, I must take hon. Members through each case. The theme is constant. I refer the Committee to case No. 1A/725/K—"Interest on capital gains tax". The report starts off emotively and very directly:
      "A widow complained that she had been charged interest on capital gains tax in circumstances which were no fault of hers."
      Here is the conclusion:
      "The Chairman's apologies acknowledge that there has been considerable delay in establishing the complainant's tax liability; and I am afraid that, for the reasons given in paragraph 7, she still has tax to pay. But her complaint
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      to me was concerned with the interest she had been required to pay, and this has been satisfactorily resolved by the Department's decision to give up the whole of that interest charge."
      In case after case—almost every single case in this volume except one, in which the taxpayer went to the Special Commissioners and largely had his problem sorted out there—we find a constant theme. The chairman apologises, "Yes, there have been delays, yes, standards are not quite what one would think appropriate for a great Department of State"; sometimes, "We can help and repay the interest and waive it"; sometimes, "Yes, there will be a repayment supplement." But a very sorry state of affairs is disclosed.
      Against that background, it is not putting it too high to say that there is a risk of the breakdown of confidence in the whole tax system. A system which does not appear to be fair to the general body of taxpayers will give rise—I think that even the hon. Member for Bristol, North-West will appreciate this—to avoidance and evasion. The Government should search their conscience and consider the part which their actions have played in reducing our tax system to this sorry state—higher and higher rates and greater and greater complexity against a background of inflation and falling living standards.
      9.15 p.m.
      There is no point in arming the Revenue with more powers of search and inquisition. I know that this was the tactic adopted a few years ago by those on the Treasury Bench.
      Dr. Oonagh McDonald indicated dissent.
      Mr. Rees: I see the hon. Lady shaking her head. I am not absolutely certain that she was in the House of Commons—she was certainly not a member of the Committee which considered the Finance Bill—when we debated the inquisitorial powers—[Interruption.]—The hon. Lady is very quick and pert with her comments, but if she cannot follow the thread of my argument, I admit that the fault must be mine, although it could equally well be that she has not applied herself to these problems. It is not enough merely to look decorative on the Bench behind the Financial Secretary. I know that a

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      little feminine charm does not come amiss to add a thin veil of decency to what has happened in the Financial Secretary's name, but it does not advance our debates.
      I believe that the most telling summary of what has happened was contained in a recent article by a very distinguished figure, Lord Houghton of Sowerby. As it happens, he was a predecessor of Lord Plant and Mr. Christopher and probably has a deeper and far more profound knowledge of the tax system than they. Labour Members will recollect that Lord Houghton of Sowerby did not grace the Conservative Party. He was brought up in the hard school of Labour politics. He knew all about the kind of things that the hon. Lady and the hon. Member for Bristol, North-West regard as part of the political education of any Labour Member.
      This is what Lord Houghton of Sowerby said, and I am sure that Labour Members will regard this as relevant:
      "In desperation, the tax-gatherer is driven to the conclusion that to administer and construe the Income Tax and Finance Acts is not enough. He must have the power to search the taxpayer's conscience and compel him to bare his soul. Was he up to something? To protest innocence is not enough: there must be proof of it.
      "It is time tax-gatherers thought out more deeply and clearly their ethical approach to those aspects of human conduct which appear to offend them so much. Taxation has no more to do with morals than the Rating and Valuation Act, or the Community Land Act, or even the dog licence. Taxation is an act of Parliament not an act of God. It is what Parliament says it should be, no more, no less."
      It is too late in the life of this Administration to expect a major measure of reform. It is too late, perhaps, to expect from the Financial Secretary a gesture of repentance, but at least he can accept this very modest new clause as a token that he appreciates the damage that he and his right hon. Friends have done to the body of taxpayers and to the tax system. On that basis I commend the new clause.
      The Financial Secretary to the Treasury (Mr. Robert Sheldon): On Supply Days there is a note on the Order Paper saying that the subject to be debated is selected by the Opposition. It would have been helpful on this new clause if we had had a note saying that it had been selected by the Opposition, because I do not think
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      that one could have told that from what the hon. and learned Member for Dover and Deal (Mr. Rees) said.
      The hon. and learned Member spoke about the reform of the tax system. It that is what he wished to achieve, it would not have been beyond his abilities to table a new clause dealing with precisely that subject. This is a technical new clause. It has a very precise purpose. It seeks to equalise the situation concerning interest due to the taxpayer and interest due to the Inland Revenue.
      The new clause attempts to provide a measure of symmetry between the amount of repayment to the taxpayer and the date from which it should run, on the one hand, and the position of the Inland Revenue, on the other. I do not think that I need go into the position in anything like the depth that I had thought would be necessary, because the hon. and learned Gentleman did not address his remarks to the new clause. The answer is that there is no difference of principle between the sentiments underlying the new clause and what I feel. I should dearly wish to see symmetry but such symmetry is not practicable. This is no matter of principle, but of impracticability. The arrangements for charging tax are different from those made for repaying the extra amount due as a result of an overcharge.
      I should say at the outset that blame does not necessarily attach to the Inland Revenue's making a late repayment. There could be a very late claim. As a result, interest would still run at 9 per cent., and that could be of benefit to the taxpayer because it is free from tax. It is impossible to attempt to achieve symmetry between the Inland Revenue and the taxpayer, largely because the pay-as-you-earn system does not permit it.
      According to the new clause, the repayment would have to be made at the end of the tax year. It is not possible to do that, because the information does not come in to the tax offices until well after the tax year. That covers five-sixths of all tax repayments. Clearly, if we were to make a gigantic effort to bring about a situation which was as closely in line as was possible, we would have to engage 1,200 extra staff to deal with 3 million

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      additional cases and we still would not meet the obligations of the new clause.
      It is interesting to look not at the report of the Parliamentary Commissioner for Administration, which, as the hon. and learned Member for Dover and Deal said, can be interpreted in different ways, but at the clear report from the same Select Committee in 1971, Cmnd. 4729, when condemnation was made of the existing practice. As a result, the Government made some observations:
      "The Chancellor of the Exchequer"
      —that was Mr. Anthony Barber—
      "has therefore concluded that it is not practicable to introduce arrangements, capable of being operated by tax offices, for applying a financial remedy in cases of undue delay in repayment of tax."
      That was confirmed in the report by the same body two years later. It was not considered practicable. In the Finance Act 1975 we introduced such a balance between the treatment of the taxpayer and the Revenue. Of course, it is not complete. The interest charged on late payments of tax and the interest provided by late repayments have come more into line. We have tried to be as fair as possible between the taxpayer and the Revenue.
      I am not convinced that it is possible to go further at present, but I take note of the wording of the new clause, if not of the comments made by the hon. and learned Member for Dover and Deal. I ask the Committee to reject the clause.
      Mr. Cope: I do not think that the Financial Secretary was of great help to the Committee in making up its mind about the new clause. First, he said, and I entirely agree, that he thought that there should be asymmetry—I think that was his word, and it is a good word—between the taxpayer and the Inland Revenue in the way in which the interest charges operate for tax which is overpaid and for tax which is underpaid. This goes to the nub of what the new clause is all about.
      In saying what he did the Financial Secretary was reflecting what the Chancellor of the Exchequer said on the Second Reading of the Finance (No. 2) Bill in 1975. The right hon. Gentleman, explaining why the provisions were being introduced, said:
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      "The new provisions are intended broadly to neutralise the advantage which a taxpayer may secure under the present system".—[Official Report, 8th May 1975; Vol. 891, c. 1644.]
      I am not sure what he meant by "neutralise". There are two possible meanings. One is to eliminate the taxpayer's advantage—to neutralise it in that sense—and the other is to make it neutral—in the Financial Secretary's words, to introduce symmetry as between taxpayers who overpaid and taxpayers who underpaid. Certainly I should like to see symmetry, as would the Financial Secretary and, I presume, the Chancellor. It should be obvious to anyone who knows anything about the matters that there is no symmetry now.
      The Financial Secretary spoke of obtaining an element of balance, but there is an extremely unbalanced balance at the moment. It involves a 12-months' difference in the date from which the interest starts to run when paid by the taxpayer and by the Revenue respectively. The new clause, relatively complicated as it seems on paper and full of the sort of jargon that is used a great deal in this sort of legislation, does its best to eliminate that one-year difference.
      It is important to bear in mind that the view of the Inland Revenue, and therefore, I assume, of the Government, is that the interest charged on tax paid late, or the interest paid by the Revenue on tax paid early or overpaid, is not intended to be a penalty. It is intended only to be a commercial rate of interest which compensates the Revenue or taxpayer for the lack of use of the money over a period of time.
      I do not think that the system works like that. The rate of interest paid at the moment is 9 per cent. on both sides, but that is paid out of after-tax income. For many people that is a completely different matter from 9 per cent. paid out of pre-tax income. For example, if a man owed £100 for a year he would be charged £9 interest by the Revenue. If he had put that money into a bank and had earned 9 per cent., when the Inland Revenue had finished with it he would not have £9 left with which to pay the Inland Revenue. In that sense the rate is in no way a commercial rate; it is a penalty. With repayment claims the system works differently.

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      It follows, in the Inland Revenue's view, and I assume therefore, the Government's, that the system should operate automatically. It does not operate on the basis of anyone making a mistake. There might be a mistake, or perhaps the taxpayer is being difficult and is not sending in his returns. But the late payment can be the fault of the Revenue, not the taxpayer. The Revenue may make a mistake in its calculations, but the interest is still generally payable. Many of the cases that have gone to the Parliamentary Commissioner for Administration have come within this category where the Revenue has made a mistake or misled a taxpayer and the interest became due. The other half of the symmetry of which the Financial Secretary spoke also applies.
      9.30 p.m.
      I have the honour to be a member of the Select Committee on the Ombudsman. The Select Committee supervises his work, goes through his reports, and so on. We have recently taken evidence from Sir William Pile and Mr. Green, of the Inland Revenue, on the whole question of interest charges and the way in which they work. They made clear to us that they recognise that there are areas of difficulty and that sometimes the Revenue makes a mistake. How could it not do so? There are a large number of people doing a complicated job. There are bound to be mistakes from time to time. But the Revenue rarely agrees to any waiver of the interest charge as a result of its having made a mistake. Therefore, it is important to see the way in which this interest operates if one is to understand what we are trying to do and the symmetry that we are trying to achieve.
      It is also clear from the evidence of Sir William Pile and Mr. Green on 15th March this year that they themselves recognise, from the Ombudsman's reports and from their own experience, that these interest charges, in both directions, were not working as well as they might. Sir William said to us:
      "I was conscious that there were difficulties, so I thought it was time we had a look at the arrangements as they worked out in practice."
      He went on to explain that they had had a considerable review of the arrangements in practice and were trying to improve the system.
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      I do not want to mislead the Committee. Sir William did not suggest the new clause, or anything like it, but he was addressing his mind, and causing his departmental committee to address its mind, to similar sets of problems. They came up with four suggestions—two administrative and two legislative. The first is concerned with the forms and the way in which they are filled in, and so on. One is a descriptive form, the other being a form which had to be filled in by taxpayers to make it absolutely clear what he was doing. Those are administrative things which we understand are being put in hand by the Revenue.
      But there are also two legislative changes which we were told were being recommended by the Revenue to the Financial Secretary, both of which seem to be sensible changes. They do not go as far as we would like to go or as far as the new clause goes. However, if tonight the Financial Secretary can tell us—it is not in the Bill—that he proposes to implement at a later stage those legislative proposals of the Inland Revenue, it would slightly modify my attitude towards the new clause, because it would alter the balance of the symmetry a little as between the taxpayer and the Revenue in this matter—the symmetry that the Financial Secretary told us he wants to see.
      Even if the Financial Secretary is not able to answer us on this point tonight, I shall be doing my best, with the support of some of my hon. Friends, I hope, to table amendments similar to those suggested by the Inland Revenue, which we can discuss in Standing Committee later.
      However, the important thing, the nub of the new clause, is the starting date. The Financial Secretary, like Sir William in answering questions in the Select Committee, dwelt heavily on the complications of the arrangements that would be necessary in order to try to secure the symmetry that we both desire. Sir William said that when he was considering most of the repayments, he thought that 125 more staff would be required. In that figure he was not including extending repayments to the PAYE taxpayers, which is what the Financial Secretary was adding in. PAYE, however, seems to be a separate consideration, because it is a self-adjusting system, operating over a longish cycle—that is

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      an advantage, but it has disadvantages—and with relatively small amounts compared with Schedule D and other large claims. That element seems to loom large for the Financial Secretary.
      Sir William made it clear that if the de minimis provision of interest waived by the Revenue, at present £10, were increased to £20, about 40 per cent. of the annual total of 340,000 cases would be eliminated. It would be acceptable if a similar de minimis rule applied the other way. If it applied to the repayments and interest on tax overpaid to which the new clause refers, the numbers of cases and staff given by the Financial Secretary and by Sir William would be much smaller.
      The Minister has made the case for the new clause in principle and announced his attachment to that principle. In that, he follows the Chancellor, and has only feebly tried to argue administrative difficulties. Those of us who have operated in this area for some time recognise that there are always administrative difficulties for the Revenue and Governments, but it is surprising how, after a few years of pressing, those difficulties are overcome when the principle is accepted. That, of course, is part of the reason why our tax system is so complicated, but they are overcome. If the Minister cannot accept the new clause I hope that his acceptance of the principle will lead to something on these lines. That is why we should press it, to make our opinion clear.
      Mr. Ian Gow: I pay tribute to the excellent speech of my hon. and learned Friend the Member for Dover and Deal (Mr. Rees). I did not hear the last few moments of it, but I heard the hors d'oeuvre and the main course. All I missed was—
      Mr. Ridley: The cadeira.
      Mr. Gow: Exactly—but it was a speech of high quality.
      The new clause would not be necessary if the Inland Revenue and the Treasury were devoted to administrative simplicity in taxation. The reason why the new clause is necessary and why my right hon. and hon. Friends will press it to a Division is the increasing complexity of tax legislation. If it were not for the complexity of tax legislation and the incentives
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      that are presented to almost all mankind to try legitimately to avoid every burden heaped upon it by the Government Front Bench, it would not be necessary to trouble ourselves with amending the Finance Act (No. 2) 1975.
      The new clause is first and foremost an indictment of the complexity of our tax system. There is no need to blame the Board of Inland Revenue for this. Its members are the unsung heroes of our saga tonight. The guilty men are seated upon the Treasury Bench. There are not many of them.
      By a strange accident of events, in the Official Report for yesterday we were given a list of Her Majesty's Ministers. There was on the Government Front Bench earlier an Assistant Whip. Now we have upon the Treasury Bench the Financial Secretary and a Lord Commissioner of the Treasury. He is even more distinguished and more grand than that. In any event, those who occupy the Treasury Bench bear a responsibility for the debate. If it had not been for the complexity of the tax legislation, the new clause would not have been required.
      My hon. and learned Friend the Member for Dover and Deal made passing reference to the report for 1977 of the Parliamentary Commissioner for Administration. My hon. Friend the Member for Gloucestershire, South (Mr. Cope) also referred to it. I draw attention to paragraph 36 of the report, which was presented to us as recently as 26th January this year. The Parliamentary Commissioner said:
      "A particular point made by complainants who have been charged interest on late paid tax"—
      those are the words I wish to underline—
      "but have at the same time overpaid other tax"—
      my hon. and learned Friend had in mind when drafting his new clause, which he has done with such skill, these very words of Sir Idwal Pugh—
      "is that the rules for payment of interest (in the form of a 'repayment supplement')".
      Those are the very words which appear in Section 47 of the Finance (No. 2) Act 1975.
      I am not sure, Mr. Goodhew, whether you were Chairman of the Standing Committee which dealt with the second Finance Bill of 1975. Whether you were or

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      not, you will have studied Hansard closely and will have seen that the precise wording in Section 47 is the very wording which was used by the Parliamentary Commissioner.
      To go back to the beginning of this paragraph of the report, it states:
      "A particular point made by complainants who have been charged interest on late paid tax, but have at the same time overpaid other tax"—
      one might think that this was worthy of Lewis Carroll by the time we just get here, but this is a trivial matter compared with some of the complexities of our tax legislation—
      "is that the rules for payment of interest (in the form of a 'repayment supplement') on tax overpaid to the Inland Revenue normally allow a period of grace of at least 12 months before the Department incur liability."
      9.45 p.m.
      Those are the awful words which appear in the Parliamentary Commissioner's annual report. They mean that the Government impose a liability for interest on the taxpayer when he has underpaid which they do not impose upon themselves when the taxpayer has overpaid. In his excellent opening speech, my hon. and learned Friend was saying that if there is to be a payment of interest to the taxpayer, it should be on precisely the same basis as the Inland Revenue requires interest from the taxpayer.
      How is it that Ministers can resist this essay in fairness, this attempt to achieve equity, this desire to achieve for the citizen precisely the same standards as the Government seek to impose upon themselves? It is just another example of the increasing arrogance and insensitivity of the State, the increasing bullying of the taxpayer, the penalisation of the little man who is struggling and the way that the Government regard themselves as being entitled to greater benefits than they confer upon the people they are supposed to serve.
      If we look at the infamous Section 47 of the 1975 Act, whom do we find included in this penalty, this arrangement for denying interest in respect of overpaid tax? Surely this is something that should moisten the eyes of the serried ranks of Labour Members who sit behind the Financial Secretary.
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      I am glad to see the former Foreign Secretary, the right hon. Member for Fulham (Mr. Stewart), in his place. He at least is a man filled with compassion, and I hope that he will interrupt me shortly in order to give his support to the new clause.
      Mr. Michael Stewart: The hon. Gentleman is referring to this as a new example of what he regards as had behaviour by the State, but this practice, whether unjust or not, has been going on for a considerable time under several Governments. It cannot be described as a new invasion of the rights of the individual.
      Mr. Gow: The right hon. Gentleman knows better than I that there is more joy in Heaven over one sinner that repenteth than over ninety and nine just persons who need no repentance.
      Mr. Stewart: I agree with that proposition, but it does not answer my point. The hon. Gentleman has incorrectly described this practice as a new piece of what he called arrogance by the State. If it is wrong, it is, unhappily, a wrong which has been going on for a long time, and previous Governments of either party might have remedied it.
      Mr. Gow: The right hon. Gentleman is entitled to rebuke me for not having made this speech on an earlier occasion. Whether my hon. Friends wish that I had made it on an earlier occasion or are content to listen to it now is a matter for them. I shall come back to the Biblical quotation with which the right hon. Gentleman found himself in respectful agreement with me.
      Mr. Ridley: My hon. Friend might care to tell the right hon. Member for Fulham (Mr. Stewart) that it was the Finance (No. 2) Act 1975, to which my hon. Friend has been referring, which tightened the screw on the taxpayer at the same time as it loosened the screw on the Revenue, which, as we have heard today from the Chief Secretary, has now got totally out of hand. There has been a major change, and it was not under Governments of other colours but only under Governments of a particular red hue that this happened.
      Mr. Gow: I think that the right hon. Gentleman voted in favour of the Finance

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      (No. 2) Act 1975. I believe that he was not a member of the Standing Committee which considered the Bill upstairs. I also know that my hon. Friend, as I would expect, is right. I want, however, to come back to the criticism—
      Mr. Robert Sheldon: Will the hon. Gentleman take account of the fact that the Finance (No. 2) Act 1975 introduced the repayment supplement? It did not exist before then.
      Mr. Gow: But what my hon. and learned Friend the Member for Dover and Deal was saying is that we believe that Section 47 of the Finance (No. 2) Act 1975 operates inequitably. That is what we are saying. My hon. and learned Friend's new clause seeks to put right that which we believe to be an injustice. The right hon. Member for Fulham rebuked me and my hon. Friends for not having introduced a new clause of this kind earlier.
      Mr. Ridley: We did.
      Mr. Gow: That is what I am saying to the right hon. Gentleman. This is not the first time that my hon. Friends have sought to amend Section 47 of the Finance (No. 2) Act 1975. But, even if it were, I must say to the right hon. Gentleman that is the first occasion on which the enormity of the inequity perpetrated by Section 47 has come to my attention.
      Taking the Bibical analogy further, we are on the road from Jerusalem to Jericho, and as we journey we find Section 47 of the Finance (No. 2) Act 1975. Instead of passing by on the other side—which was the advice given to the Committee by the Financial Secretary—my hon. Friends are going to the taxpayer, binding up his wounds and pouring in oil and wine. They are setting the taxpayer on the back of a Conservative beast, taking him to the inn and taking care of him. On the morrow, when they depart, they will take out 9 per cent. interest—or whatever rate of interest is fixed for the time being under the Finance (No. 2) Act 1975 by the powers given there—and they will say to the taxpayer "We have cared for you and, if there is anything further which is due, when we come again and we are on the other side of the Committee, we shall repay you."
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      I do not believe that that is something improper for the House of Commons to do. Are we here—this is hardly music to the ears of the Financial Secretary, although I know it will be to the right hon. Member for Fulham—to ignore the true interests of the people when they find themselves aligned against the State? I assert most emphatically that what we are here to do in this place is to defend the citizen when he finds that the mighty State is doing something which it ought not to do.
      I wish to return now to the annual report for 1977 of the Parliamentary Commissioner. Sir Idwal says:
      "This apparent imbalance between the citizen's liability and that of the Department"—
      that is, the Department of Inland Revenue—
      "is not a matter I have been able to take up, because the repayment supplement rules are laid down quite specifically in the 1975 Act."
      That is the very Act that we are seeking to amend in the new clause and the very grievance that we are seeking to put right.
      Whom do we find upon our side? I must not speak for the Scottish nationalists, who have other things upon their minds, but we find that the Parliamentary Commissioner for Administration is aligning himself—I hope I do him no injustice—with my hon. and learned Friend the Member for Dover and Deal.
      I have not finished with the quotation. I wish to return to it.
      "I have noted that it is open to an Inspector"—
      that is, an inspector of taxes—
      "in certain circumstances, to authorise an overpayment to tax to be set against other outstanding tax and so prevent interest from running against the taxpayer to the extent that the two amounts of tax overlap. And the Chairman of the Board"—
      that is, the chairman of the Board of Inland Revenue—
      "informed me on 18th October 1977 that he had decided that the time had come to review the provisions on interest on late payment (and repayment) of tax".
      Is not that very remarkable? Who would have believed that we could have had supporting the Conservative Opposition not only the Parliamentary Commissioner for Administration but the chairman of the Board of Inland Revenue? When one has a trio of my hon. and learned Friend the Member for Dover and Deal, the Parliamentary Commissioner for Administration and the chairman of the Board of

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      Inland Revenue all in agreement, one has a kind of trinity. I shall not lay myself open to a charge of blasphemy by trying to describe their different roles, but we have a trinity of whom the first to speak in the Committee was my hon. and learned Friend.
      My hon. and learned Friend was too diffident and modest to call in aid those two very distinguished persons. But I should add that they were appointed not by my right hon. Friend the Leader of the Opposition, not even by my right hon. Friend the Member for Sidcup (Mr. Heath), but by the Government whose representative sits upon the Treasury Bench looking rather gloomy.
      Mr. Robert Sheldon: Bored.
      Mr. Gow: I hope very much that we may have a further speech from the Financial Secretary.
      Mr. Timothy Raison: No.
      Mr. Gow: My hon. Friend says "No" but just look at the alternatives. It is when we look at the alternatives that the Financial Secretary appears to be the best available.
      My hon. Friend the Member for Aylesbury (Mr. Raison) suggested that the Lord Advocate should reply to this debate. The Lord Advocate was what I would call an intermittent attender during the Committee stage of the Scotland Bill. That has now gone to another place, and long may it remain there, but I do not want to get diverted down that road. I want to answer the suggestion made by my hon. Friend the Member for Aylesbury that the Lord Advocate should be invited to reply to this debate.
      Mrs. Winifred Ewing: Perhaps I can assist the hon. Gentleman by giving him a good precedent for his argument that the Lord Advocate should be invited to reply to the debate. In Scotland bail money attracts interest when it is recovered. It seems to me that the Lord Advocate would, therefore, be bound to agree with the hon. Gentleman's proposition.
      Mr. Gow: I hope that if the hon. Lady catches the eye of the Chair she will be able to develop that further. My hon. Friend's suggestion has considerable merit, but by custom it is the Solicitor-General
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      who replies when important legal matters are raised.
      10.0 p.m.
      I was about to refer to the last but one subsection of Section 47. This is the one which refers to the personal representatives of a deceased person, and it is here that I know I shall carry with me Government supporters who sit above the Gangway, because they must be enthusiastic in trying to give justice to widows and orphans. But, as so often happens, it is left to the Opposition to be the champions of the poor, the oppressed, the widows and the orphans, and it is those people who are mentioned in the subsection.
      It provides:
      "The preceding provisions of his section shall apply in relation to a partnership"—
      and perhaps here I should declare an interest in that I am a partner in a firm of solicitors. It could be that, if we had overpaid tax, we might get a benefit under this new clause. The subsection goes on:
      "or a United Kingdom trust (as defined in section 110(1) of the Finance Act 1972), or, in the case of a United Kingdom estate, the personal representatives of a deceased person."
      This is where I wish to enlist the support of my hon. Friend the Member for Croydon, South (Mr. Clarke). He is a man who has very much at heart the interests of widows and orphans. He will wish to address the Committee about the injustice which is being done to them—an injustice which will be remitted if the new clause should meet with the approval of the Committee.
      So persuaded am I by the force of my own arguments, let alone those of my hon. and learned Friend the Member for Dover and Deal, that I think we have driven away supporters of Her Majesty's Ministers, and I believe that even those who have remained are now persuaded of the virtue of the new clause.
      It would be wearying for the Committee if I read other paragraphs of the report of the Parliamentary Commissioner for Administration. I shall conclude this part of my remarks by saying that the principle lying behind the new clause is irrefutable. Lying behind the arrogance of the Government is the contempt which Her Majesty's Ministers feel for taxpayers. The Opposition do not share that feeling.

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      We say that where a taxpayer has overpaid tax to the Treasury and where the Inland Revenue has had the use of that tax, the rules for the payment of interest which apply should be exactly the same as those which apply to unpaid tax.
      I agree with the Government that the present rules about the payment of interest on unpaid or underpaid tax are right. But surely, in decency, fairness, equity and justice, we should apply the same rules to those who have overpaid tax.
      I give one warning to the Financial Secretary. I do not know how he voted during the course of the European Communities Bill, nor do I know how he voted in the referendum. But, if the Government resist this new clause and remain deaf to our arguments, there is a real possibility that this issue will be taken to the European Court of Justice. If it is taken there, it will be claimed that it is unfair discrimination against the taxpayer.
      Look who has just arrived—the Chief Secretary has come to hear our debate. A few moments ago we were talking about the Lord Advocate. We do not have him here, but we have the Chief Secretary. Mercifully, he is now engaged in conversation with the Financial Secretary. It is a matter of joy for the Committee that he should have arrived. He is a fair-minded man who cares deeply about the European Court. I am sure he would not like to be taken before it for discriminating against taxpayers and in favour of Government Ministers. Before long the Chief Secretary will be going back to his role of giving tax advice, and it will be of great advantage to his clients if they have the benefit of New Clause No. 4. With these few words, I commend the new clause to the Committee.
      Mr. Nelson: This has been a remarkable debate. The incisiveness of my hon. Friend the Member for Eastbourne (Mr. Gow) in putting the plight of widows and orphans was very moving. I also wish to pay tribute to the eloquent and persuasive way in which my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) moved the new clause.
      I take this opportunity to pay tribute to the tax office at Chichester, which has a considerable burden to bear. I had the
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      privilege of visiting this tax office recently on constituency business—
      Mr. Gow: Could my hon. Friend tell the Committee the number of those employed in the Chichester tax office on 1st March 1974, and the number employed there on 15th May 1978?
      Mr. Nelson: Not without notice. Suffice to say that the rate of productivity has risen as steeply as the income of my constituents, who are well satisfied with their treatment by this tax office.
      Looking at the work done by the Chichester tax office, I was very impressed by the depth of care that its staff take and the sympathetic treatment that they give to so many individuals and small businesses in my district.
      In paying that tribute, which is richly deserved—that office has always taken up my representations and dealt with cases rapidly and ably—I must say that it seems extraordinary that we have had such a national swelling in the number of tax inspectors. This is of particular relevance to the new clause. The Financial Secretary has already told us that 1,200 new tax inspectors would have to be employed to staff an extra 3 million cases that would need analytical work and computation, were the new clause to be carried. I find this absolutely remarkable. Hardly any explanation was given showing why such a large number would need to be employed as a result of a relatively minor amendment to the 1975 Act. There was little indication why the technical and administrative changes that would be necessary would be insurmountable.
      This was a matter raised during the passage of the 1975 Act and all hon. Members will have read closely the report of our proceedings then. On that occasion it was drawn to the attention of the Minister that it should be possible to move towards a system of symmetry without unduly increasing the number of people within the inspectorate or substantially increasing the complexity or number of cases that the inspectorate would have to examine. The new clause deals with a case of simple justice. We believe that there must be a logical as well as a desirable case to be made for symmetry with the interest or repayment

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      of late tax. It seems to be obtuse of the Minister to say that this is not possible.
      The 1975 Act introduced the repayment supplement. This was a welcome improvement, but it is noteworthy that the position of those who have suffered through late repayment of tax overpaid or who have had to pay interest on tax paid late has become noticeably worse as the inflation rate has risen. For them, in recent years, not only the complexity of their tax liability but the opportunity cost of having money left with the Government as opposed to utilising it themselves has increased substantially. As a result, so has their cause for concern. This is why such people support the new clause.
      The Minister asks why we have not proposed such a change on previous occasions. The answer must be, in part, that the rate of inflation was not nearly as severe and the impact on so many taxpayers was not as great. Now that so many people are owed repayment of tax by way of repayment supplement it seems that they are not only losing out because of the basis date for computation purposes of the tax; they are losing out in pure financial terms, because the 9 per cent. rate specified in the 1975 Act does not begin to compare with what they might be able to achieve if they used their money in other ways.
      This position may be strictly comparable with a temporary rate of interest on
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      a bank account. A large number of taxpayers who are due sums from the Revenue would be able to earn considerably more than the 9 per cent. The complexity of the tax system, which has drawn so many more people into it, has meant that people are uncertain of their liability. The cash flow for individuals and companies cannot be predicted as certainly as before. For those people the symmetry provided for in the new clause is essential.
      It seems doctrinaire of the Financial Secretary not to provide at least some words of sympathy and to show a readiness to reconsider the matter. Although the issue has been discussed before, it is almost churlish of the Minister not to explain in any more detail why such administrative changes would be necessary. He should explain what were the complexities of the computation by the tax inspectors and why the wording of the new clause could not even be substantially improved by the Government if they were sympathetic at a later stage.
      For these reasons I believe that the new clause should be carried by the Committee. It will alleviate substantial hardship suffered by many people who are due repayment of overpaid taxes by the inspector of taxes, and it will redress an anomaly by restoring the symmetry which, in justice, should be provided.
      10.15 p.m.
      Mr. Ian Stewart: I did not originally expect to take part in the discussions of this new clause, but as I listened to the debate—a debate of exceptional quality—I thought that I should rise to explain one point. I am affected by the new clause and since, if the matter reaches a Division, I shall vote for the proposals, I should explain my position to the Committee.
      The fact that I am potentially affected by these provisions gives me an opportunity to say, from personal experience, that these situations which have been described, and in which the dice are so heavily loaded against the taxpayer, are not as rare as may be imagined.
      I am not saying that the clause will assist persons such as myself who are partly in this situation because of their own failings. It was my fault that, last year, I completed my tax return several months late. Therefore, I am in no sense making a personal complaint, but I now have, as I understand it, money that is due to be repaid to me for tax overpaid when I have already paid extra tax only a few months ago under threat of a charge to interest on unpaid tax if I tried to offset the two.
      In regard to many taxpayers whose affairs are not all that complicated, I believe that the circumstances described by the Parliamentary Commissioner can easily occur. The reason is not only that there are now many more taxpayers and that the taxes which they pay are at much higher rates, but that the burden on the taxpayer, involving his having to face the possibility of paying interest on unpaid tax, which is no longer allowable as a deduction against income tax, tips the scale against them. This is the fact that lies at the heart of the problem.
      I know that the right hon. Gentleman the Financial Secretary feels that there is a case for symmetry between taxpayers and the Revenue in the case of tax overpaid or underpaid, but perhaps he feels that there would be opportunities for abuse if taxpayers were deliberately to pay large sums of potential tax early and in excess amounts so that they could obtain the benefit of 9 per cent., or whatever the rate may be for the time being, tax free.
      390
      I believe that 9 per cent. tax free should not be such an exceptional benefit to the taxpayer that it becomes an object of envy by the Revenue and a matter that it must watch as an opportunity for tax avoidance; or alternatively, that the way to balance the scales would be to even them out, not by moving a new clause on the tax overpaid but by altering the rules in the other balance of the scale and dealing with the situation at the other end.
      Perhaps if the interest on tax paid late were allowable as a deduction for income tax, this lack of symmetry would partially disappear and the taxpayer would not feel that he was being unduly burdened by the rules. Even though an attempt was made to remedy the difficulty in 1975, going a little way to recognise the problem, it did not go far towards properly dealing with it.
      We read today that the tax men are gathered in Scarborough and are complaining that they have not received the increase in pay to which they feel themselves to be entitled. They have suggested that they should take industrial action if they do not receive the extra money by April next year, but the extra money to which the tax men feel themselves entitled is not theirs already, or theirs by right; it is merely a wage settlement which they consider should come their way. On the other hand, the money that we are discussing here—the taxpayers' money—is due to them, having been overpaid, and it should come their way as soon after the matter can be settled with the Revenue.
      The difficulty with the clause and with any means of remedying the problem is that the subject is, as the Financial Secretary said earlier, one of considerable complexity. However, I cannot believe that we should be frustrated on those grounds in our attempts to produce a more equitable balance between the rights of the Revenue and the rights of the taxpayer. I recall that in the Standing Committee a year ago we raised the question of relief for VAT on bad debts, and—lo and behold—this year it has not proved a matter of insurmountable complexity to introduce provision on that subject, which we shall be debating in the coming weeks.

      391
      I hope that it will be possible to remedy this manifest injustice between the Revenue and the taxpayer. I say that not only because it is important that the taxpayer should know where he stands and have a fair deal as between his financial position and that of the Revenue but because the Revenue itself ought not to suffer the odium of having to administer a lopsided and unfair system.
      The higher rates of tax and the more individuals brought into the personal tax net, the more important it is that individual taxpayers should not find themselves in conflict with Inland Revenue staff because the rules themselves are tilted against them. The taxes may be too high—they may be far higher than taxpayers believe to be fair or reasonable—but if on top of that the administrative rules relating to the payment and collection of taxes and the repayment of tax overpaid are tilted against the taxpayer, the taxpayer will not unreasonably feel that the Inland Revenue is trying to exploit him and get out of him not only what is due but something that is not due.
      It would be well for us to remember that tax morality, if that be the right way to describe it—the willingness of taxpayers to meet their tax bills—has been undermined in recent years by the high rates of tax payable, but it will be undermined even further if taxpayers believe, as at present they would be entitled to believe, that the administrative rules also are balanced against them.
      I therefore ask Treasury Ministers to recognise, by accepting the new clause, that until some other way can be found of balancing the scales between Revenue and taxpayer, the clause would go at least some way to remedy the injustice that many taxpayers feel. I support my hon. Friends who have spoken in favour of the clause, and I hope that it will prove acceptable to the Treasury Bench.
      Mr. Ridley: Underlying the new clause, which I heartily support, is a collapse of public confidence in the Inland Revenue and the Customs. I do not think that it is the fault of those Departments; it is a consequence of the legislative diarrhoea on tax matters issuing from this Government. But it has serious implications, because at no time since I have
      392
      been in the House have there been such strained relations between taxpayers and the tax-gathering authorities. This is very bad, because it will alienate the taxpayer from the tax gatherer.
      For example, an article in the last edition of The Sunday Times revealed—I cannot remember exactly how the article went—that the Revenue gives a dubious tax victim 10 per cent. of the maximum penalty if he is honest, 20 per cent. if it thinks that he is acting, 40 per cent. if he is dissembling, 60 per cent. if he is lying, 80 per cent cent. for cheating and 100 per cent. for downright fraud. Those are exactly the marks that this Government should get.
      On the other hand, it is very bad for the relationship between taxpayers and the Revenue. I wonder whether it would not be a good idea for the Revenue to appoint a few public relations officers to try to improve its image. There will be a lot of redundancies on the Labour Benches very soon. I am wondering whether the Chief Secretary himself might do the job, but when I think of his fraudulent exchange with my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) this afternoon about the numbers of the Inland Revenue staff, I am not so sure that he would be very suitable.
      The Chief Secretary knows full well that the 7,400 extra tax men who were on the books in 1974 were not full-time tax men. They were put there to deal with a temporary situation and were seconded from other Departments. He did not make that clear.
      Mr. Joel Barnett rose—
      Mr. Ridley: I shall not give way now. I want to finish dealing with the Chief Secretary, and then I shall give way to him. He knows perfectly well that those 7,400 tax men were engaged on paying out post-war credits. Furthermore, if they were employed by the Revenue, why did not the Chief Secretary ensure that the Revenue put the fact in its annual report and the Customs and Excise put it in its annual report? If those people had been employed by the Customs and Excise and by the Revenue, the Chief Secretary should have ensured that the fact was made public in the reports.
      Mr. Joel Barnett: I am surprised at the hon. Gentleman. I should have thought that he, unlike the right hon. and learned Member for Surrey, East (Sir G. Howe), would at least have checked the facts. In 1974 the report of the Board of Inland Revenue stated the number of casual workers during the year. If the hon. Gentleman had checked that, he would have known that that is a fact. He would also have known that it is a fact that the number of short-term engagements between 1970 and 1974 grew from some 600 to some 7,000 at the year-end in question. He should at least be willing to accept that. At 1st April 1974 there were in post some additional 7,300 that neither he nor his right hon. and learned Friend had the decency to accept as being the fact, and they should withdraw the ridiculous accusation they have made.
      Mr. Ridley: The Chief Secretary knows very well what they were doing, and it was on a temporary assignment. He has made a point to the Committee which I do not think is worthy of him. So he is not fit to be the public relations officer of the Inland Revenue in his next incarnation.
      Mr. Joel Barnett: Whatever they were doing, there were 7,300 in post at 1st April 1974. Will the hon. Gentleman have the decency to withdraw the accusation he has made?
      Mr. Ridley: I have made no accusation except that the Chief Secretary is not playing straight with the Committee, and I stick to that.
      I thought of others who might be public relations officers for the Inland Revenue and the Customs and Excise. I see that the Chief Secretary has retreated after that interchange. I am pleased to see the end of him if that is the best he can do for the Committee.
      Mr. Bernard Conlan: The Financial Secretary has defended himself adequately. He has made perfectly clear, without making a party point, that the 7,000 people to whom the hon. Gentleman is now referring were appointed under the regime of the Conservative Government.
      Mr. Ridley: It would be better if the hon. Gentleman were to distinguish between
      394
      the Chief Secretary and the Financial Secretary. The Financial Secretary has not uttered a word in this debate. It would be a good idea if the hon. Gentleman checked his facts before coming into the Chamber and making a speech like that.
      10.30 p.m.
      The new clause is symptomatic of the worsening relationship between the Revenue and the taxpayer. I need say no more, except to urge upon the Government that they must at some time take seriously the fact that, if they are to get a happy relationship between taxpayers and tax gatherers, they cannot ignore what is going on—the tax raids, the cowboys and Indians stuff, breaking into this company's office, breaking into that person's house in the middle of the night and all the nonsense about which we read in the papers. Such things do untold damage to the Revenue, and they arise from the ridiculous legislation that we have considered on previous Finance Bills and which we shall consider on this Bill upstairs in Standing Committee.
      It is not the fault of the Revenue. I am not blaming the civil servants. I know that some of them speak out of turn. Lord Plant has made it known that it was his express purpose, as chairman of the tax gatherers' union, to suppress the self-employed altogether. But that was an aberration. I am defending the tax man. I am saying only that if the Government are to get a little more acceptance of the taxation system, they must make life a little less complicated and give fewer powers to the Revenue. That is why I support the new clause.
      Mrs. Winifred Ewing: It appears to me that the role of the tax inspector as a friend, confidant and adviser is a little short of the fact when, as a working Member of Parliament, I find how many constituents, particularly PAYE constituents, are up against delays in repayment of tax due to them because of the complexities of the system.
      Frankly, with no disrespect to the hon. Member who paid tribute to his tax area. I cannot pay such tribute to Centre 1 in East Kilbride on which many of my constituents have to depend for justice. It seems that a letter from an MP is almost necessary to get the due repayment of tax. My constituents have caught

      395
      on to this, so a huge number come to me every week to write letters for them to Centre I so that their cases will get to the top of the basket. That is an unsatisfactory situation. I do not think that should be the role of an MP. But it is necessary to do it because Centre I is in such utter chaos.
      The late Lord Cooper, the former Lord President of the Court of Session, is on record as saying that there was nothing illegal in a man—I suppose it would be "a person" now—so arranging his tax affairs as to minimise his tax liability. I hold with that view. I see nothing wrong with it. The trouble is that fishermen in my constituency, who are mostly self-employed, are greatly overpaying tax because they will not so arrange their affairs as to keep vouchers and chits for the enormous amounts they spend on gloves, oilskins and so on. They cannot be bothered. They say that as they go to sea every week and are home for only a couple of days, they cannot be bothered to do it. I cannot get the Revenue to lay down a reasonable guideline for these men who incur so much a year in legitimate claims. These fishermen are done down by the tax inspectors.
      With that background I turn to the new clause, which I support and which the SNP Bench will support, too. The Revenue is behaving in a high-handed way because it has a great deal of power The Inland Revenue is a fearsome body. I suppose that all of us—those on PAYE and those who are not—fear it. The Revenue has enormous sanctions. It does not obey the ordinary rule of law, as I understand it, where the onus is the other way round. The onus is now on many taxpayers to prove that they have not done something instead of its being the other way round. The Inland Revenue starts with a great advantage. I accept that that may be necessary to run the country, but it still means that, having got the onus on its side, it should be reasonably fair when a genuine mistake has been made.
      In Scotland, the law relating to interest due on money depends mainly on a decree having been granted in the court to prove that a debt is due. The interest can date back to when the action was raised. That, of course, would not apply under this clause. However, I can cite
      396
      a precedent which is relevant in terms of basic justice. When, as a condition of obtaining freedom, an innocent person wrongly charged with a crime in Scotland pays bail, on acquittal the bail is repaid with interest. Instead of the Inland Revenue, with all its powers—greater powers than are possessed by a court—treating a person, who is usually up against it financially and usually finds the injustice extremely worrying in his attempts to secure economic survival, in an unjust manner, why should it not treat that person in the way as someone wrongly accused is treated in a criminal proceeding?
      Mr. Peter Rees: However warm the Financial Secretary's heart—and we know that beneath that stern exterior he is a human being—he has treated the Committee this evening very shabbily. He has made a perfunctory, dismissive, if not entirely frivolous, speech. No doubt he was encouraged to do that by support from his hon. Friends below the Gangway, support which evaporated noticeably after he had sat down. The country will note where it can find support in its battles with the Inland Revenue. There is no criticism of the individual officer, but it must be the experience of every right hon. and hon. Member on the Opposition side that a great part of their postbag is devoted to problems with the Inland Revenue.
      Of this factor the Financial Secretary has shown himself signally unaware. What he has been doing over the last four years one is left to conjecture. Those of us who have studied him across the Committee in Finance Bill debates know that he takes an extremely superficial view of his duties.
      The first point that the right hon. Gentleman failed to grasp or to deal with is that there is a symmetry in these provisions. He does not seem to realise the sense of grievance and injustice felt by taxpayers when, having overpaid their tax, they find that the repayment supplement takes no account of the 12 months or more during which the Inland Revenue has enjoyed their money.
      My hon. Friend the Member for Hampstead (Mr. Finsberg) was kind enough to give me before the debate a letter which reached him only the day before yesterday from two of his constituents

      397
      who received a capital sum on their discharge from important offices. They will be entitled to relief on that sum. Nevertheless, tax was deducted at the basic rate under Schedule E and they will probably have to wait two, if not three, years before any kind of recompense is made to them. That is the kind of case that irks the general body of taxpayers, even if it is not generally appreciated on the Government Benches.
      The reasons that the Financial Secretary produced for this asymmetry were specious indeed. He had to go back to my noble Friend Lord Barber and cite, slightly out of context, certain observations of his. But I remind the Committee and the Financial Secretary that in the days when my noble Friend presided at No. 11—and would that we were back in those days as far as fiscal matters are concerned—
      Mr. Robert Sheldon: The money supply.
      Mr. Rees: For the Financial Secretary this week, to say "The money supply"—well, I do not know whether it would be quite in order, Mr. Godman Irvine, to take up that particular challenge now, but we shall remember it when we proceed upstairs, because I apprehend that we shall have a debate on the general financial situation when we come to consider the regulator, and we shall examine in very great detail indeed that rather unconsidered careless remark of the Financial Secretary, which has been characteristic of his interventions in our debate so far.
      As I was saying when the Financial Secretary was ill-judged enough to interrupt me, in the days when my noble Friend was presiding at No. 11 the interest provisions were not as they are now. Characteristically, the right hon. Gentleman and his right hon. Friends, without giving very careful thought—or, if they did that, giving thought with malice against the taxpayer—devised a system for tax collection, interest payments and inquisitorial methods which were quite novel to this country. The balance was tilted quite against the taxpayer and quite in favour of the Inland Revenue.
      That is a point that the Financial Secretary and his right hon. Friends have
      398
      never realised. Therefore, in citing the remarks of my noble Friend, as I have said, fine words butter no parsnips, and they certainly do not advance the Financial Secretary's particular argument because they were uttered in a quite different context.
      But the debate went a little further than that. The Financial Secretary fails to have appreciated the general unease, examples of which were given by my hon. Friends, who have contributed so notably to this debate, which he evidently has not appreciated. If he feels that perhaps they come from too partisan a source, I would remind him of the passages from Sir Idwal Pugh's various reports, which I ventured to cite to the Committee and on which the Financial Secretary did not have the courtesy to comment to any degree whatever.
      I think that this will demonstrate to the country outside, as it has demonstrated to the Opposition side of the Committee, but perhaps not to the Government side, that there is something gravely wrong with the administration of the Revenue system. I quite concede that it is not something that will be cured by this new clause. It can be cured only by a change of Government, by a Conservative Government who will approach these matters with an entirely different heart and eye. If proof of that fact is needed, if the country wants some tangible reason why there is need for that, people have only to consider the debate tonight and to consider who made a contribution, and in what guise, from the Government side of the Committee.
      Although I recognise that this is a modest new clause, limited in its effect—indeed, after the trumpery way in which it was treated by the Financial Secretary, I wish that we had put down a new clause of far wider scope and far deeper import—nevertheless, for the moment, I believe that it will demonstrate to the country what is wrong with the tax system and why
      Therefore, I invite all Opposition Members to divide on the new clause and support it in the Division Lobby.
      Mr. Robert Sheldon: The hon. and learned Member for Dover and Deal (Mr. Rees) finally got around to dealing with the new clause. However, I noted that the debate ranged very much wider than

      399
      the very narrow new clause. If the hon. and learned Member wanted a debate on taxation generally, what is wrong with taxation and where he wants to direct it, he has many opportunities to set down new clauses which deal with these wide issues which he wishes to raise. I would have been very happy to deal with them in turn.
      The new clause deals with the equity of the taxpayer paying interest on overdue tax as compared with the interest on overpaid tax received by the taxpayer. What we did in the Finance Act 1975 was to introduce for the first time something which is of benefit to the taxpayer. We actually paid him interest on the tax which was overpaid.
      10.45 p.m.
      That was the first time that this had been done. It had been recommended by the Parliamentary Commissioner for Administration. The solution had been refused by Lord Barber in 1971 and again
      in 1973. This Government introduced the principle of paying interest on overpaid tax in 1975. That is obviously not the end of the line. If there are changes that we can introduce we shall do so. But for the hon. and learned Member for Dover and Deal to condemn the Government for introducing these improvements when nothing was done for years is wholly unjustifiable. The new clause fails to take account of those changes.
      The present system produces a measure of equity between those who pay their taxes late and those who pay on time. That is a useful way to proceed I shall note the serious contributions which have been made, and if some changes are necessary they will obviously come forward. Meanwhile, I ask my right hon. and hon. Friends to reject the new clause.
      Question put, That the clause be read a Second time:—
      The Committee divided: Ayes 253, Noes 274.

      Division No. 211]

      AYES

      [10.46 p.m.

      Adley Robert

      Drayson, Burnaby

      Harvie Anderson, Rt Hon Miss

      Aitken, Jonathan

      du Cann, Rt Hon Edward

      Haselhurst, Alan

      Alison, Michael

      Durant, Tony

      Havers, Rt Hon Sir Michael

      Amery, Rt Hon Julian

      Dykes, Hugh

      Hayhoe, Barney

      Arnold, Tom

      Edwards, Nicholas (Pembroke)

      Henderson, Douglas

      Atkins, Rt Hon H. (Spelthorne)

      Elliott, Sir William

      Hicks, Robert

      Atkinson, David (Bournemouth, East)

      Emery, Peter

      Hodgson, Robin

      Bell, Ronald

      Evans, Gwynfor (Carmarthen)

      Holland, Philip

      Bendall, Vivian (Ilford North)

      Ewing, Mrs Winifred (Moray)

      Hooson, Emlyn

      Bennett, Dr Reginald (Fareham)

      Eyre, Reginald

      Hordern, Peter

      Benyon, W.

      Fairbairn, Nicholas

      Howe, Rt Hon Sir Geoffrey

      Biffen, John

      Fairgrieve, Russell

      Howell, David (Guildford)

      Biggs-Davison, John

      Farr, John

      Hunt, David (Wirral)

      Blaker, Peter

      Fell, Anthony

      Hunt, John (Ravensbourne)

      Body, Richard

      Finsberg, Geoffrey

      Hurd, Douglas

      Bowden, A. (Brighton, Kemptown)

      Fisher, Sir Nigel

      Hutchison, Michael Clark

      Boyson, Dr Rhodes (Brent)

      Fletcher, Alex (Edinburgh N)

      Irving, Charles (Cheltenham)

      Braine, Sir Bernard

      Fookes, Miss Janet

      James David

      Brittan, Leon

      Forman, Nigel

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

      Brooke, Peter

      Fowler, Norman (Sutton C'f'd)

      Johnson Smith, G. (E Grinstead)

      Brotherton, Michael

      Fox, Marcus

      Jones, Arthur (Daventry)

      Bryan, Sir Paul

      Fraser, Rt Hon H. (Stafford & St)

      Jopling, Michael

      Buchanan-Smith, Alick

      Freud, Clement

      Joseph, Rt Hon Sir Keith

      Buck, Antony

      Fry, Peter

      Kaberry, Sir Donald

      Budgen, Nick

      Galbraith, Hon T. G. D.

      Kershaw, Anthony

      Bulmer, Esmond

      Gardiner, George (Reigate)

      King, Evelyn (South Dorset)

      Burden, F. A.

      Gardner, Edward (S Fylde)

      King, Tom (Bridgwater)

      Butler, Adam (Bosworth)

      Gilmour, Sir John (East Fife)

      Kitson, Sir Timothy

      Carlisle, Mark

      Glyn, Dr Alan

      Knight, Mrs Jill

      Chalker, Mrs Lvnda

      Godber, Rt Hon Joseph

      Knox, David

      Churchill, W. S.

      Goodhart, Philip

      Lamont, Norman

      Clark, Alan (Plymouth, Sutton)

      Goodlad, Alastair

      Langford-Holt, Sir John

      Clark, William (Croydon S)

      Gorst, John

      Latham, Michael (Melton)

      Clarke, Kenneth (Rushcliffe)

      Gow, Ian (Eastbourne)

      Lawrence, Ivan

      Clegg, Walter

      Gower, Sir Raymond (Barry)

      Lawson, Nigel

      Cockcroft, John

      Grant, Anthony (Harrow C)

      Le Merchant, Spencer

      Cooke, Robert (Bristol W)

      Gray, Hamish

      Lester, Jim (Beeston)

      Cope, John

      Grimond, Rt Hon J.

      Lewis, Kenneth (Rutland)

      Cormack, Patrick

      Grist, Ian

      Lloyd, Ian

      Costain, A. P.

      Hall-Davis, A. G. F.

      Loveridge, John

      Crawford, Douglas

      Hamilton, Archibald (Epsom & Ewell)

      Luce, Richard

      Crouch, David

      Hamilton, Michael (Salisbury)

      McAdden, Sir Stephen

      Crowder F. P.

      Hampson, Dr Keith

      MacCormick, Iain

      Dodsworth, Geoffrey

      Hannam, John

      McCrindle, Robert

      Douglas-Hamilton, Lord James

      Harrison, Col Sir Harwood (Eye)

      Macfarlane, Neil

      MacGregor, John

      Pattie, Geoffrey

      Stainton, Keith

      MacKay, Andrew (Stechford)

      Percival, Ian

      Stanbrook, Ivor

      Macmillan, Rt Hon M. (Farnham)

      Pink R. Bonner

      Stanley, John

      McNair-Wilson, M. (Newbury)

      Prentice, Rt Hon Reg

      Steen, Anthony (Wavertree)

      McNair-Wilson, P. (New Forest)

      Price, David (Eastleigh)

      Stewart, Rt Hon Donald

      Madel, David

      Prior, Rt Hon James

      Stewart, Ian (Hitchin)

      Marshall, Michael (Arundel)

      Pym, Rt Hon Francis

      Stokes, John

      Marten, Neil

      Raison, Timothy

      Stradling Thomas, J.

      Mates, Michael

      Rathbone, Tim

      Tapsell, Peter

      Mather, Carol

      Rees, Peter (Dover & Deal)

      Taylor, Teddy (Cathcart)

      Maude, Angus

      Rees-Davies, W. R.

      Tebbit, Norman

      Mawby, Ray

      Reid, George

      Temple-Morris, Peter

      Maxwell-Hyslop, Robin

      Renton, Rt Hon Sir D. (Hunts)

      Thomas, Dafydd (Merioneth)

      Mayhew, Patrick

      Renton, Tim (Mid-Sussex)

      Thompson, George

      Meyer, Sir Anthony

      Rhodes, James R.

      Townsend, Cyril D.

      Miller, Hal (Bromsgrove)

      Ridley, Hon Nicholas

      Trotter, Neville

      Mills, Peter

      Ridsdale, Julian

      van Straubenzee, W. R.

      Miscampbell, Norman

      Roberts, Michael (Cardiff NW)

      Vaughan, Dr Gerard

      Mitchell, David (Basingstoke)

      Roberts, Wyn (Conway)

      Viggers, Peter

      Moate, Roger

      Rossi, Hugh (Hornsey)

      Wainwright, Richard (Colne V)

      Monro, Hector

      Rost, Peter (SE Derbyshire)

      Wakeham, John

      Montgomery, Fergus

      Royle, Sir Anthony

      Walder, David (Clitheroe)

      Moore, John (Croydon C)

      Sainsbury, Tim

      Walker, Rt Hon P. (Worcester)

      More, Jasper (Ludlow)

      St. John-Stevas, Norman

      Walker-Smith, Rt Hon Sir Derek

      Morgan, Geraint

      Scott, Nicholas

      Wall, Patrick

      Morgan-Giles, Rear-Admiral

      Scott-Hopkins, James

      Watt, Hamish

      Morris, Michael (Northampton S)

      Shaw, Giles (Pudsey)

      Weatherill, Bernard

      Morrison, Charles (Devizes)

      Shaw, Michael (Scarborough)

      Wells, John

      Morrison, Hon Peter (Chester)

      Shelton, William (Streatham)

      Welsh, Andrew

      Mudd, David

      Shepherd, Colin

      Whitelaw, Rt Hon William

      Neave, Airey

      Shersby, Michael

      Whitney, Raymond (Wycombe)

      Nelson, Anthony

      Silvester, Fred

      Wiggin, Jerry

      Neubert, Michael

      Sims, Roger

      Wigley, Dafydd

      Newton, Tony

      Sinclair, Sir George

      Winterton, Nicholas

      Nott, John

      Skeet, T. H. H.

      Wood, Rt Hon Richard

      Onslow, Cranley

      Smith, Timothy John (Ashfield)

      Younger, Hon George

      Oppenheim, Mrs Sally

      Speed, Keith

      Osborn, John

      Spence, John

      TELLERS FOR THE AYES:

      Page, Rt Hon R. Graham (Crosby)

      Spicer, Jim (W Dorset)

      Mr. Anthony Berry and

      Page, Richard (Workington)

      Spicer, Michael (S Worcester)

      Sir George Young.

      Parkinson, Cecil

      Sproat, Iain

      NOES

      Abse, Leo

      Cocks, Rt Hon Michael (Bristol S)

      Fletcher, L. R. (Ilkeston)

      Allaun, Frank

      Cohen, Stanley

      Fletcher, Ted (Darlington)

      Anderson, Donald

      Coleman, Donald

      Foot, Rt Hon Michael

      Archer, Rt Hon Peter

      Colquhoun, Ms Maureen

      Ford, Ben

      Armstrong, Ernest

      Conlan, Bernard

      Forrester, John

      Ashley, Jack

      Cook, Robin F. (Edin C)

      Fowler, Gerald (The Wrekin)

      Ashton, Joe

      Corbett, Robin

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

      Atkins, Ronald (Preston N)

      Cowans, Harry

      Freeson, Rt Hon Reginald

      Atkinson, Norman

      Cox, Thomas (Tooting)

      Garrett, John (Norwich S)

      Barnett, Guy (Greenwich)

      Crawshaw, Richard

      Garrett, W. E. (Wallsend)

      Barnett, Rt Hon Joel (Heywood)

      Cronin, John

      George, Bruce

      Bates, Alf

      Crowther, Stan (Rotherham)

      Gilbert, Rt Hon Dr John

      Bean, R. E.

      Cryer, Bob

      Ginsburg, David

      Beith, A. J.

      Cunningham, Dr J. (Whiteh)

      Golding, John

      Bennett, Andrew (Stockport N)

      Dalyell, Tam

      Gould, Bryan

      Bidwell, Sydney

      Davidson, Arthur

      Gourlay, Harry

      Bishop, Rt Hon Edward

      Davies, Rt Hon Denzil

      Graham, Ted

      Blenkinsop, Arthur

      Davies, Ifor (Gower)

      Grant, George (Morpeth)

      Boardman, H.

      Davis, Clinton (Hackney C)

      Grant, John (Islington C)

      Booth, Rt Hon Albert

      Deakins, Eric

      Grocott, Bruce

      Boothroyd, Miss Betty

      Dean, Joseph (Leeds West)

      Hamilton, W. W. (Central Fife)

      Bottomley, Rt Hon Arthur

      de Freitas, Rt Hon Sir Geoffrey

      Hardy, Peter

      Boyden, James (Bish Auck)

      Deil, Rt Hon Edmund

      Harper, Joseph

      Bradley, Tom

      Dempsey, James

      Harrison, Rt Hon Walter

      Bray, Dr Jeremy

      Dewar, Donald

      Hart, Rt Hon Judith

      Brown, Hugh D. (Provan)

      Doig, Peter

      Hattersley, Rt Hon Roy

      Brown, Robert C. (Newcastle W)

      Dormand, J. D.

      Hayman, Mrs Helene

      Brown, Ronald (Hackney S)

      Douglas-Mann, Bruce

      Healey, Rt Hon Denis

      Buchan, Norman

      Eadie, Alex

      Heffer, Eric S.

      Buchanan, Richard

      Edge, Geoff

      Horam, John

      Callaghan, Rt Hon J. (Cardiff SE)

      Ellis, John (Brigg & Scun)

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

      Callaghan, Jim (Middleton & P)

      English, Michael

      Howells, Geraint (Cardigan)

      Campbell, Ian

      Ennals, Rt Hon David

      Hoyle, Doug (Nelson)

      Canavan, Dennis

      Evans, Fred (Caerphilly)

      Huckfield, Les

      Cant, R. B.

      Evans, Ioan (Aberdare)

      Hughes, Rt Hon C. (Anglesey)

      Carmichael, Neil

      Evans, John (Newton)

      Hughes, Mark (Durham)

      Carter, Ray

      Ewing, Harry (Stirling)

      Hughes, Robert (Aberdeen N)

      Carter-Jones, Lewis

      Fernyhough, Rt Hon E.

      Hughes, Roy (Newport)

      Cartwright, John

      Fitch, Alan (Wigan)

      Hunter, Adam

      Castle, Rt Hon Barbara

      Fitt, Gerard (Belfast W)

      Irvine, Rt Hon Sir A. (Edge Hill)

      Clemitson, Ivor

      Flannery, Martin

      Irving, Rt Hon S. (Dartford)

      402

      403

      Jackson, Colin (Brighouse)

      Miller, Dr M. S. (E Kilbride)

      Silkin, Rt Hon S. C. (Dulwich)

      Jackson, Miss Margaret (Lincoln)

      Mitchell, Austin

      Sllverman, Julius

      Janner, Greville

      Mitchell, R. C. (Soton, Itchen)

      Skinner, Dennis

      Jay, Rt Hon Douglas

      Moonman, Eric

      Smith, John (N Lanarkshire)

      Jeger, Mrs Lena

      Morris, Alfred (Wythenshawe)

      Spearing, Nigel

      Jenkins, Hugh (Putney)

      Morris, Rt Hon Charles R.

      Spriggs, Leslie

      John, Brynmor

      Morris, Rt Hon J. (Aberavon)

      Stallard, A. W.

      Johnson Walter (Derby S)

      Moyle, Roland

      Steel, Rt Hon David

      Johnston, Russell (Inverness)

      Murray, Rt Hon Ronald King

      Stewart, Rt Hon M. (Fulham)

      Jones, Alec (Rhondda)

      Newens, Stanley

      Stoddart, David

      Jones, Barry (East Flint)

      Noble, Mike

      Stott, Roger

      Jones, Dan (Burnley)

      Oakes, Gordon

      Strang, Gavin

      Kaufman, Gerald

      Ogden, Eric

      Summerskill, Hon Dr Shirley

      Kelley, Richard

      O'Halloran, Michael

      Swain, Thomas

      Kerr, Russell

      Orme, Rt Hon Stanley

      Taylor, Mrs Ann (Bolton W)

      Kilroy-Silk, Robert

      Ovenden, John

      Thomas, Jeffrey (Abertillery)

      Kinnock, Neil

      Owen, Rt Hon Dr David

      Thomas, Mike (Newcastle E)

      Lambie, David

      Padley, Walter

      Thomas, Ron (Bristol NW)

      Lamborn, Harry

      Palmer, Arthur

      Thorne, Stan (Preston S)

      Lamond, James

      Pardoe, John

      Tierney, Sydney

      Latham, Arthur (Paddington)

      Park, George

      Tilley, John (Lambeth, Central)

      Leadbitter, Ted

      Parker, John

      Tinn, James

      Lestor, Miss Joan (Eton & Slough)

      Parry, Robert

      Tomlinson, John

      Lever, Rt Hon Harold

      Pavitt, Laurie

      Torney, Tom

      Lewis, Ron (Carlisle)

      Pendry, Tom

      Tuck, Raphael

      Litterick, Tom

      Penhaligon, David

      Varley, Rt Hon Eric G.

      Lomas, Kenneth

      Price, C. (Lewisham W)

      Wainwright, Edwin (Dearne V)

      Loyden, Eddie

      Price, William (Rugby)

      Walker, Harold (Doncaster)

      Lyon, Alexander (York)

      Radice, Giles

      Walker, Terry (Kingswood)

      Lyons, Edward (Bradford W)

      Rees, Rt Hon Merlyn (Leeds S)

      Ward, Michael

      Mabon, Rt Hon Dr J. Dickson

      Richardson, Miss Jo

      Watkins, David

      McCartney, Hugh

      Roberts, Albert (Normanton)

      Weitzman, David

      McDonald, Dr Oonagh

      Roberts, Gwilym (Cannock)

      Wellbeloved, James

      McElhone, Frank

      Robinson, Geoffrey

      White, Frank R. (Bury)

      MacFarquhar, Roderick

      Roderick, Caerwyn

      White, James (Pollock)

      MacKenzie, Rt Hon Gregor

      Rodbers, George (Chorley)

      Whitehead, Philip

      Mackintosh, John P.

      Rodgers, Rt Hon William (Stockton)

      Whitlock, William

      Maclennan, Robert

      Rooker, J. W.

      Willey, Rt Hon Frederick

      Madden, Max

      Roper, John

      Williams, Alan Lee (Hornch'ch)

      Magee, Bryan

      Rose, Paul B.

      Williams, Rt Hon Shirley (Hertford)

      Mahon, Simon

      Ross, Stephen (Isle of Wight)

      Wilson, Rt Hon Sir Harold (Huyton)

      Mallalieu, J. P. W.

      Ross, Rt Hon W. (Kilmarnock)

      Wilson, William (Coventry SE)

      Marks, Kenneth

      Rowlands, Ted

      Wise, Mrs Audrey

      Marshall, Dr Edmund (Goole)

      Ryman, John

      Woodall, Alec

      Marshall, Jim (Leicester S)

      Sandelson, Neville

      Woof, Robert

      Mason, Rt Hon Roy

      Sedgemore, Brian

      Wrigglesworth, Ian

      Maynard, Miss Joan

      Selby, Harry

      Young, David (Bolton E)

      Meacher, Michael

      Sever, John

      Mellish, Rt Hon Robert

      Shaw, Arnold (Ilford South)

      TELLERS FOR THE NOES:

      Mendelson, John

      Sheldon, Rt Hon Robert

      Mr. James Hamilton and

      Mikardo, Ian

      Shore, Rt Hon Peter

      Mr. Peter Snape.

      Millan, Rt Hon Bruce

      Silkin, Rt Hon John (Deptford)

      Question accordingly negatived.

    New Clause No. 5

      WHISKY OUT OF BOND
      'The duty of excise charged on whisky shall, instead of being payable on removal from warehouse as specified in the regulations made under section 16(2) of the Finance (No. 2) Act 1975, be payable—

      (a) from 6th April 1979, on the 14th day following the day on which duty was charged;

      (b) from 6th April 1980, on the 28th day following the day on which duty was charged;

      (c) from 6th April 1981, on the 42nd day following the day on which duty was charged.'.—[Mr Younger.]

      Brought up, and read the First time.
      11.0 p.m.
      Mr. George Younger: I beg to move, That the clause be read a Second time.
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      I should first declare an interest in that I am a director of a company which, although it does not make any whisky, sells a considerable amount of whisky both at home and abroad. I cannot remember whether this is the eleventh or twelfth occasion upon which I have taken part in a debate on the subject of the whisky duty and the effect that it has on the industry. However, tonight's debate gives us the chance of approaching the subject with rather more hope than we have had on any of the other occasions in previous years when we have raised this matter with the Government.
      First, I should like to describe briefly the object of the new clause. At the present time, as hon. Members will know, the duty payable on whisky is actually payable to the Revenue before withdrawal from bond. Therefore, the duty cheque has to be payable before the

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      whisky may be extracted from bond. Thereafter, the whisky has to be transported to the customer who will sell it, and that customer, in the normal course of trade, is given a period of credit before he has to pay his account. This is normally between seven and eight weeks. Therefore, the duty which is payable before the whisky comes out of bond has in most cases to be carried by the producing firm for a period of seven or eight weeks.
      The new clause would effectively, when fully in operation, delay payment of the duty for a period of six weeks after withdrawal from bond. Although this would not completely eliminate the difference in time between payment of the duty and receipt of the money from the customer, it would go a very long way towards it. I think that that would be very valuable.
      Mr. Crawford: Will the hon. Gentleman explain why it is that now, after three years, his own party has seen fit to move this new clause? Will he also explain why, having abstained on the new clause which the SNP has sought to move during the last three years, he is now seeking to make this point? The SNP has been in favour of this for the last three years and my hon. Friend the Member for Banff (Mr. Watt) raised the subject in an Adjournment debate. Why are the Tories now moving this new clause?
      Mr. Younger: I am sorry that the hon. Gentleman felt it necessary to intervene with that remark, particularly as he is totally inaccurate. I was taking part in the debates on this subject long before he was even a Member of the House. If he wants chapter and verse for what I assert, I remind him that on 18th May 1976 the Committee of which he was a member discussed a proposal moved by a friend of many of us, Sir John Hall, who, alas, died recently, on which not only I on several occasions but the hon. Member himself spoke.
      Mr. Crawford: Tell us the vote.
      Mr. Younger: He can discover what the vote was if he looks in the appropriate place in Hansard. But I can tell him that I voted as he did. I do not know whether his memory is failing him. I suggest that before he tries to make
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      clever interventions of that sort he should get his facts right.
      I move on to the costs of my proposal. The clause meets one of the main criticisms of the Minister in previous years, which is that the cost would be too heavy to bear if this proposal were implemented in one fell swoop. This clause not only phases the change over three years but does not commence the change until April 1979. So the good bit of news that I have for the Financial Secretary is that, worried as he must be about the financial state of the Budget for this year, here is one change that will have no effect in this financial year.
      The change starting in April 1979 would be effected in three phases and, by the calculations that I have been able to make, each phase would involve a once-and-for-all cost of between £55 million and £60 million. I notice that this tallies reasonably closely with the figures given in a letter from Mr. Christopherson of Customs and Excise. He calculated that a delay of four weeks would cost £120 million and that one of six weeks would cost £180 million. We seem to be fairly well agreed about the cost of implementing the new clause. There would be no cost this year, and there would be a cost of between £55 million and £60 million each year for the three financial years following. Thereafter, there would be no cost whatever.
      I do not think that the Financial Secretary can argue that the clause represents an unacceptable charge on the Exchequer. I hope that that fact will encourage him to accept it.
      Mr. Russell Johnston: It is clear that the hon. Gentleman is putting forward the official view of the Opposition Front Bench. Therefore, perhaps he can explain why the Opposition did not pursue this line when they were in Government between 1970 and 1974. There may have been very good reasons. Perhaps he will remind the Committee what they were.
      Mr. Younger: I do not want to go into them at great length, but my first comment is that during that period there was not the severe and very extreme inflation which we have had since 1974. The hon. Member for Inverness (Mr. Johnston) knows very well the way in which the whisky industry is organised

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      and that inflation has had a severe effect on it. In a moment or two I shall detail one or two facts to demonstrate that in the last few years the effect on the whisky industry has been pretty severe. I hope that we shall have the support of the hon. Member for Inverness and his colleagues. I am sure that he has a large number of people in his constituency who are dependent on the industry. In view of that, I am sure that he will wish to be to the forefront in supporting the new clause.
      There is no doubt that the carrying of the sum of money as I have described for six to eight weeks places a considerable burden on the industry as a whole. The scale of this can be best illustrated by taking the cost of a single bottle of whisky and apportioning the amount of duty. The average price of a bottle of whisky is £4·20. I know that it can be bought more cheaply, but that is about the average. Of that £4·20, £3·16 is accounted for by duty. Another 31p is accounted for by VAT, leaving only 73p, which is the real cost of the bottle. The carrying of such a large percentage of the value—80 per cent. of the sale price—imposes a heavy deadweight charge on the industry.
      It is obvious that this inhibits investment in the industry and also the cash flow of many firms. This point has been made by a number of companies in the past two or three years. That is why there have been amalgamations of firms which might not have been necessary had this problem not existed.
      Mr. Powell: Can the hon. Member estimate the cost in terms of interest of carrying the duty due for a period of seven weeks? Can he indicate also whether this charge, like all other charges is not spread over all the links in the process, from production to consumption?
      Mr. Younger: I am not sure about the right hon. Member's first point. I have not been able to make a precise calculation of how much this would amount to on each bottle, but it is certainly quite a number of pence. On the latter point, the amount is carried in the ultimate price for the product, as every cost on the industry is bound to be, but it is the producing company which has had to carry the smaller cost of maturing the whisky over a three-year period which also has to carry this large sum for the six weeks.
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      This charge is not very even-handed when compared with that on other products of a similar type in the same sort of industry. Whereas whisky has to carry this amount, beer does not because beer has deferment for 39 days between the day when the duty has to be paid and actual production of the money. British wine has 29 days' grace. Therefore, with these two products the principle has been accepted that it is not strictly right that this amount should have to be produced at an early stage in production. This is another reason why the Minister should look at the new clause sympathetically.
      The vast majority of our EEC partners have some form of deferment for spirits. In Belgium there is deferment until the fifteenth day of the fourth month following the day of delivery for consumption. In West Germany it is the fifteenth day of the third month. In Italy 15 days are allowed for payment of half the excise duty, with 30 days for the other half. And so it goes on. If we are to compete on fair terms with other products in the Community, we should move in the direction of the new clause.
      11.15 p.m.
      It has been said that there would be technical difficulties about making a change of this sort. We are grateful to the Minister for what has been done. Over the past year a great deal of progress has been made towards satisfying everyone that there are no technical difficulties in making a change.
      Mr. J. W. Rooker: The hon. Member made various comparisons with the European Community. Can he elaborate a little more? I was not aware that there was a great deal of whisky manufactured in the Community, and the new clause applies only to whisky. If other spirits are involved, why is there not a new clause dealing with spirits other than whisky, on the basis that there is not a lot of competition in the Community?
      Mr. Younger: The hon. Member has raised a good point. The new clause applies only to whisky. We are hoping, because this is the strongest case, to establish the principle. It is true that, if we can do so, logically it ought to be applied to spirits generally and to imported wines. It would be our hope, if we can establish

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      the principle, that the issue could be raised at a later stage to put these other matters on all fours.
      Mr. Russell Johnston: Is the hon. Member satisfied that such a change would be acceptable within the European Economic Community in terms of the rules of competition concerning spirits?
      Mr. Younger: Certainly. I am satisfied that sooner or later the present disparity between these various beverages will be unacceptable to our partners in the Community. We should, if we are looking ahead, be expecting this change, or something like this change, to happen at some time. Unless there is any reason why he should not do so, I hope that the Minister will accept the point sympathetically.
      During our debates in Committee last year, the Minister was extremely helpful and referred to the issue in considerable detail. He used these words:
      "duty deferment is a matter that I am considering. I hope that I shall be able to have some discussions with the wine and spirit industry to look at some of the practical implications of taking some action on deferment. I hope to undertake this over the next 12 months before next year's Budget"—[Official Report, Standing Committee D. 19th May 1977; c. 36.]
      That was fair enough. The Minister has been as good as his word. Fruitful discussions have taken place between the Wine and Spirit Association and Customs and Excise on this matter.
      There was a letter to Mr. Plowman, of the Wine and Spirit Association of Great Britain, dated 22nd December 1977 from Mr. Christopherson, of Customs and Excise, which clearly spelt out the conclusions of those discussions and said what, in his view, would be the cost of this change. It was made clear that there were no absolute technical problems involved. It is fair to add that he stated categorically that this fact did not in any way commit Ministers to agree to the change. I accept that that is the position today. The Minister has not committed himself to make a change, and it is our object to try to persuade him to do so tonight.
      No one can doubt that this is an extremely important industry. It makes a contribution to providing jobs in Scotland,
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      particularly in the remote areas where jobs are difficult to come by. In 1977, no less than 93 million proof gallons, worth £512 million, was exported. That is an extremely fine record.
      There is no doubt that the increasing effect of these duties upon the industry and consumers has had a serious effect on home production during the past few years, as is shown by the production figures. In 1974, 183,000 proof gallons was produced whereas in 1977 only 151,000 proof gallons was produced. That is a drop of about 20 per cent. It is this aspect and the loss of job opportunities that is entailed that should at long last turn the scale, in this longstanding saga, in persuading the Minister that this time some help is needed.
      The Government have to deal with a serious unemployment problem—a problem about which they, as well as the rest of us, are deeply concerned. But Ministers tell hon. Members that there is little they can do about the situation and always add that they wish they could do more. Here is something positive that could be done now by the Government to help an industry whose jobs are very important indeed to many parts of Scotland. I hope that I have made a case of which the Minister will be aware and that the argument will reach such a pitch that at long last it will be conceded. It makes economic sense and sense in terms of fairness between whisky and other industries which should be treated similarly. It is a long-standing matter which we have debated for many years. Surely, this year is the year to bring the matter to fruition.
      This year the new clause is specially designed to make matters easy for the Minister. In this proposal there would be no cost to the Exchequer this year. It gives the right hon. Gentleman plenty of opportunity to make plans for the time when the relatively small cost involved in this exercise in the next three years comes to be felt in a future Budget. I hope that tonight we shall see the culmination of 12 years of pressure and that our proposal will be accepted by the Government.
      Mr. Hamish Watt: Although my colleagues and I welcome this opportunity to press these proposals, we find it galling that, once again, our new clause has not been called. The SNP has

      411
      been consistent in pushing the case for deferment of duty since we came to the House in 1974, and as long ago as 22nd January 1976 I had an Adjournment debate on this subject.
      Mr. Lamson: The hon. Gentleman said that his party's clause had not been called. I have been unable to find it on the Amendment Paper. Will he tell us what number it is and on which page it appears?
      Mr. Watt: I assure the hon. Gentleman that we submitted proposals on spirits in total, but not on whisky in particular. We have always maintained that the provision must cover all spirits. We are particularly concerned that whisky should be covered because it is a subject that is most important for Scotland. Nowadays whisky is made, matured, blended and sold by reputable companies, although I admit that in the past this was not the case. It was important that Customs and Excise could get their money before they allowed anybody to take whisky out of bond. But this is not now the case, and we are merely asking for comparability.
      Mr. F. A. Burden: On a point of order, Mr. Godman Irvine. We are anxious to know what is in the clause that has not been called. Since we cannot find it, perhaps you would tell us where it is.
      The Second Deputy Chairman (Mr. Bryant Godman Irvine): If the hon. Gentleman looks at the very beginning of the Amendment Paper, he will find a note that clarifies the position completely. That will indicate to him where that item can be found.
      Mr. Watt: We are consistent in requesting deferment of this duty, and I believe that it is essential that we should take this decision tonight. There is a very strong case for supporting the whisky industry because it is such a valuable contributor to the Exchequer. It contributes £512 million to the nation, and a great deal of cash accrues to the Exchequer from the sale of whisky.
      It is vital that this industry should be given parity with the beer industry or the wine industry. There is no better time for the Government to do it than this year or next year. A great deal of oil money
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      is coming into the country now, and if that money is to be used sensibly it must be used to bolster up our viable industries. The whisky industry is no lame duck like shipbuilding or even the motor car industry. It is a viable, thrusting and thriving industry which has always paid its way and always will pay its way.
      The whisky industry is not asking for a handout through the new clause. It is asking only for the use of that which is its own. The industry is, I believe, more viable than any other in Britain, with the possible exception of tourism. It has no import materials in its production. It does not have to import expensive raw materials as so many other industries do. I say again that it is time that the Government gave the whisky industry parity.
      As the hon. Member for Ayr (Mr. Younger) said, the industry is an employer of labour in many rural and urban areas of Scotland where no other jobs are available.
      It is asking a great deal of the industry that it has to find £19 million every year to finance the early payment of tax, which is what it amounts to. It is not a deferment we are talking about here. We are talking about parity. It would be far better to let the industry have its own money so that it could finance the laying down of more stocks. It is in everyone's interest that stocks should be laid down now. Whisky which is being made this year and next year will not be drunk until the early 1980s at the earliest, or in the case of mature whisky not until the mid-1980s, and some of it will not be drunk until 1990. That is a very long period for any industry to have to work to, and it is important that the whisky industry should have the use of this cash.
      The new clause is absolutely reasonable. It will not hurt the Exchequer this year. It will not hurt the Exchequer at any time, since it provides for phased steps forward to the parity which the industry has long sought.
      I shall be interested to see how my colleagues on the Liberal Bench vote tonight, especially those who have whisky distilleries in their constituencies. I shall be particularly interested to see how some hon. Members on the Government side vote, especially those with blending and bottling factories in their constituencies. This is a wonderful opportunity to

      413
      do the right thing by the whisky industry, and I commend the new clause to the Committee.
      Mr. Rooker: I am not sure whether I am in favour of the new clause but I should have thought that, with all the problems which we discussed last week, the Government need to get their hands on every pound of tax and duty as quickly as possible, as it becomes due. But the idea seems to be to take out of circulation, as it were, £180 million on the six-week basis and £120 million on the four-week basis. It is still money that would be lost. The hon. Member for Ayr (Mr. Younger) shakes his head, but he gave the figures. I have not got them from anywhere else. He said that it was roughly £50 million or £60 million a year.
      Mr. Younger: I made the point that there is no cost at all this year.
      Mr. Rooker: I accept that entirely; but Governments do not work on a hand-to-mouth basis. No modern responsible Government running our country's affairs can work on a hand-to-mouth basis in taxation. That may be the Tory Party's idea of running our affairs, but it is not the Labour Party's. It is still £180 million of tax cuts.
      Mr. Younger: No.
      Mr. Rooker: It is a tax cut in the sense that it increases the cash flow in the industry by £180 million over three years. I accept that it is a once-for-all payment, but in total it is £180 million over six weeks. That is not chicken feed. It could be spread on many small items over several years, or it could be a once-and-for-all payment to the construction industry, where extra employment is valuable. The sum of £180 million is equivalent to ½p off income tax. It is not an insignificant sum.
      11.30 p.m.
      I repeat that I am not sure whether I am in favour of the proposal. I do not know whether it applies to Irish whiskey, or whether the problems relating to Scotch whisky apply in Northern Ireland, or whether the bonding situation—which is very peculiar to this industry—that applies in Scotland applies in Northern Ireland.
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      If the new clause is approved, I am concerned about the effect it will have on whisky on which no duty is payable. We did not hear anything about this from the hon. Member for Ayr. If the new clause were accepted, it would cost the Revenue money on a once-and-for-all basis. The Revenue loses money on a considerable amount of whisky on which no duty is paid.
      I refer hon. Members to the appropriation accounts, House of Commons Paper 138, presented to the House on 31st Janaury of this year. In paragraphs 56 to 60 inclusive the Comptroller and Auditor General pointed out that there is a massive tax fiddle going on due to the fact that there are 250,000 proof gallons of whisky a year on which no duty is paid. This whisky is that which is drawn off for sampling. It is not an insignificant amount of whisky. When one realises that from each cask or vat of whisky one-tenth of a gallon may be drawn off for sampling purposes, one can see that there is scope for abuse. [Laughter.] Hon. Members may think that this is funny, but some £7 million in revenue is lost each year in this way. Many areas of the public service would benefit greatly from the injection of £7 million.
      However, not all of it is abuse. Much of the whisky drawn off in this way is used for sampling. The Comptroller and Auditor General said that he asked the Customs and Excise what it was doing about this matter, it having been drawn to its attention. The Comptroller and Auditor General said in paragraph 58:
      "The Department have no direct information on the ultimate use of duty-free samples, but they have long been aware from investigations undertaken for other purposes that it is not uncommon for such samples to be added to duty-paid stocks."
      So who makes the profit on that? It is £3·16 on a bottle, plus VAT. Who makes the rake-off on that—the wholesalers or the retailers? The public pay duty on bottles of whisky at the rate of 80 per cent., according to the hon. Gentleman, and that duty does not go to the Revenue. We are losing £70 million a year.
      Reference has been made to our Common Market partners and to the need to harmonise our affairs. These sampling arrangements of one-tenth of a gallon

      415
      per cask are unique. The United Kingdom allows a very generous amount to be taken for sampling purposes compared with our Common Market partners. I should like to know what is happening in terms of harmonisation.
      Mr. Watt: Does the hon. Gentleman appreciate that a cask can hold about 110 gallons of whisky? He is taking up the Committee's time by talking about a thousandth part of the cask.
      Mr. Rooker: I am taking the Committee's time to ask those who support the clause, which will cost the taxpayer, the Revenue, £180 million over three years, whether it is their intention to put duty on all of the whisky. I have made the point that on 250,000 gallons—a relatively small amount in percentage terms—there is no duty paid. It is clearly stated in the report of the Comptroller and Auditor General to the House of Commons that there is a tax fiddle going on, because some of that whisky is later sold to the general public. This abuse needs to be stamped on.
      Will anything be done about this? It is clear that the housekeeping arrangements of the Customs and Excise and the distillers are not all they should be. It is accepted in every distillery, according to the Comptroller and Auditor General, that the maximum allowable sample is always taken. There is never a cask where there is a need to take less than one-tenth of a gallon.
      The statistical specialists in the House will know that there must be some occasions on some casks, which will be smaller than some that the hon. Member for Banff (Mr. Watt) mentioned, where there is no need to take the full amount as a sample. [Laughter.] Hon. Members think that this is funny. We hear so much about abuse of the social security system costing 0·6 million a year, but every time hon. Members draw attention to tax abuse on a massive scale—whether it is income tax, corporation tax or, as in this case, excise duty on whisky—Opposition Members think that it is funny. They are not prepared to take seriously tax abuse to which the Comptroller and Auditor General has drawn attention. All that the Opposition wish to do is to add to the tax abuse. I accept that they wish to increase public expenditure in the short term. They have come forward with
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      no plans to make sure that all whisky is covered by the duty. There is nothing in the clause or the speech of the hon. Member for Ayr to show that they have even read the Comptroller and Auditor General's report. We have heard nothing about whether they will do anything about this.
      The Opposition should have the good grace to comment on the report. [HON. MEMBERS: "Out of order."] If I am out of order, Mr. Godman Irvine, I will take that from you and no one else. I have kept my remarks strictly to the new clause and the amount of public expenditure that flows from it. It is legitimate to seek to know whether it covers all whisky removed from the warehouse. The whisky taken for sampling is dearly removed from the warehouse, duty free.
      It is not a matter that hon. Members would discuss each day. It is a difficult matter to raise in the normal course of business. I am extremely grateful that the new clause has been tabled. I, too, look for the SNP new clause and amendment. It seems to me from what you said, Mr. Godman Irvine, that the Tory Party ruled the SNP amendment out of order by choosing to debate only the duty payment on whisky on the Floor, whereas the SNP amendment went much wider.
      I do not know the amount of duty on other spirits where there is a tax abuse. The Comptroller and Auditor General's report relates specifically to the whisky industry. He does not differentiate between the Irish whiskey industry and the Scottish whisky industry. I should like to know how the clause affects the Irish position, which has become so important in the passage of the Bill, for legitimate political reasons concerning the Irish Members. I should have thought that they would have something to say on this important matter, as it affects their economy. There is no doubt that this industry is vital to the British economy. I do not wish, in what I have said, to run down the Scotch whisky industry. It is extremely important.
      I want to make the point—I think that I have got the message across—that the new clause represents further tax handouts and cuts on top of the existing abuse and tax evasion. Indeed, it is admitted

      417
      in the Comptroller and Auditor General's report to be illegal. I hope that my right hon Friend will tell us what the Government intend to do about the situation.
      Mr. J. Grimond: I am sure that many hon. Members are well disposed towards the whisky trade. Some of them may even be thinking of going into the sampling trade after hearing the speech by the hon. Member for Birmingham. Perry Barr (Mr. Rooker). I do not intend to deal with possible abuses. Duty-free shops may be said to be evading duty in a similar way.
      We do not often have the opportunity of commenting on this important industry. Therefore, I want to make two serious points. The whisky industry, which is extremely important for the export trade and for many particular localities, is now suffering from a steep increase in costs. The distillery in my constituency suffers chiefly from increases in fuel and transport costs.
      We know that the Government have been having conversations with the industry. What proposals have they to meet the legitimate fear of the industry that there will be a continuing decline in distilling—there has already been some decline—and possible threats to the export trade if costs go on rising indefinitely and duty takes up such a high proportion of the price of whisky? I hope that the Government will tell us the results of their conversations with the trade.
      Mr. Alick Buchanan-Smith: The speeches by the hon. Members for Banff (Mr. Watt) and for Birmingham, Perry Barr (Mr. Rooker) had one thing in common—they both introduced a somewhat ghostly atmosphere into the debate. The hon. Member for Banff asked us to refer to an amendment which does not even appear on the Notice Paper and which we had to conjure up from the figment of our imagination, and the hon. Member for Perry Barr tried to bring to us a different form of departed spirit. It will be interesting to learn from the reply by the Financial Secretary where that spirit has departed to and whether we can bring it back into the Treasury net.
      I do not claim to have the same number of distilleries in my constituency as
      418
      the hon. Member for Banff, but there are six. Cash flow is of major importance, to them.
      The right hon. Member for Orkney and Shetland (Mr. Grimond) intervened briefly to raise one important matter. But I think that the Committee would be interested to know whether the Liberal Party supports the new clause. What should appeal to the Liberal Party is that we are trying not merely to seek equity in the treatment of whisky and other alcoholic beverages, but to move towards the harmonisation to which the EEC is also trying to move. It is significant that the EEC is suggesting that excise duty should be paid at the earliest, on the fifteenth and, at the latest, on the twenty-fifth day of the second succeeding month. In other words, the EEC is moving towards the position set out in the new clause. I hope that the Liberal Party will at least be true to its support of the European Economic Community and, in going towards harmonisation, will support the new clause.
      Mr. Crawford: There has been a lot of laughter about the new clause, but I point out that at least 20,000 jobs are involved directly in the whisky industry, apart from those not directly involved. As has been said, there is considerable short-time working in the industry.
      I am appalled at the cynicism of the Conservative Front Bench in tabling this new clause. The Scottish National Party has constantly sought—
      Mr. Buchanan-Smith: The hon. Gentleman is jealous.
      Mr. Crawford: I am not jealous. The SNP has constantly sought on Finance Bills, as the Treasury Bench knows, to reduce the duty on whisky. We are very interested in the jobs of our countrymen in this respect. The clause affects the matter but lightly. I understand that the once-for-all cost is £150 million to £160 million over three years.
      11.45 p.m.
      The Liberal Party view on whisky is worth considering. I understand that when the SNP sought to reduce the duty on whisky during the last two or three Finance Bills the Liberals voted with the Government. I shall gladly give way if any hon. Gentleman wishes to correct me.
      Mr. Pardoe: I intervene to tell the hon. Gentleman not that he is wrong but that in the 1950s duty was 78 per cent. of consumer expenditure on whisky, and it is now down to 58 per cent. If one raised the price of a bottle of whisky in real terms to what it was in 1967, the retail price would have to go up by £2·75. I cannot think that the House of Commons has done badly by the whisky industry.
      Mr. Hector Monro: Tell that to the people of Inverness.
      Mr. David Steel: Do not confuse the hon. Member with the facts.
      Mr. Crawford: No, do not confuse me with the facts. According to Adam Bergius, who is chairman of the Scotch Whisky Association, in the last financial year, although the duty on whisky has been increased, the amount of revenue from whisky decreased by £20 million. Those are not my figures, but those of the Scotch Whisky Association.
      There has been a spot of bother over whisky in the EEC. It was decided there that whisky was not an eau de vie. Whisky derives from the Gaelic uisge beatha. That means eau de vie. In spite of the cynicism of the Conservatives on this issue, we shall support the new clause.
      Mr. Dennis Canavan: The debate has certainly made clear where the priorities of the Tories and the Scottish National Party lie. Last week they voted to give about £445 million to the rich in tax handouts. To-night they are trying to give about £165 million in a tax handout to the whisky magnates. That is where their priorities lie, and I hope that the people of Scotland will note that the Tories will not be alone in the Lobby tonight, but that the SNP apparently wants to help them give this present to the whisky capitalists.
      Mr. Watt: Will the hon. Gentleman say how many of his constituents work in the whisky industry?
      Mr. Canavan: I shall be coming to that matter later. Perhaps the hon. Member will have a wee bit of patience.
      It is also significant that the Tories and SNP Members are trying to give this present to the whisky companies at a time
      420
      when today's edition of the Glasgow Herald has a headline saying
      "Scotch's strength in profit margins".
      Among other things, it says:
      "The strong trading position of UK distillers is contrasted with tight margins in importers, shippers and retail chains, together with the reticient growth of UK wine consumption, in a survey by Jordan Dataquest. From a sample of 220 companies throughout the UK, the average profit margin for whisky distillers was 13·9 per cent., for retail chains 0·8 per cent., while wine importers and shippers had an average margin of zero."
      They seem to be doing not too badly on that evidence concerning their profit margins.
      Later, the article says:
      "Top prizes for profits growth, in distilling went to DCL's White Horse, with an increase of 89·4 per cent., last year."
      Let us now look at some of the pre-tax profits which these companies are making. Distillers Company, for example, in the year ending March 1977, is listed as making a pre-tax profit of £127,690,000.
      Mr. Crawford: Just how much of that profit was gained from whisky?
      Mr. Canavan: I could not say off-hand but if the hon. Member cares to look into the matter I think that he will find that a substantial amount came from whisky.
      Mr. Robert Hughes: If Distillers is making such vast profits, can it not finance this revenue quite merrily out of profit without coming to the Government and seeking a handout?
      Mr. Canavan: I am grateful to my hon. Friend, because it is obvious that Distillers has profits not only from whisky. It also makes excessive profits out of the National Health Service, for example, to an extent which is, to my mind, almost immoral. We have seen some of the activities in which Distillers has been involved concerning drugs, and I think that it leaves a lot to be desired.
      Mr. Russell Fairgrieve: As the hon. Member reads out his list of profits, will he please give what the profit is as a percentage of sales?
      Mr. Canavan: I could not give that particular figure at this very moment. I am not a walking encyclopaedia. I do not go around with all the figures. But

      421
      if the hon. Member wants one percentage, the article to which I have referred says:
      "Top prize for profits growth in distilling went to DCL's"—
      one brand—
      "White Horse, with an increase of 89·4 per cent. last year."
      What are the companies doing with these profits? It would not be so bad if they were paying their workers decent wages. But I note that the wages bill for Distillers was only £59 million and there are 19,000 workers. By my arithmetic, that means an average wage of about £3,000. Bearing in mind that some of the directors no doubt get more than 10 times that amount, that makes the average wage for the worker in the distillery considerably less than that.
      Mr. Younger: Surely it is the Government who have been preventing these companies from giving better wages to their employees.
      Mr. Canavan: Perhaps recently that has been so, but certainly over the years when there was an element of free collective bargaining Distillers Company and all the other distillers were significant by the slowness with which they responded to trade union pressure for decent wages.
      I maintain that distillers have plenty of money to invest in the industry in order to improve it, to make it more efficient and thereby also to provide more jobs in the industry. They have plenty of opportunity to do that without a tax handout of £165 million. They also have enough left over from their profits to sell a dram at a more moderate price.
      The pressure for the new clause does not come from the unions. Trade unionists in my constituency involved in distilling and in the ancillary industries of bottling and capping have made no representations at all asking me to support it. Trade unionists are not dumb. They know fine that this clause of itself would not create one job in Scotland. Nor have I had any representations from consumers, because they know fine the clause will not take 1p or even ½p off the cost of a dram.
      It is sheer hypocrisy for the Scottish nationalists and the Tories to claim that they are thinking of the workers or the consumers. They are not: they are thinking of those who are making a profit
      422
      out of this industry. I challenge them. They knocked a hole in the family budget of £445 million last week. Now they would increase that hole by £165 million. Where will they get the money from? Their priorities are such that if it came to the crunch they would prefer to take the milk from the schoolchildren in order to put money into the pockets of the whisky capitalists.
      I urge the House to reject the clause.
      Mr. Robert Sheldon: The new clause provides for the phased deferment of excise duty on whisky, in three stages, starting next year. The first difficulty is that it is related to whisky alone. My hon. Friend the Member for Birmingham Perry Barr (Mr. Rooker) mentioned this. He also menioned duty-free samples. The Customs and Excise are at present having discussions with the industry about their use, and I am sure that the House will be notified of any results.
      Because the clause is limited to whisky, it discriminates against other spirits, obviously including brandy, imported from other EEC countries. The clause would therefore be in breach of our EEC obligations. But that is not its only weakness. It makes no provision for security of payment. That has been a feature ever since the beginning of excise duties many centuries ago.
      Mr. Watt: Is the Minister saying that the whisky industry is less reputable than the beer industry and that the Government are more sure of getting their money from the latter?
      Mr. Sheldon: The duty on beer is not collected at the end as it is on whisky and spirits. The method of collection is quite different.
      Mr. Watt: Answer.
      Mr. Sheldon: I have answered, if the hon. Gentleman was listening. The collection of duty on spirits is at the final product stage. That is not so in the beer industry. He should examine duty collection to see how it is done.
      But the main objection, of course, is cost, which is equal to the average duty outstanding at any moment and which has to be financed by Government borrowing. On our 1978–79 estimates of revenue flow, the cost of the new clause for whisky alone would be about £66 million

      423
      over the three years. Of course, deferment could not apply only to whisky, and, if we included all spirits, the cost for three years would rise to £126 million. There would also be problems over our EEC obligations if we did not include wine. We would then arrive at the total of £165 million mentioned by my hon. Friend the Member for West Stirlingshire (Mr. Canavan).
      12 midnight
      The hon. Member for Ayr (Mr. Younger) was asked why the last Conservative Government did not permit duty deferment. He said that levels of inflation were not so high then and that therefore the industry's problem was not so severe. But we have introduced stock relief, which has been of enormous value to the whisky industry, as many representions that I have received confirm.
      The hon. Member for Ayr was right in saying that there is no technical problem. We have had discussions on these matters and if it becomes possible to allow some period of duty deferment, at least we will have removed the technical problem.
      I accept the importance of the whisky industry both for its enormous impact on our export performance and for the jobs it creates, as well as for the unique product that we are fortunate to have manufactured in Scotland.
      As the hon. Member for Cornwall, North (Mr. Pardoe) pointed out, there has been a real terms decline in the incidence of duty. The duty on a bottle of spirits today is £.3·70. On the same price base as 10 years ago, it would have been £6·40. There has been a steep decline, in real terms, in the incidence of duty.
      That is not the only way in which the Government have helped the industry. Home consumption is expected to rise considerably this year. In 1977–78, 16·6 million proof gallons were produced for home consumption, and that figure is expected to rise to more than 21 million proof gallons this year.
      I agree with what the right hon. Member for Orkney and Shetland (Mr. Grimond) said about the importance of the industry, but these production and consumption figures and the figures I have quoted for incidence of the duty show
      424
      that the burdens imposed on the industry by the Government have been reduced over the last few years.
      The burden on the industry of financing the duty depends not only on the level of the duty and the inability or otherwise of the industry to have the duty deferred, but upon the amount of credit that the industry gives to its customers. Distillers and importers of spirits generally give customers considerable commercial credits. The danger is that if there is duty deferment, pressure from retailers for an extension of the period of credit as a result of the distillers receiving a longer period to pay will be severe. That problem has already been recognised.
      More than 80 per cent. of the Scotch whisky produced in Scotland is exported. That is a commendable and unique performance. But if we were to introduce duty deferment, it would not help exporters. So the exporters would not get the benefit.
      When we look at certain major exporters, particularly in the malt part of the industry, we find that they do not do a great domestic trade. That means that the largest part of the exporting business would not get any benefit from duty deferment. That, together with the fact that wholesalers and retailers would be able to exert pressure upon the distillers, so that much of the benefit would go to them, means that the case for sympathetic consideration is not so great this year.
      We came to the conclusion, therefore, that for 1978–79 there could be no duty deferment, with our public sector borrowing requirement at its present level. We are now looking at the prospect for 1979–80 and what we can do to help the industry in improving even further its present performance. But 1979–80 can be dealt with in the Finance Bill of 1979, and there is no need to take action now and try to guess what will be the economic position 12 months or a little less from now.
      Mr. Rooker: If that is the case, the Tory Party will be forced to tell us where it is to get the money. Tonight it has sought to avoid answering that question by putting a date limit on the proposal.
      Mr. Sheldon: My hon. Friend is quite right. It is the easiest thing in the world to incur debts 12 months from now, and

      425
      we are likely to see this sort of thing again and again. That is what the Opposition have sought to provide, because they have found that they would be in some difficulty in trying to save money for this current year. They have sought to find an alternative by saying, in effect, "We shall not try to get it this year but will try to get it next year." The danger is that this will not be seen in the context of the economic position at that time and, of course, anything that can be done in this area can be done in the Finance Bill of 1979.
      The Budget judgment for next year will obviously have to take account of the important points concerning the industry which have been put forward during the course of the debate. The public sector borrowing requirement is another matter that will obviously be taken into consideration in the judgment.
      I do not think that the proposal should be for decision now. I hope that it will be possible to move some way next year, but the final decision must be left until then. I ask the Committee to reject the new clause.
      Mr. Younger: I am afraid that that was a most disappointing reply from the Minister. What he has really said is that he accepts the validity of all the arguments but is not prepared to do anything about the mattter this year. I take it that his last words are an undertaking to us that it will be very much on the agenda for next year. But that is not satisfactory from our point of view.
      I have explained why the new clause refers only to whisky. We would prefer
      to come back possibly at a later stage of the Bill with a proposal which would include spirits as well, if the principle can be accepted.
      The hon. Member for West Stirlingshire (Mr. Canavan) indicated that what he really wanted was a lot of whisky companies which made no profits at all. That would, of course, be an absolute recipe for loss of jobs and for disaster for those companies and for the economy as well. The Minister followed that up by saying that one reason that he was doubtful about this was that he would not have security for payment. Does he seriously think that companies in this industry, which are mostly well known, would actually default on payment in this matter? That is a ridiculous concept.
      Finally, the Minister suggested that if the proposal were carried out the customers would then require to extend their credit for a similar period from the end of the six or seven weeks that the firm would get from the change. That is a quite ridiculous point of view. It would be totally unlikely to happen and is quite out of keeping with the customs of the trade. It is absolute nonsense, in fact.
      The Minister's reply was most disappointing, and in order to reinforce the great importance that we attach to saving jobs in the industry, at a time when unemployment is running at a record rate since the war, I ask my hon. Friends to vote for the new clause.
      Question put, That the clause be read a Second time:—
      The Committee divided: Ayes 236, Noes 264.

      Division No. 212]

      AYES

      [12.9 a.m.

      Adley Robert

      Buck, Antony

      Durant, Tony

      Aitken, Jonathan

      Budgen, Nick

      Dykes, Hugh

      Alison, Michael

      Bulmer, Esmond

      Edwards, Nicholas (Pembroke)

      Arnold, Tom

      Burden, F. A.

      Elliott, Sir William

      Atkins, Rt Hon H. (Spelthorne)

      Butler, Adam (Bosworth)

      Emery, Peter

      Atkinson, David (Bournemouth, East)

      Carlisle, Mark

      Ewing, Mrs Winifred (Moray)

      Bendall, Vivian (Ilford North)

      Chalker, Mrs Lynda

      Eyre, Reginald

      Bennett, Dr Reginald (Fareham)

      Churchill, W. S.

      Fairbairn, Nicholas

      Benyon, W.

      Clark, Alan (Plymouth, Sutton)

      Fairgrieve, Russell

      Berry, Hon Anthony

      Clark, William (Croydon S)

      Fair, John

      Biffen, John

      Clarke, Kenneth (Rushcliffe)

      Fell, Anthony

      Biggs-Davison, John

      Clegg, Walter

      Finsberg, Geoffrey

      Blaker, Peter

      Cooke, Robert (Bristol W)

      Fisher, Sir Nigel

      Body, Richard

      Cope, John

      Fletcher, Alex (Edinburgh N)

      Bowden, A. (Brighton, Kemptown)

      Cormack, Patrick

      Fookes, Miss Janet

      Boyson, Dr Rhodes (Brent)

      Costain, A. P.

      Forman, Nigel

      Braine, Sir Bernard

      Crawford, Douglas

      Fowler, Norman (Sutton C'f'd)

      Brittan, Leon

      Crouch, David

      Fox, Marcus

      Brooke, Peter

      Dodsworth, Geoffrey

      Fraser, Rt Hon H. (Stafford & St)

      Brotherton, Michael

      Drayson, Burnaby

      Fry, Peter

      Bryan, Sir Paul

      du Cann, Rt Hon Edward

      Galbraith, Hon T. G. D.

      Buchanan-Smith, Alick

      Dunlop, John

      Gardiner, George (Reigate)

      Gardner Edward (S Fylde)

      Macfarlane, Neil

      Rost, Peter (SE Derbyshire)

      Gilmour, Sir John (East Fife)

      MacGregor, John

      Royle, Sir Anthony

      Glyn, Dr Alan

      MacKay, Andrew (Stechford)

      Sainsbury, Tim

      Godber, Rt Hon Joseph

      Macmillan, Rt Hon M. (Farnham)

      St. John-Stevas, Norman

      Goodhart, Philip

      McNair-Wilson, M. (Newbury)

      Scott, Nicholas

      Goodlad, Alastair

      McNair-Wilson, P. (New Forest)

      Scott-Hopkins, James

      Gorst, John

      Madel, David

      Shaw, Giles (Pudsey)

      Gow, Ian (Eastbourne)

      Marshall, Michael (Arundel)

      Shaw, Michael (Scarborough)

      Gower, Sir Raymond (Barry)

      Marten, Neil

      Shelton, William (Streatham)

      Grant, Anthony (Harrow C)

      Mates, Michael

      Shepherd, Colin

      Gray, Hamish

      Mather, Carol

      Shersby, Michael

      Grist, Ian

      Maude, Angus

      Silvester, Fred

      Hall-Davis, A. G. F.

      Mawby, Ray

      Sims, Roger

      Hamilton, Archibald (Epsom & Ewell)

      Maxwell-Hyslop, Robin

      Sinclair, Sir George

      Hamilton, Michael (Salisbury)

      Mayhew, Patrick

      Skeet, T. H. H.

      Hampson, Dr Keith

      Meyer, Sir Anthony

      Smith, Timothy John (Ashfield)

      Hannam, John

      Miller, Hal (Bromsgrove)

      Speed, Keith

      Harrison, Col Sir Harwood (Eye)

      Mills, Peter

      Spence, John

      Harvie Anderson, Rt Hon Miss

      Miscampbell, Norman

      Spicer, Jim (W Dorset)

      Haselhurst, Alan

      Mitchell, David (Basingstoke)

      Spicer, Michael (S Worcester)

      Havers, Rt Hon Sir Michael

      Moate, Roger

      Sproat, Iain

      Hayhoe, Barney

      Monro, Hector

      Stainton, Keith

      Henderson, Douglas

      Montgomery, Fergus

      Stanbrook, Ivor

      Hicks, Robert

      Moore, John (Croydon C)

      Stanley, John

      Hodgson, Robin

      More, Jasper (Ludlow)

      Steen, Anthony (Wavertree)

      Holland, Philip

      Morgan-Giles, Rear-Admiral

      Stewart, Rt Hon Donald

      Hordern, Peter

      Morris, Michael (Northampton S)

      Stewart, Ian (Hitchin)

      Howe, Rt Hon Sir Geoffrey

      Morrison, Charles (Devizes)

      Stokes, John

      Howell, David (Guildford)

      Morrison, Hon Peter (Chester)

      Stradling Thomas, J.

      Hunt, David (Wirral)

      Mudd, David

      Tapsell, Peter

      Hunt, John (Ravensbourne)

      Neave, Airey

      Taylor, Teddy (Cathcart)

      Hurd, Douglas

      Nelson, Anthony

      Tebbit, Norman

      Hutchison, Michael Clark

      Neubert, Michael

      Temple-Morris, Peter

      Irving, Charles (Cheltenham)

      Newton, Tony

      Thompson, George

      James, David

      Nott, John

      Townsend, Cyril D.

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

      Onslow, Cranley

      Trotter, Neville

      Johnson Smith, G. (E Grinstead)

      Oppenheim, Mrs Sally

      van Straubenzee, W. R.

      Jones, Arthur (Daventry)

      Osborn, John

      Vaughan, Dr Gerard

      Jopling, Michael

      Page, Rt Hon R. Graham (Crosby)

      Viggers, Peter

      Joseph, Rt Hon Sir Keith

      Page, Richard (Workington)

      Wakeham, John

      Kershaw, Anthony

      Pattie, Geoffrey

      Walder, David (Clitheroe)

      King, Evelyn (South Dorset)

      Percival, Ian

      Walker, Rt Hon P. (Worcester)

      King, Tom (Bridgwater)

      Pink, R. Bonner

      Walker-Smith, Rt Hon Sir Derek

      Kitson, Sir Timothy

      Prentice, Rt Hon Reg

      Wall, Patrick

      Knight, Mrs Jill

      Price, David (Eastleigh)

      Watt, Hamish

      Knox, David

      Prior, Rt Hon James

      Weatherill, Bernard

      Lamont, Norman

      Raison, Timothy

      Wells, John

      Langford-Holt, Sir John

      Rathbone, Tim

      Welsh, Andrew

      Latham, Michael (Melton)

      Rees, Peter (Dover & Deal)

      Whitney, Raymond (Wycombe)

      Lawson, Nigel

      Reid, George

      Wiggin, Jerry

      Lester, Jim (Beeston)

      Renton, Rt Hon Sir D. (Hunts)

      Winterton, Nicholas

      Lewis, Kenneth (Rutland)

      Renton, Tim (Mid-Sussex)

      Wood, Rt Hon Richard

      Lloyd, Ian

      Rhodes, James R.

      Young, Sir G. (Ealing, Acton)

      Loveridge, John

      Ridley, Hon Nicholas

      Younger, Hon George

      Luce, Richard

      Ridsdale, Julian

      McAdden, Sir Stephen

      Roberts, Michael (Cardiff NW)

      TELLERS FOR THE AYES:

      MacCormick, Iain

      Roberts, Wyn (Conway)

      Mr. Spencer Le Marchant and

      McCrindle, Robert

      Rossi, Hugh (Hornsey)

      Lord James Douglas-Hamilton.

      NOES

      Abse, Leo

      Brown, Hugh D. Provan)

      Crowther, Stan (Rotherham)

      Allaun, Frank

      Brown, Robert C. (Newcastle W)

      Cryer, Bob

      Anderson, Donald

      Brown, Ronald (Hackney S)

      Cunningham, Dr J. (Whiteh)

      Archer, Rt Hon Peter

      Buchan, Norman

      Dalyell, Tam

      Armstrong, Ernest

      Buchanan, Richard

      Davidson, Arthur

      Ashton, Joe

      Callaghan, Jim (Middleton & P)

      Davies, Rt Hon Denzil

      Atkins, Ronald (Preston N)

      Campbell, Ian

      Davies, Ifor (Gower)

      Atkinson, Norman

      Canavan, Dennis

      Davis, Clinton (Hackney C)

      Barnett, Guy (Greenwich)

      Cant, R. B.

      Deakins, Eric

      Barnett, Rt Hon Joel (Heywood)

      Carmichael, Neil

      Dean, Joseph (Leeds West)

      Bates, Alf

      Carter, Ray

      de Freitas, Rt Hon Sir Geoffrey

      Bean, R. E.

      Carter-Jones, Lewis

      Dell, Rt Hon Edmund

      Beith, A. J.

      Cartwright, John

      Dempsey, James

      Bennett, Andrew (Stockport N)

      Castle, Rt Hon Barbara

      Dewar, Donald

      Bidwell, Sydney

      Clemitson, Ivor

      Doig, Peter

      Bishop, Rt Hon Edward

      Cocks, Rt Hon Michael (Bristol S)

      Dormand, J. D.

      Blenkinsop, Arthur

      Cohen, Stanley

      Douglas-Mann, Bruce

      Boardman, H.

      Coleman, Donald

      Dunnett, Jack

      Booth, Rt Hon Albert

      Conlan, Bernard

      Eadie, Alex

      Boothroyd, Miss Betty

      Corbett, Robin

      Edge, Geoff

      Bottomley, Rt Hon Arthur

      Cowans, Harry

      Ellis, John (Brigg & Scun)

      Boyden, James (Bish Auck)

      Cox, Thomas (Tooting)

      English, Michael

      Bradley, Tom

      Crawshaw, Richard

      Ennals, Rt Hon David

      Bray, Dr Jeremy

      Cronin, John

      Evans, Fred (Caerphilly)

      428

      429

      Evans, Ioan (Aberdare)

      Leadbitter, Ted

      Rooker, J. W.

      Evans, John (Newton)

      Lestor, Miss Joan (Eton & Slough)

      Roper, John

      Ewing, Harry (Stirling)

      Lever, Rt Hon Harold

      Rose, Paul B.

      Fernyhough, Rt Hon E.

      Lewis, Ron (Carlisle)

      Ross, Stephen (Isle of Wight)

      Fitch, Alan (Wigan)

      Litterick, Tom

      Ross, Rt Hon W. (Kilmarnock)

      Fitt, Gerard (Belfast W)

      Lomas, Kenneth

      Rowlands, Ted

      Flannery, Martin

      Loyden, Eddie

      Ryman, John

      Fletcher, Ted (Darlington)

      Lyon, Alexander (York)

      Sandelson, Neville

      Foot, Rt Hon Michael

      Lyons, Edward (Bradford W)

      Sedgemore, Brian

      Ford, Ben

      McCartney, Hugh

      Selby, Harry

      Forrester, John

      McDonald, Dr Oonagh

      Sever, John

      Fowler, Gerald (The wrekin)

      McElhone, Frank

      Shaw, Arnold (Ilford South)

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

      MacFarquhar, Roderick

      Sheldon, Rt Hon Robert

      Freeson, Rt Hon Reginald

      MacKenzie, Rt Hon Gregor

      Shore, Rt Hon Peter

      Freud, Clement

      Mackintosh, John P.

      Silkin, Rt Hon John (Deptford)

      Garrett, John (Norwich S)

      Maclennan, Robert

      Silkin, Rt Hon S. C. (Dulwich)

      Garrett, W. E. (Wallsend)

      Madden, Max

      Silverman, Julius

      George, Bruce

      Magee, Bryan

      Skinner, Dennis

      Gilbert, Rt Hon Dr John

      Mahon, Simon

      Smith, John (N Lanarkshire)

      Ginsburg, David

      Mallalieu, J. P. W.

      Snape, Peter

      Golding, John

      Marks, Kenneth

      Spearing, Nigel

      Gould, Bryan

      Marshall, Dr Edmund (Goole)

      Spriggs, Leslie

      Gourlay, Harry

      Marshall, Jim (Leicester S)

      Stallard, A. W.

      Grant, George (Morpeth)

      Mason, Rt Hon Roy

      Steel, Rt Hon David

      Grant, John (Islington C)

      Maynard, Miss Joan

      Stewart, Rt Hon M. (Fulham)

      Grocott, Bruce

      Meacher, Michael

      Stoddart, David

      Hamilton, W. W. (Central Fife)

      Mendelson, John

      Stott, Roger

      Hardy, Peter

      Mikardo, Ian

      Strang, Gavin

      Harper, Joseph

      Millan, Rt Hon Bruce

      Summerskill, Hon Dr Shirley

      Harrison, Rt Hon Walter

      Miller, Dr M. S. (E Kilbride)

      Swain, Thomas

      Hart, Rt Hon Judith

      Mitchell, Austin

      Taylor, Mrs Ann (Bolton W)

      Hattersley, Rt Hon Roy

      Mitchell, R. C. (Soton, Itchen)

      Thomas, Dafydd (Merioneth)

      Hayman, Mrs Helene

      Moonman, Eric

      Thomas, Jeffrey (Abertillery)

      Healey, Rt Hon Denis

      Morris, Alfred (Wythenshawe)

      Thomas, Mike (Newcastle E)

      Heffer, Eric S.

      Morris, Rt Hon Charles R.

      Thomas, Ron (Bristol NW)

      Horam, John

      Morris, Rt Hon J. (Aberavon)

      Thorne, Stan (Preston S)

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

      Moyle, Roland

      Tierney, Sydney

      Hoyle, Doug (Nelson)

      Murray, Rt Hon Ronald King

      Tilley, John (Lambeth, Central)

      Huckfield, Les

      Newens, Stanley

      Tinn, James

      Hughes, Rt Hon C. (Anglesey)

      Noble, Mike

      Tomlinson, John

      Hughes, Mark (Durham)

      Oakes, Gordon

      Torney, Tom

      Hughes, Robert (Aberdeen N)

      Ogden, Eric

      Varley, Rt Hon Eric G.

      Hughes, Roy (Newport)

      O'Halloran, Michael

      Wainwright, Edwin (Dearne V)

      Hunter, Adam

      Orme, Rt Hon Stanley

      Walker, Harold (Doncaster)

      Irving, Rt Hon S. (Dartford)

      Ovenden, John

      Walker, Terry (Kingswood)

      Jackson, Colin (Brighouse)

      Owen, Rt Hon Dr David

      Ward, Michael

      Jackson, Miss Margaret (Lincoln)

      Palmer, Arthur

      Watkins, David

      Janner, Greville

      Pardoe, John

      Wellbeloved, James

      Jay, Rt Hon Douglas

      Park, George

      White, Frank R. (Bury)

      Jeger, Mrs Lena

      Parker, John

      White, James (Pollock)

      Jenkins, Hugh (Putney)

      Parry, Robert

      Whitehead, Philip

      John, Brynmor

      Pavitt, Laurie

      Whitlock, William

      Johnson, Walter (Derby S)

      Pendry, Tom

      Williams, Alan Lee (Hornch'ch)

      Johnston, Russell (Inverness)

      Penhaligon, David

      Williams, Rt Hon Shirley (Hertford)

      Jones, Alec (Rhondda)

      Price, C. (Lewisham W)

      Wilson, Rt Hon Sir Harold (Huyton)

      Jones, Barry (East Flint)

      Price, William (Rugby)

      Wilson, William (Coventry SE)

      Jones, Dan (Burnley)

      Radice, Giles

      Wise, Mrs Audrey

      Kaufman, Gerald

      Rees, Rt Hon Merlyn (Leeds S)

      Woodall, Alec

      Kelley, Richard

      Richardson, Miss Jo

      Woof, Robert

      Kerr, Russell

      Roberts, Albert (Normanton)

      Wrigglesworth, Ian

      Kilroy-Silk, Robert

      Roberts, Gwilym (Cannock)

      Young, David (Bolton E)

      Kinnock, Neil

      Robinson, Geoffrey

      Lambie, David

      Roderick, Caerwyn

      TELLERS FOR THE NOES:

      Lamborn, Harry

      Rodgers, George (Chorley)

      Mr. James Hamilton and

      Lamond, James

      Rodgers, Rt Hon William (Stockton)

      Mr. Ted Graham.

      Latham, Arthur (Paddington)

      Question accordingly negatived.
      Bill (Clause 11) reported, with amendments to lie upon the Table.

  LITTER AND REFUSE (LONDON)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Tinn.]
  12.25 a.m.
  Mr. Michael Neubert: Well over 10 million people now come to visit
  430
  the British Isles each year, many of them to London. About 10 million people live in London, many of them working, as we do, in Westminster. At the centre of our capital city we are surrounded by a wealth of historic buildings and Royal parks, rightly renowned world-wide. Yet all too often the state of our streets is a disgrace. It used to be said that the streets of London were paved with gold. Too often these days too many of the streets of London are paved with plastic

  431
  bags, empty Coke cans and cigarette packets.
  As a Londoner, with some interest in travel and tourism, especially I regret the adverse impression that this must leave with many visitors to our city. There is one feature to which I particularly object and that is the new established practice of leaving refuse on public pavements and private forecourts for long periods for later collection. This has the effect of detracting very much from the London street scene. Unless it is vigorously resisted and arrested, the appearance of London can only get worse.
  It is not only the fact that we have litter in our streets that causes me concern. That is a more evident problem. At least the strewing of litter is usually thoughtless and inconsiderate, whereas the practice of dumping rubbish on our streets in plastic bags and cardboard boxes is deliberate and becoming more widespread. This process must not be allowed to continue. If it does, the contrast between our noble buildings and our slovenly streets will widen, and the disparity between taxpayers' money spent on restoring the fabric of our buildings and ratepayers' money spent on the cleansing of our streets will sharpen. The amenities of living in London will be severely damaged.
  For all these reasons, I seek to raise this issue tonight, in the hope that the process can not only be arrested but reversed. Unfortunately, even this apparently simple point, which I take the opportunity to put to the Minister, is not really as simple and straightforward as it might seem. There are many complex factors involved and it is not possible within the scope of this short debate to include all of them.
  What are the main reasons for this state of affairs? There are three major difficulties facing anyone attempting to maintain high standards of cleanliness in London's streets: the nature of our historic buildings, the inadequacy of access to older property, and the traffic congestion which inhibits and slows down refuse rounds. These factors in themselves are not peculiar to London.
  There seem to be three other factors which are particularly pertinent to this problem. The first derives from the
  432
  origins of this practice, namely, the lowering of standards which took place in the 1969 "dirty jobs" strike, which is an illustration of how a strike can do damage that lives on long after the dispute is settled. The outward effects of this dispute were most unfortunate. It led people at that time, of necessity, to deposit their rubbish on the streets. They saw, day after day, rubbish and rotting refuse at their doorstep. They thought nothing of it. It became almost acceptable. Ever since that precedent was established there has not been the same resistance to such a state of affairs which there would otherwise have been and which existed before. In the past nine years or so this trend has been increasing.
  We have then to consider the inadequacy of the present law. Many of these matters are still governed by the provisions of the Public Health Act 1936. It is not surprising that, 42 years later, those provisions are not meeting modern needs. Circumstances have radically changed in so many evident ways and the regulations under that legislation are no longer satisfactory to deal with the problem.
  Let me give one example. "Waste" is defined as being in two categories—either domestic or trade. Hotels and restaurants are not apparently committed to the latter category, and they often enjoy a free service, whereas the demands made on that service by hotels and restaurants are by their nature exceptional and heavy. In the centre of London where we live and work that consideration is especially the case. There is a need to update the legislation, and I shall return to that matter later.
  There is a third thread which is important. In such a service as refuse collection, which is labour intensive, the attitudes of the men working that service will be critical. This will require a constructive and co-operative approach to the problem by trade unionists, members and leaders alike, if the problems, are to be solved, particularly in central London.
  I wish to draw the Minister's attention to the implications of the Health and Safety at Work, Etc. Act. I know that that legislation is not his responsibility, but I think he will agree that he will need to take those provisions into account. The provisions of that Act, if fully carried through, could prove calamitous to refuse collecting services in central London.

  433
  The principles of the legislation are unexceptionable, namely, the wish to ensure healthy and safe conditions for men and women at work. But the detailed provisions of the Act, if carried to the extreme, will prove highly costly and counter-productive in many respects in the service that is being undertaken. It is clear, for example, that any one of a number of objections could be made on present practice to dangerous steps to basements or to high rise buildings, defective back alleyways, low ceilings, inadequate lighting, ice and frost on stairs, rotting refuse, rodents, and broken handrails. Any one of those reasons could be taken by an eager beaver union representative, eager to make his mark, as an objection to carrying out the collection. If carried to extremes, it is clear that the practice of kerbside collections, so far from diminishing, will increase. Therefore, we have all these factors in the background.
  What needs to be done? First, a higher priority must be accorded to this Cinderella service. Attitudes to refuse collection have always been gently derisory, and probably always will be, but the service is the very essence of our standard of living. Amenities play a very important part in that standard of living. Living standards depend not just on the size of the cigar or on the cubic capacity of the next new car, or even on holidays in Spain. Standards of living depend on humdrum, everyday events which all too often we take for granted. I refer to the twice-daily delivery of post, the daily delivery of a pint of milk, and, of course, the regular cleansing of our streets and the collection of refuse.
  Greater priority must ge given within local council budgets to this service. I pay tribute to the work that has been done in the face of enormous difficulties by the directors of cleansing in the three central London authorities which I have consulted. I refer to the City of Westminster, the Royal Borough of Kensington and Chelsea and the City Corporation. Nothing in my remarks should be taken to disparage the work they are doing or the policy of their authorities.
  But it is clear from figures given to me of expenditure on the service in the past four years that, although expenditure has increased substantially in cash terms, in real terms it has shown a cut-back.
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  Although some of that may be due to special circumstances, or even perhaps to greater efficiency and achieving the same amount of work at smaller cost, I suspect that in a period of economic restraint inevitably this service has suffered, and it is all too easy for it to suffer.
  I should like to see a recording of priorities not only by the councils themselves but by the Department, too. I make the point to the Minister that, as local government nowadays is so much Government-directed, he, too, might play some part in reordering priorities in this matter. Although humdrum, commonplace, everyday and taken for granted, this service is vital to the well being of our community, and especially in central London.
  Second, and specifically, I draw attention to the fact that, four years after the passing of the Control of Pollution Act 1974, there remain outstanding provisions in Part I still to be implemented. It is regrettable that after this lapse of time they should remain unimplemented. The Act itself was a successor to the Protection of the Environment Bill introduced by the last Conservative Government, which fell at the time of the General Election early in 1974, and it is now time to consider early implementation of its outstanding provisions.
  Those provisions would allow powers to councils to ensure that there were adequate facilities for the storage of refuse and its eventual disposal and that there were adequate facilities for the disposal of waste. In addition, the councils could levy charges, in particular on hotels and restaurants, which are the principal, though not the only, offenders.
  Here is an example of how the present system works to the disadvantage of London. There is a small hotel in South Kensington which enjoys twice-weekly free service from the Royal borough, and it does so by means of an accumulation of bags of refuse which, during the course of the week, can total 500. There is a considerable amount of refuse, and there can be 250 bags at any given time, stacked neatly on the hotel's own ground but none the less an eyesore to those who pass down that side street on their way to the hotel or going about their business or pleasure in London.
  If a charge were levied, it could provide revenue for a self-financing

  435
  scheme, or the potential ability to apply a charge could be used as a deterrent to encourage such hotels and commercial entrprises to invest in compaction equipment which could reduce the volume of such rubbish by a ratio of four to one, thereby making better use of their own space and also removing some of the worst eyesores when rubbish overflows on to forecourts and pavements. In that way, a great deal could be done.
  I call on the Minister tonight to bring about early implementation of those provisions. Although he is not directly responsible for the service, he has a vital role to play because only he can bring in the full implementation of Part I of the Act, and only he can effectively co-ordinate a campaign to improve the appearance of London. He must show a determination not to tolerate a lowering of standards in our capital city. I hope that he will take that opportunity tonight.
  12.38 a.m.
  The Under-Secretary of State for the Environment (Mr. Kenneth Marks): I am sure that the House will allow me to start my speech tonight by taking the opportunity to pay tribute to my friend and colleague, the Member of Parliament for Manchester, Moss Side, Frank Hatton, whose death this morning was reported by Mr. Speaker at the start of today's business.
  This debate is about just one of the many problems of people who live in our great cities. Many of Frank Hatton's constituents in Manchester faced a whole host of such problems. For many years he represented them on the Manchester City Council, and since 1973 in the House of Commons. The pages of Hansard, the minutes of meetings in various Ministries and innumerable letters and interviews record the constancy of his efforts on their behalf.
  Despite illness and pain over a long period, Frank Hatton would have been here to put his constituents' case. They and the city of Manchester owe him a great deal. Manchester's high reputation in education owes much to his leadership. He was chairman of the education committee for several years, and a national figure in education. In the many discussions I had with him, as one of the teachers' representatives, I know that he
  436
  was patient and understanding, yet decisive when the need arose.
  On Thursday, boys from Frank Hatton's old school—the Manchester Central High School for Boys—will be visiting Parliament, and he had planned to meet them. His life, devoted to working for the benefit of others, is, I think, an example to all of them and I am sure that I speak not only for those who represent Manchester but for the whole House when I express sympathy for his wife. She has been his constant companion both in London and in Manchester, bearing a great share of his work, for a long period of worry and sadness; and our thoughts are with her.
  I am grateful to the hon. Member for Romford (Mr. Neubert) for raising this subject. Much of the litter in our streets comes from members of the public—people who throw away sweet papers or cigarette cartons, beverage cans, and so on. But a big part—perhaps even the greater part—undoubtedly comes from dirty work practices. One of the worst of these is the very unpleasant habit of many shops and restaurants—and, indeed, offices and work shops—of piling up rubbish without any kind of container, and leaving it to blow about until whatever remains is collected.
  Clearly, there are some real physical problems here. The smaller shops and work places in central London are frequently in old property virtually backing on to the shops or houses in the next street. They may have no room at all to store their refuse, or even where they have it may be quite impossible for the refuse collectors to get at it after the staff have gone home. The refuse can be collected only outside ordinary working hours because it is only then that the collection vehicles can get through. So there really is no alternative to refuse being left on the pavement in some cases.
  But if refuse has to be piled up outside these places, it emphatically does not have to be piled up without a container. I am glad that the hon. Member is so clearly with me in believing that to put it out like this is irresponsible and anti-social. Once we can bring Section 13 of the Control of Pollution Act into force it can also become illegal. That section will give local authorities powers to require the waste to be put into a

  437
  container wherever it is likely to cause a nusiance or be detrimental to the amenities of the locality. In other words, the authorities will be able to act on their own—without having to go to the courts for an enforcement order as they must under the nuisance provisions of the Public Health Acts—and they will be able to act before the event and not only after it. This will be a very big step forward.
  We have been discussing implementation of this provision with the local authority associations. The section is linked with another section which places a formal duty on local authorities—as opposed to their present power—to collect trade waste wherever they are asked to do so. That is likely to involve some capital expenditure. There is also a need for some preliminary work on regulations. But we are anxious to implement the whole of Sections 12 to 14 of the Act as soon as we can, and the local authority associations are keen for us to do so, too, provided, of course, that the necessary provisions can be made in the rate support grant settlement. I am glad to be able to tell the hon. Member that we had a meeting with the local authority associations this morning, and as a result we hope to implement subsections (5) and (6) of Section 13 in two months' time.
  There is one point that I want to stress. The new powers we are talking about will be effective only if they are enforced. That job will inevitably fall to the local authorities. But it is, of course, exactly this kind of effort on which the axe is swung first whenever expenditure or staff is cut back. Indeed, this is exactly what has caused the implementation of Section 13 to be delayed for so long. So if we is cut back. Indeed, this is exactly what hon. Member is seeking—and I fully share his enthusiasm for it—we shall have to pay for it. We cannot get it free. Getting rid of pollution, whatever form it takes, costs money and means public expenditure.
  I make this point partly because it seems to me important in itself, but partly also in fairness to the local authorities concerned. It is very easy to criticise them for not doing more. But even when they have the powers they will not be able to do it without the resources.
  438
  I should like to look at the problems to which the hon. Member has drawn attention in a context rather wider than that of implementing Section 13 of the Act. I think that the hon. Member has performed such a useful service in raising this subject tonight because he has put his finger on a particular source of litter, which calls for a particular approach, and has allowed us to see it as such.
  There are of course other sources of litter which call for a similar homing-in on a specific target: the mess which can be caused by street trading, again essentially an enforcement task for local authorities, in London under the London County Council (General Powers) Act; the activities of advertising agents who indiscriminately hand out advertising leaflets in our main tourist areas; and, I fear, some of the methods of collecting refuse, which seem designed to create litter rather than to remove it. I hope that as we become more systematic in our approach to litter we may be readier to identify special problems of this kind, to consider just what are the best ways of dealing with each, and perhaps whether we have all the powers we need to do so.
  I mentioned earlier that we have already discussed the implementation of Section 13 of the Act with the local authority associations. We are also discussing with them the implementation of Section 24 of the Act, which requires counties, in co-operation with their districts and with interested environmental organisations, to draw up litter plans. I hope that these plans will lead the authorities to look very closely at those parts of the litter problem which derive from the practices the hon. Gentleman mentioned, as well as the litter-dropping habits of the general public, and to consider how best they can act directly on the sources responsible for them.
  I recently helped to launch the litter plan in rural Northumberland. The people there had not waited for the implementation of the Act but had gone ahead and, with the co-operation of the Keep Britain Tidy Group, had examined the various causes of litter in their area and produced a plan to cope with it. I hope that in the near future all the county councils will be doing the same.
  We also hope that some of the projects which are being carried through under

  439
  our inner cities programme can include action to deal with litter. Litter is certainly not confined to the inner cities, but it is probably at its very worst in the city centres. It is of course for the local authorities concerned to decide what can be done best. I know that one at least has asked the Keep Britain Tidy Group to co-operate with it in a special campaign, and I hope that others may follow its example.
  Behind all this will be the general educational work to change public attitudes to litter. We are greatly indebted for the work which has been done by the Keep Britain Tidy Group, the local authorities and various organisations. It may be that in future it will have to aim not only at dissuading people from dropping litter themselves but at making them less tolerant—as the hon. Gentleman rightly is not tolerant—of litter created in
  440
  the ways we have been talking about tonight.
  People who keep their houses clean and tidy are entitled to demand that there should not be squalor in the streets around them. The combination of litter, graffiti, vandalism and neglect, whether it is caused by individuals, shops and stalls, or works and offices, is an insult to them, and we shall seek to eradicate it.
  I am grateful for the hon. Gentleman's contribution tonight. I have taken note particularly of his comments on the Health and Safety at Work, etc. Act, and shall consult my right hon. Friend the Secretary of State for Employment to consider what the hon. Gentleman has said.
  Question put and agreed to.
  Adjourned accordingly at twelve minutes to One o'clock.

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  Industrial Civil Servants (Pay)
DEFENCE
  Service Personnel (Resignations)
  Service Personnel (Resignations)
  Service Personnel (Political Speeches)
  Service Personnel (Political Speeches)
  Army Officers (Retirements)
  Army Officers (Retirements)
  Greenwich Market
  Greenwich Market
  Territorial and Army Volunteer Reserve
  Territorial and Army Volunteer Reserve
NATIONAL FINANCE
  Capital Gains Tax (Farmers)
  Capital Gains Tax (Farmers)
  Personal Taxation
  Personal Taxation
  Value Added Tax
  Value Added Tax
  Capital Transfer Tax
  Capital Transfer Tax
  Irrecoverable Tax
  Irrecoverable Tax
  Duchy of Cornwall
  Duchy of Cornwall
  European Community
  European Community
  Personal Incomes
  Personal Incomes
  Manufacturing Output
  Manufacturing Output
TRANSPORT
  Perth-Inverness Railway Line
  Perth-Inverness Railway Line
  Motorways
  Motorways
  A428-Ashburnham Road (Roundabout)
  A428-Ashburnham Road (Roundabout)
  A45 Newmarket Bypass (Service Facilities)
  A45 Newmarket Bypass (Service Facilities)
  Manchester (Victoria and Piccadilly Stations)
  Manchester (Victoria and Piccadilly Stations)
  Crawshawbooth, Rossendale (Pelican Crossing)
  Crawshawbooth, Rossendale (Pelican Crossing)
  Bedford-Leicester Railway Line (Electrification)
  Bedford-Leicester Railway Line (Electrification)
  Bromham Bridge, Bedford
  Bromham Bridge, Bedford
  Transport Supplementary Grant (Salop)
  Transport Supplementary Grant (Salop)
  Lucas Aerospace (Workers' Corporate Plan)
  Lucas Aerospace (Workers' Corporate Plan)
  National Health Service (Kent)
  National Health Service (Kent)
  Nurses
  Nurses
  British Railways (Markets)
  British Railways (Markets)
  Smoking and Cancer
  Smoking and Cancer
  Fluoridation
  Fluoridation
  Skin Cancer
  Skin Cancer
  Departmental Office, Llangollen
  Departmental Office, Llangollen
  St. Faith's Hospital, Brentwood
  St. Faith's Hospital, Brentwood
  Births
  Births
  Medical Records (Transfers)
  Medical Records (Transfers)
  Retirement Pensioners (Ormskirk)
  Retirement Pensioners (Ormskirk)
  Deaf Adolescents
  Deaf Adolescents
  Nurses (European Community Directives)
  Nurses (European Community Directives)
  Health and Safety
  Health and Safety
  Post-operative Infection (Lewisham Hospital)
  Post-operative Infection (Lewisham Hospital)
  Blind Persons (Allowance)
  Blind Persons (Allowance)
  Juvenile Offenders
  Juvenile Offenders
NORTHERN IRELAND
  Examination Results
  Examination Results
  Pollution Control and Local Government
  Pollution Control and Local Government
  Community Services
  Community Services
FOREIGN AND COMMONWEALTH AFFAIRS
  Falkland Islands
  Falkland Islands
WALES
  Caernarvon Area Family Practitioner Committee
  Caernarvon Area Family Practitioner Committee
  General Practitioners (Appointment)
  General Practitioners (Appointment)
  A5 (Improvement Work Finance)
  A5 (Improvement Work Finance)
  Museums
  Museums
  Welsh Language
  Welsh Language
  Mathematics Graduates
  Mathematics Graduates
  Housing (Elderly Persons)
  Housing (Elderly Persons)
  Housing Expenditure
  Housing Expenditure
  Unemployed Persons
  Unemployed Persons

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

KING'S COLLEGE HOSPITAL
Lord GREENHILL of HARROW: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a Statement to allay the anxiety about the future teaching role of King's College Hospital caused by recent Press reports in the Daily Telegraph of 10th April commenting on the reduced budget for 1978-79 of the Lambeth, Southwark and Lewisham Area Health Authority (Teaching).
Lord WELLS-PESTELL: My Lords, we have no intention of closing or fundamentally changing the role of any of the London teaching hospitals in the near future. My right honourable friend the Secretary of State for Social Services has just launched a study of hospital provision in Inner London in the long-term, taking into account the continuing fall in the residential population and the need to support medical teaching. However, it is too soon to forecast what the outcome will be, either generally or in relation to individual hospitals.
Lord GREENHILL of HARROW: My Lords, I am much obliged to the noble Lord. Does he not agree that any continued uncertainty might well diminish the efficiency of the medical school and reduce the standard of the hospitals which serve the very populous area of South-East London?
Lord WELLS-PESTELL: My Lords, we are very dependent on population
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movement, and there is a considerable population movement in London. We must also take into account that even in London there are areas where medical services are not adequate and it is necessary to shift some of the resources from one area to another. But as far as the King's College Hospital is concerned, it is well sited in relation to the population it serves and there is no intention in the near future of changing its location or its role.
Lord PLATT: My Lords, in his original Answer did the noble Lord not say that there was no question of closing any teaching hospital at the present time and that there were no plans for doing so? Does this apply to the Elizabeth Garrett Anderson Hospital, which comes under a teaching AHA?
Lord WELLS-PESTELL: My Lords, I was referring to London teaching hospitals. The noble Lord, if he has looked at the Telex, will have seen that my right honourable friend the Secretary of State in fact announced this morning that the Elizabeth Garrett Anderson Hospital will be closed on the 21st July.
Lord REIGATE: My Lords, when the noble Lord speaks of no changes "in the near future", how near is the future? Are they good for 10 years, or 20 years?
Lord WELLS-PESTELL: My Lords, the noble Lord would not expect me to put a time on that, but what I should like to say is that all the Regional Health Authorities have been asked to get their Area Health Authorities to prepare an area strategic plan, so that it will be possible to see what needs to be done. I would say to the noble Lord who asked the main Question that the Area Health Authority to which he refers in that Question would be well advised to prepare the strategic plan which is required of it.
Lord SEGAL: My Lords, since it takes something like six or seven years for a doctor to qualify, can my noble friend give an assurance that it is not the Government's policy to reduce the intake of medical students into our teaching hospitals, since the shortage of qualified doctors is world-wide?
Lord WELLS-PESTELL: My Lords, we are hoping that the target for the annual student intake of something like 4,000 will be effective from the early 1980s.
Lord SANDYS: My Lords, arising out of the noble Lord's reply to the question by the noble Lord, Lord Platt, are the Government aware that the Secretary of State's announcement in regard to the Elizabeth Garrett Anderson Hospital appears to contravene an undertaking given by the noble Lord that a closure of the hospital would not take place without full Parliamentary debate?
Lord WELLS-PESTELL: My Lords, with great respect, this is very wide of the Question. I tried to be courteous to the noble Lord, Lord Platt, and give him an answer, but I do not think I ought to be tempted by the noble Lord who has just sat down.
Lord AVEBURY: My Lords, is the Minister aware that recently there have been appearing in the newspapers many inaccurate and alarmist reports which are calculated to undermine the confidence of the general public in the National Health Service, which, with all its defects, is still the best in the world? What is to be the practice of the Department of Health and Social Security in dealing with generalised allegations such as these closures; and is it not unsuitable for Questions to be tabled in either House regarding reports in the Press, which would lead to an endless flow of Parliamentary debate if one were to try to refute every single false allegation which was made?
Lord WELLS-PESTELL: My Lords, I am grateful to the noble Lord for that comment and I would entirely agree with him. I cannot think there is anything likely to cause more alarm than the statement in The Times today, reputed to have been made by Mr. Patrick Jenkin, who yesterday, when referring to the National Health Service and commenting on the present White Paper on public expenditure, said:
"We have to live within that, and there is no possibility of extra money"
being available for the National Health Service in the future.
The Earl of HALSBURY: My Lords, with respect to the time-scale, would the
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noble Lord tell the House what provision is being made in relation to determining the future of the specialist postgraduate teaching hospitals affiliated to the British Postgraduate Medical Federation? A decision must be taken before next year, and I should be most obliged if the noble Lord could inform the House what is the time-scale on this decision.
Lord WELLS-PESTELL: My Lords, I cannot reply to the noble Earl other than to say that my right honourable friend the Secretary of State has set up a body known as the London Health Planning Consortium, which is a newly-established body consisting of very senior representatives of my Department, the University Grants Committee, the London University and the Thames Regional Health Authorities. It is going not only to make recommendations to the National Health Service and the academic authorities but to try to advise my right honourable friend what the position is generally. Before any of their recommendations are acted upon there will be wide consultation.
Lord LEE of NEWTON: My Lords, is my noble friend aware, in fairness to Mr. Patrick Jenkin whom he quoted, that that gentleman told us that the Tories, if they came into power, would change completely the reorganisation of the Health Service which they carried out in 1973, because of the terrible waste of public money which ensued?
Lord WELLS-PESTELL: My Lords, I am being led down a number of avenues which I do not think I ought to pursue.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I know that the House is very interested in all these questions and the width of the opinion expressed, but we have spent seven minutes on this subject and I hope that it is the feeling of the House that we should go on to the next Question.

BEAFORD VILLAGE HALL: GOVERNMENT GRANT
2.44 p.m.
Lord CLIFFORD of CHUDLEIGH: My Lords, by way of declaring my interest may I, as president of the Devon Association of Parish Councils, with over 400

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parish halls on its books, beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government why the Department of Education and Science has refused an adequate grant to Devon County Council to cover completion of the Beaford village hall after the villagers had raised the sum of £10,650 and received offers from parish, district and county councils.
The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Lord Donaldson of Kingsbridge): My Lords, the Department's support for local projects of this kind depends on decisions taken by the local education authorities. Authorities submit a programme of voluntary youth and community projects to which they themselves are willing to contribute, and the Department then announces the total amount it will pay in grants towards the cost of projects in each authority's area. The selection of projects for support, within that sum, is then a matter for the authority. The demand for grant this year exceeded the total sum available, so many authorities have had to choose between projects for support.
Lord CLIFFORD of CHUDLEIGH: My Lords, while I thank the noble Lord for that reply, which was not entirely unexpected, may I ask whether or not it was the understanding before the limitations were announced by the Minister last autumn that, if the parish—in this case a parish with a population of 360—raised 25 per cent. of the total of the sum required, the Government, one way or another and through district, parish or county councils, would supply the rest of the money?
Would the Minister not agree that a small community such as this one cannot raise so large a sum of money overnight? In fact, it is quite fantastic, I think, that they have done it at all. Therefore does it not smack of retrospective legislation or going back on a given word to refuse the extra £14,000 needed to finish the job?
Lord DONALDSON of KINGS-BRIDGE: My Lords, as regards the first part of the noble Lord's supplementary
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question, I have no information about any promise made by the Government to meet the total sum if 25 per cent. were found. I shall inquire about this. It is a most unlikely promise to have been made; but, if it was made, I will acknowledge it. As regards the second point, I think that the local people have done marvellously. The grant of £30,600 which has been made to Devon for their five projects (of which Beaford village hall is one) represents 68 per cent. of what the county authorities bid for. I understand that this grant will enable Devon to include a first instalment of the Beaford hall project within its programme.
Lord YOUNG of DARTINGTON: My Lords, is the noble Lord aware—and I do not suppose that he is—of the extent of feeling on this question not only in the village of Beaford but also in the surrounding villages which the proposed village hall will serve?—an extent of feeling which is due, as the noble Lord, Lord Clifford of Chudleigh, has said, partly to the fact that so much time has already been spent in raising over £10,000 for this hall. Even though it is not possible now to go back on what happened last year, will he urge upon his colleagues in the Department of Education and Science following this noble effort that, at any rate in the coming year, the full grant should be given as it has been in accordance with practice in the past in many counties of this country?
Lord DONALDSON of KINGS-BRIDGE: My Lords, I am aware that there is a good deal of feeling locally; and my colleagues are as distressed as are noble Lords. But the way these things are done is a standard way. The final decision has to be made by the local authority and the Department can give only the share of the total amount that is available. Surrenders of grant allocation by other authorities may, I think it is just worth saying, make it possible to increase Devon's allocation even now; but at the moment I can give no undertaking that this will be so. It may be clearer in a month or so. In any case I will pass on my noble friend's views to my colleagues.
Lord THORNEYCROFT: Will the noble Lord pass on something else too—that it may be a good thing to spend a

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little more on the Beaford village hall and rather less on the grandiose plans of the Community Land Act and office blocks full of civil servants trying to introduce a wealth tax?
The Earl of ONSLOW: My Lords, in his reply, the noble Lord said that if Lord Clifford of Chudleigh could show that a promise had been made, he would record it. Would it not be much better that he honoured it?
Lord DONALDSON of KINGS-BRIDGE: My Lords, I did not say that I would record it; I said that I would acknowledge it.
The Earl of ONSLOW: My Lords, will he honour it?
Lord DONALDSON of KINGS-BRIDGE: My Lords, it is not for me to honour; it is for the Department under my Secretary of State. I shall bring it to her attention.
Lord BLYTON: My Lords, is the Minister aware that it is the Conservative Party which is keen to introduce income tax cuts for the higher regions of taxation, on the basis that it can be met by cutting public expenditure? Is it not ironic to see that Party asking for more public expenditure?
Lord DONALDSON of KINGS-BRIDGE: My Lords, if I had replied to the political question put to me, which did not seem to deserve a reply, I would have replied in exactly those terms.
Lord CLIFFORD of CHUDLEIGH: My Lords, would the noble Lord agree that the £42,600 allocation to Devon, with 400 parish halls, is really very small, and that if changes are to be made in what was the agreed system before, at least four years' notice should have been given so that organisations which are trying to raise 25 per cent. of the total cost do not get cut off suddenly? The notice that this was going to stop was given last autumn by the Minister. Is that fair on the organisations that have been working so hard for the local community?
Lord DONALDSON of KINGS-BRIDGE: My Lords, I do not think that
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the noble Lord is raising a new point. I think that I have given the only answer I can, that whether or not one project or another should be given priority over others for support, rests with the Devon County Council.

SEAFARERS' CONDITIONS: ILO CONVENTIONS
2.52 p.m.
Lord BROCKWAY: 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 how far the Conventions on Seafarers' Conditions adopted at the 1976 ILO Maritime Conference have been ratified.
Lord WALLACE of COSLANY: My Lords, I would refer my noble friend to the White Paper, Cmnd. 7163, presented to Parliament on 24th April which indicates the position in the United Kingdom. The requirements of the conventions on continuity of employment and on minimum standards in merchant ships are already substantially satisfied but further discussions with the shipping industry are necessary to establish whether all of them are met in all British ships. The requirements of the annual leave convention are generally speaking not yet satisfied.
Lord BROCKWAY: My Lords, will the Minister agree that these conventions and recommendations, which include continuity of employment, a minimum standard of life and protection for young sailors, would mean almost a revolution in the conditions of those in the merchant service? Does he remember that the British Government supported all these conventions and recommendations at the ILO? Will the Government do their utmost not only to ratify them on behalf of the British Government but to influence other Governments to ratify them as well?
Lord WALLACE of COSLANY: My Lords, in reply to my noble friend, may I say that we are most certainly doing our best to get complete finality so far as conditions of employment and standards are concerned. Leave with pay is a little more complicated, but the general

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approach of the British Government is entirely in accord with the views of my noble friend.
Lord SHINWELL: My Lords, is it not true that the regulations relating to safety of seafarers associated with another Amendment to the Merchant Shipping Act have not yet been produced by the Government although they made a promise to do so many months ago? Is my noble friend also aware that it is customary with the ILO not to ratify conventions? Is he aware that in 1930 I succeeded in obtaining unanimously from an ILO Conference in Geneva a convention for the reduction of miners' hours of labour in all coal-producing countries, and we are still waiting for the ratification?
Lord WALLACE of COSLANY: My Lords, my noble friend obviously understands that ILO conventions lay down international labour standards, and the standards are made for international achievement. We are doing our utmost to reach complete achievement, and in many cases achievement has been realised. So far as safety and other factors are concerned, that is outside the range of the immediate question, but I shall make inquiries and no doubt my noble friend will put down a Question on the subject.
Lord SHINWELL: My Lords, could anything really be lost to anybody—except the large number of civil servants associated with the ILO—if it was closed down entirely?
Lord WALLACE of COSLANY: My Lords, that is an entirely different question, with which I am not inclined to agree.

SOVIET FREIGHT RATE UNDERCUTTING
Baroness WARD of NORTH TYNESIDE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether it is now possible to report any action on the part of the Commission of the European Economic Community on the problem of the Soviet Union undercutting United Kingdom freights.
Baroness STEDMAN: My Lords, the agenda for the meeting of the Council of Ministers (Transport) in June includes the question of East bloc competition. Ministers will then consider Commission proposals, which are being discussed now in Brussels, and other suggestions.
Baroness WARD of NORTH TYNESIDE: My Lords, while thanking the noble Baroness for that reply, may I ask how long we shall have to wait before we know what action can be taken? I am sure it is fair to say that the noble Baroness is just as anxious as I am to look after our merchant navy fleet and I have been raising this matter time and time again. Could the noble Baroness exercise a little pressure to get on with the matter? It is very important indeed to our merchant navy.
Baroness STEDMAN: My Lords, I accept all that the noble Baroness has said about the time it takes to come to decisions on these matters. If she thinks that I am any good at exerting pressure, then I will certainly give her that assurance.
Baroness ELLES: My Lords, could the noble Baroness state what stage these negotiations have reached in Brussels? Has the matter been discussed by Coreper or has it in any way reached the Council of Ministers yet? It would be helpful if the noble Baroness could give an indication of the timing that we may expect.
Baroness STEDMAN: My Lords, as the noble Baroness said earlier, this has gone on for a long time. Last year the Ministers from the Department held talks with the Soviet Minister of Merchant Marine over the difficulties that were being created by Soviet rate-cutting. There were further discussions in June of last year when both sides agreed that they would try to seek guidelines for the orderly development of maritime trades and set up a continuing mechanism to try to identify and establish all the difficulties. Subsequently there were Ministerial talks in Moscow which, as my noble friend Lord Oram reported a few months ago, proved to be very disappointing. The problem is that for the time being it would seem that the Soviet authorities have decided that the commercial advantages

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that they can gain from a continuing policy of a rather aggressive outsider competition with Western shipping out-weighs the political advantages of trying to accommodate and to work with us. The stage we have now reached is that the Commission have produced a paper as a basis for consideration for possible action at Community level.
I am sorry to reply in such detail but I think it will be helpful. The points made are, first, an expression of Community objectives relating to the East bloc liner shipping; secondly, some form of establishment of a Community-wide monitoring system; and thirdly, the establishment of a mechanism for using Community-wide countervailing powers, such as quotas, if these prove to be necessary. The United Kingdom, West Germany and Denmark have broadly endorsed that Commission's draft.
The Commission, against the wish of many of the Members, have now published those proposals and there has been some stiffening of resistance among some of our other Members in the Community. It is against this background that the Danish Presidency is now trying to draw up some form of compromise proposal. The Commission's document will be before the meeting and therefore cannot be withdrawn, so it may be—and here it is pure speculation—that on 12th June when this meeting is called the Council of Ministers (Transport) will have a report on the Commission's proposal. They will also have some suggestions for compromise. There may also be further developments which will come out of that. More than that I cannot say until after the meeting.
Baroness ELLES: My Lords, I am most grateful for that full reply. Will the Government accept that we have a strong position in regard to the Soviet fishing marine, and if they do not come to terms with the Community we might have a different attitude towards allowing them to fish under Third Country rights under the fishing agreements with the Soviet Union? I think that some pressure should be brought to bear upon them.
Baroness STEDMAN: My Lords, there are several pressures that might be brought to bear, but at this point of time
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I think we would rather wait for the outcome of the meeting on 12th June.
Lord AVEBURY: My Lords, if one asks how many of the conditions referred to in the previous Question are observed by the Soviet Union, and if the answer is "very few", what action will the Government take to raise this matter in the ILO?
Baroness STEDMAN: My Lords, there again, I should not like to be drawn until after this meeting on 12th June. We are hoping that we may reach a solution then.
Lord BRUCE of DONINGTON: My Lords, is my noble friend aware of the differences of opinion there may be among the Member States concerning the Commission proposals and that these proposals were in fact agreed by the European Parliament a week ago, and were agreed unanimously?
Baroness STEDMAN: Yes, my Lords, I am aware of that and they are also before our Scrutiny Committees.
Baroness WARD of NORTH TYNESIDE: My Lords, may I ask the noble Baroness whether action is still being taken by making representations to the Soviet Union? In view of the fact that she has given a very full reply now, can I ask whether it is really in order in the House for details of these arrangements to be given in supplementaries rather than in the original Answer, for instance to me, when I have asked the Question?
Baroness STEDMAN: My Lords, I understand the custom in this House is to be as brief as possible in the first Answer and to give such additional information as is asked for afterwards.
Baroness WARD of NORTH TYNESIDE: My Lords, what about the Russians, then?

EXPORT GUARANTEES AND OVERSEAS INVESTMENT BILL [H.L.]
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I understand that no Amendments have been set down to this Bill and that no noble Lord has

133
indicated a wish to move a manuscript Amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the Order of Recommitment be discharged.
Moved, That the Order of Recommitment be discharged.—(The Lord Chancellor.)
On Question, Motion agreed to.

OATHS BILL [H.L.]
The LORD CHANCELLOR: My Lords, I understand that no Amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript Amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the Order of Recommitment he discharged.
Moved, That the Order of Recommitment be discharged.—(The Lord Chanchellor.)
On Question, Motion agreed to.

SCOTLAND BILL
3.3 p.m.
The LORD CHANCELLOR: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, that the House do now again resolve itself into Committee.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD GREENWOOD OF ROSSENDALE in the Chair.]
Schedule 12 [Legal proceedings involving devolution issues]:
Viscount DILHORNE Viscount DILHORNE moved Amendment No. 189:
Page 72, line 40, at end insert ("but only with leave of the Inner House, or failing such leave, with the leave of the House of Lords").
The noble and learned Viscount said: We come back again to Schedule 12 and this Amendment is a probing Amendment which I hope will not be controversial. I am afraid it will not be entertaining and
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it is somewhat technical in character. If one looks at paragraph 17, one sees that where a devolution issue has been decided in England on a reference to the High Court or the Court of Appeal, an appeal will lie to the Judicial Committee, but only with the leave of the High Court or of the Court of Appeal or with the leave of the Judicial Committee. Then if one looks at paragraph 22, one sees similar provisions made in relation to an appeal on a reference from the Court of Appeal of Northern Ireland. The leave of that court or of the Judicial Committee is required for the case to go to the Judicial Committee.
No criticism can be made of those provisions if there is to be an appeal to the Judicial Committee, but when one looks at paragraphs 9 and 10 one sees a change of pattern. Those are the two paragraphs relating to Scotland. Paragraph 10 provides that there shall only be an appeal from the High Court of Justiciary with the leave of that court or of the Judicial Committee; and again no criticism can be made of that. But when one looks at paragraph 9 one sees that it does not require that leave should be obtained for an appeal to the Judicial Committee from the Inner House of the Court of Session where a devolution issue has been decided by that court on a reference. What I want to ask is this: why should a litigant before the Inner House of the Court of Session be treated differently from any other court? Before all other courts the litigant has to get leave to go further, but in a case which comes on a reference before the Inner House, no leave is required.
I think that the pattern should be consistent and this Amendment seeks to bring about uniformity in this respect. For an appeal from a superior court to the Judicial Committee, the leave of the Inner House will be required, or the leave of the Judicial Committee, as leave is required in respect of an appeal to the Judicial Committee from any other court. It strikes me as very odd that there should be this exception in the case of the Inner House, and this Amendment seeks to remove that exception. I beg to move.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): As the noble and learned Viscount, Lord Dilhorne, has explained, this is a probing Amendment and indeed I think that if he

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were to seek to press it on some occasion he would recognise that the wording would have to be changed in the light of the defeat of Amendment No. 188. As he has also explained, the Amendment seeks to insert a requirement for leave of the Inner House before a devolution issue which has been referred to the Inner House of the Court of Session under paragraph 7 of Schedule 12 can be appealed to the Judical Committee. As the noble and learned Viscount has pointed out, this is the only case in the Schedule where we find that the issue may be appealed to the judicial Committee without leave. He has pointed to the paragraphs relating, on the one hand, to England and Wales and, on the other hand, to Northern Ireland where leave is required.
The requirement of leave to appeal is omitted from paragraph 9 in relation to civil proceedings because, unlike the present position in England, Wales and Northern Ireland, leave is not normally required in order to appeal from the Inner House of the Court of Session. This distinction at present applies in relation to appeals to the House of Lords, and it was considered appropriate to preserve the same distinction in relation to appeals on devolution issues to the Judicial Committee; so the Schedule is in its present form.
At the present time, leave is not required for an appeal from the Inner House of the Court of Session to the House of Lords against a final judgment of the Inner House; nor is leave required for an appeal against an interlocutory judgment, unless it has been pronounced unanimously in the Inner House. Moreover, notwithstanding the refusal of leave by the Inner House, appeals have been taken to the House of Lords in cases where leave was necessary, and in such cases some appeals have been sustained on the view that the interlocutor appealed against was in fact on the merits. But, broadly speaking, where the judgment sought to be appealed against would substantially dispose of the case or of any substantial part of it so that the same party could not again bring an action on the same matter, an appeal is competent without leave.
That is the current position. Since, therefore, broadly speaking, subject to the exceptions I have mentioned and to
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certain statutory exceptions, leave is not required for appeals from the Inner House, and since the decision on a devolution issue would quite commonly have the effect of determining finally the rights of the parties to the action, it seems appropriate to allow appeals from the Inner House to the Judicial Committee on devolution issues without leave. I should add that it has never been suggested in the past that the absence of a requirement of leave in appeals from the Inner House to the House of Lords has led to a surfeit of such appeals, even though legal aid is commonly available for them.
The noble and learned Viscount has also referred to paragraph 10 of the Schedule, and the requirement for an appeal to the Judicial Committee from a reference of a devolution issue to the High Court of Justiciary. That, in our view, is not a proper analogy for introducing leave in relation to the Inner House. As the Committee will appreciate, there never has hitherto been any right of appeal at all beyond the High Court of Justiciary in Scotland, so that there is no proper precedent to work from in that area. But, in view of the special status of the High Court of Justiciary as a court of final appeal, it was considered appropriate that there should be no appeal beyond it except by leave of the court itself or, failing such leave, leave of the Judicial Committee. So the analogy that has been taken is the analogy of the present practice in relation to the Inner House of the Court of Session.
Viscount DILHORNE: The noble and learned Lord has justified the requirement of leave for an appeal from the High Court of Judiciary on the ground that such an appeal is without precedent, and I quite agree. But an appeal from the Inner House, or from the superior courts of England, to the Judicial Committee is also without precedent. I was, of course, aware that an appeal from the Inner House to this House in ordinary litigation is made without leave, but that is no precedent for appeals limited to devolution issues on a reference going to the Judicial Committee, and I must say that I do not think it affords any ground for not giving the requirement of leave.
I do not know whether there are any Scots feelings about this, but I should have thought there could be no objection to

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the requirement that an appeal from the Inner House could be brought only with leave. I should have thought that it was desirable. It is true that there is not a surfeit of Scottish appeals at the present moment, but I think, from such experience as I have had, that we get some cases from Scotland for which, if they had been brought in England, leave would not have been given. However that may be, I would ask the noble and learned Lord to look at this Amendment again. I think that it would be much better if there were uniformity, and if we did not elaborate and extend appeals without leave from the Inner House. Of course, I shall not press the Amendment, for the simple reason that, as the noble and learned Lord said, it is out of order at the present time.
Lord FRASER of TULLYBELTON: I am sorry to find myself once again disagreeing with my noble and learned friend Lord Dilhorne. It may be that it is desirable to have uniformity between paragraph 9 on appeals from the Inner House, paragraph 17 on appeals from the Court of Appeal and paragraph 22 on appeals from the Northern Ireland Court of Appeal. But it has been agreed and maintained throughout, particularly by my noble and learned friend Lord Diplock, that the appeals with which this Schedule is likely to deal will be pre-dominantly Scottish appeals. Therefore, I should have thought that the pattern should be set for the Scottish practice, which is that appeals come from the Inner House of the Court of Session to the House of Lords without leave, and, if uniformity is desirable, that should set standards for the others. If not, then the present practice, which is different in Scotland from what it is in England, should prevail, and I cannot see any great objection to that.
Lord McCLUSKEY: I am indebted to the noble and learned Lord who has just spoken, but there is one other analogy in paragraph 23 of the Schedule which I ought to mention. The noble and learned Viscount will certainly have seen that, if a devolution issue comes to the House of Lords by the ordinary route and not by the reference route, it will get there without leave of the Inner House of the Court of Session. So it would be an anomalous position if there had to be leave on
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the reference route but on the ordinary route there was no leave required. That may be an argument that he will find persuasive. But I am certainly indebted to the noble and learned Lord, Lord Fraser of Tullybelton, for assisting us.
Viscount DILHORNE: If I may say one further word, I quite agree that, without leave, it would not get to the Judicial Committee; it would get to the House of Lords. But then it would need to have a decision of the House of Lords for it to go to the Judicial Committee. There would have to be leave in that respect. I do not propose to pursue this Amendment, and I beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendment No. 193 not moved.]
3.15 p.m.
Viscount COLVILLE of CULROSS Viscount COLVILLE of CULROSS moved Amendment No. 197:
Page 74, line 23, after ("Ireland") insert ("or any person who can show that he would he directly affected if such issue were not determined").
The noble Viscount said: I am afraid that, as it stands, this Amendment does not make very much sense. But it gives me an opportunity to ask the noble and learned Lord, Lord McCluskey, a question of which I gave him notice in my speech the other day. It seems to be a common feature of this Schedule that there are anomalies between countries, and in the case of Northern Ireland, unlike Scotland and England and Wales, there is no paragraph relating to the institution of proceedings. In Scotland, regardless of whether anybody else wishes to take a devolution issue, the Lord Advocate can, of his own accord, institute proceedings under paragraph 4; and in England and Wales the Attorney-General can do the same under paragraph 12. But nobody can do so in Northern Ireland.
I know that the Attorney-General for Northern Ireland is, in fact, the same person as the Attorney-General for England and Wales, but that does not seem to me to give him jurisdiction in Northern Ireland if the Statute does not say so, although it does say so in regard to the other countries. I wonder why this anomaly should have arisen. There must be some explanation for it. Will

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the noble and learned Lord be so very kind as to tell us?—because I simply wish to probe the matter. I beg to move.
Lord McCLUSKEY: When we looked at paragraph 4, I think that I succeeded in explaining to the few Members of the Committee who were still present at that time that Schedule 12 is really concerned with the way in which procedurally the courts should deal with devolution issues, and paragraph 4 is a rather special provision. It was really designed to ensure that if the Lord Advocate, on the one hand, as pursuer, or a Scottish Secretary, on the other, as defender, came into the kind of legislation envisaged by paragraph 4, neither of them would have to demonstrate a title and interest; it was assumed. Accordingly, paragraph 4 was really designed to allow litigation to be raised without this hurdle having to be crossed. Paragraph 12 does exactly the same for the Attorney-General in England. It means, therefore, that the United Kingdom Government can, through either the Lord Advocate in Scotland or the Attorney-General in England, bring devolution issues before the court.
There is no similar power to raise proceedings without demonstrating a title in Northern Ireland, because it is inconceivable that the Government, having the opportunity to do it in Scotland or in England—and the great majority of cases would arise in Scotland—would want to cross the Irish Sea in order, off their own bat, to raise proceedings of this kind in Belfast. The Government's practical interest in devolution issues raised in other actions is, therefore, protected by the requirement of intimation, which is contained in paragraphs 5, 13 and 19; and, of course, that requirement extends also to actions in Northern Ireland. So the simple point is that it just is not necessary for Northern Ireland. Anything that requires to be done can be done under the two paragraphs referred to for Scotland and England.
Viscount COLVILLE of CULROSS: I am sorry, but I do not follow this. I may be wrong, but what I think is likely to happen in practice is that if a piece of Scottish legislation, whether it is primary, which we discussed the other day, or secondary, comes into being and is not
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picked up by one of the sieves through which it has to go—either pre-enactment or under one of the political override powers—a situation may arise where, as a result of a set of individual facts, it appears that there is indeed a clash between the powers of the Scottish Legislature, or the Scottish Secretary, and the law of the rest of the United Kingdom, which gives rise to a question of Tires. One cannot tell where these matters of fact are going to arise.
Although the law of Northern Ireland is very similar in many respects to the law of England and Wales, it does not follow that it is similar in every respect. At the moment, for instance, we are legislating for Northern Ireland by means of Statutory Instrument. Although I have not studied them, I do not suppose that in every respect they are exactly the same as the law on this side of St. George's Channel. Is it really inconceivable that on the facts of a case in Northern Ireland and in view of the law in Northern Ireland which gives rise to a dispute, a devolution issue may appear which is not capable of being litigated either in England and Wales or in Scotland, either because there is nobody who is prepared to deal with it or because the law in those two countries does not give rise to that set of facts? I quite understand that it may not happen very often, but why is it that we go out of our way to make it impossible to do something about it in the event that it does occur?
This is one of the things that I do not understand about the Bill. I am all for economy of drafting. However, when we can make something clear by putting a few words into a vital piece of constitutional legislation, where the courts may have to consider extending the ordinary doctrines of interpretation and this kind of thing and when it is perfectly easy for Parliament to say what it intends, why do we go on refusing to do it? The Government will not put into the Bill simple, ordinary words which make things clear. I cannot see what harm it can do to give to the Attorney-General in Northern Ireland the power to institute proceedings. While he may never use those powers, may I ask about the occasion when he ought to have done so and is then debarred by our having been intransigent in refusing this Amendment, or one similar to it, which would have

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this effect? Is the noble and learned Lord unable to conceive that it would be as well to be consistent, just in case?
Lord McCLUSKEY: I can conceive almost anything, but I believe that it is very unlikely that circumstances would arise in which a declaratory type of action would be appropriate to be taken in Northern Ireland. One does not want to encumber the Bill with unnecessary provisions. One can conceive of all kinds of fantastic possibilities and legislate for them, but if one does one ends up with a Bill which is longer and much more difficult to understand. If I can find any justification for supposing that such an action might be taken, then I shall urge that the matter be altered, but at the moment I cannot see it.
Viscount COLVILLE of CULROSS: That is a generous offer. May I make one more point. The Attorney-General, acting on behalf of the public—and I am sure that the Lord Advocate does the same in Scotland—sometimes has an opportunity to put things right when the ordinary citizen, either because he cannot afford it, or because he is not sufficiently sure, or for some reason like that, or because his status is not completely sound, cannot start off the proceedings, or does not wish to start off the proceedings. It can affect quite a large number of people, either directly or indirectly. It is a safeguard for the public. As I understand it, that is what the Attorney-General thinks that it is there for, and, holding his Scottish office, I am sure that the noble and learned Lord also knows that it is there to safeguard the ordinary citizen.
I am sure that the noble and learned Lord is right in saying that this will not happen very often, but is it not right that we should make sure that the ordinary citizen has this protection, just in case? I should be grateful if the noble and learned Lord would look again at this matter—not on the basis of this Amendment but on the basis of his kind offer—and then we might be able to come back to it on another occasion. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 198 not moved.]
3.24 p.m.
Viscount DILHORNE Viscount DILHORNE moved Amendment No. 201:
Page 75, line 4, leave out paragraph 23.
The noble and learned Viscount said: At a late hour last Wednesday, in a very thin Committee, we had an interesting debate which began when the noble Viscount, Lord Hood, called upon my noble and learned friend Lord Diplock. The debate was on whether there should be the right of appeal on devolution issues on a reference to the Judicial Committee of the Privy Council. May I remind the Committee that my noble and learned friend pointed out that there were two channels for appeals: devolution issues on reference going to the Judicial Committee, and devolution issues arising in ordinary litigation finding their way, possibly with leave from the English and Northern Ireland courts but without leave from the Inner House, to this House, which would mean following the normal procedure.
I have no intention of trying today to revive a debate that we had last Wednesday, when the question then under discussion was decided by one vote. I suppose that I should congratulate Her Majesty's Government upon their magnificent victory when they did not have even a quorum in the Committee and when they would not have won if nobody had voted for the Amendment. That is how things happen. Whether, in the circumstances of this being a very thin Committee, we really ought to reconsider that particular matter again, bearing in mind the constitutional implications of this measure, will be a matter for consideration.
In the course of that debate there was some discussion relating to paragraph 23, which this Amendment proposes to take out of the Bill. However, as my noble and learned friend pointed out, this Amendment did not stand or fall with the Amendments then being discussed. So few Members having heard that debate, I will, if I may, just remind the Committee why some of us think that this paragraph should go. First, there is no precedent for it. There is a precedent for the Judicial Committee giving advisory opinions, but there is no precedent for it being a court of final appeal from the courts of the United Kingdom. Until we joined the European Economic Community, from those courts this House

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has always been the final court. However, paragraph 23 suggests that the situation should be altered and that the Judicial Committee should be able to have devolution issues referred to it from this House.
I want to deal quite shortly with this matter, but it seems to me to have these consequences. Let us suppose that in the ordinary course of litigation there is an appeal to this House in which a number of issues are to be decided, that one of those issues is a devolution issue and that one of the parties to the litigation thinks that it would be better to have the devolution issue referred to the Judicial Committee. If one party is of that opinion, there will have to be an application to that end to their Lordships in this House, and that application may be opposed. In that case, time is bound to be taken up in argument.
Where litigation is involved, time always means expense, and the expense may not be inconsiderable. That is bound to happen if any party wishes to have the devolution issue carved out and taken apart from the other issues in the case and referred to the Privy Council. If it is referred to the Privy Council, there will have to be a further hearing before the Privy Council. Another wheel is being attached to the coach, which must mean that more expense will be involved. Fresh briefs will certainly have to be delivered to counsel. In this respect my noble and learned friend Lord Keith of Kinkel made some very pertinent observations last Wednesday. This will certainly involve delay, and possibly considerable delay, in the final determination of the appeal. Those, as I see it shortly stated, are the consequences of the inclusion of this paragraph 23. What good purpose is this particular paragraph intended to serve? There are two possibilities. One is that it will enable a devolution issue to be argued before Lords of Appeal in Downing Street instead of here—and the Committee will remember the very amusing speech of the noble and learned Lord, Lord Hailsham, in regard to this when he painted the picture of five elderly gentlemen climbing into an ancient Daimler car to be transferred from here to Downing Street and, having finished the devolution issue, climbing into the car again to be brought
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back here to finish the case. I need not stress that. That is one possibility.
The other possible view was that put forward by the noble Lord, Lord Wedderburn of Charlton. Last Wednesday, he made a speech which I must confess I did not fully understand. In column 1138 of Hansard he said this:
"If we are setting up—and let there be no mistake that we are setting it up, [that is, the Privy Council] apart from our EEC European Court obligations—within this jurisdiction, something of the nature of an embryonic constitutional court…".
That was a rather surprising statement in relation to the Judicial Committee which has sat and dealt with constitutional questions from the Commonwealth for a very long period of time. I wonder very much whether the Commonwealth countries from which appeals come would like to have their final court of appeal referred to as an "embryonic constitutional court". The noble Lord then went on—and this is the part I found very puzzling—
"in the applications and interpretations of the law, which today are infused with policy, without detraction from the rule of law in every court in the land, and in particular in the appellate courts and in the House of Lords, that element of policy, which every noble and learned Lord who sits in the Appellate Committee knows exists, but which we lawyers sometimes dare not talk about …, will be there in a broader and more fulsome form."
When I heard the noble Lord say that, I thought that he had used the word "policy" meaning "politics", but that he indignantly denied to the noble Earl, Lord Selkirk. I could have understood his accusing—quite unjustifiably, I think—their Lordships of being actuated by their political past or any political views they might happen to have when construing a Statute or in deciding any other case. But that was not his meaning. He used the words, "are infused with policy", and he said that every noble and learned Lord who sat in the appellate chamber knew that our decisions were infused with policy.
I must confess that I do not know what he means. Certainly, in construing a Statute there is only one policy and that is to seek to give effect, if we can, to the intention of Parliament as expressed in the language used by Parliament, which is not always by any means an easy task. I do not know what the noble Lord

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meant when he said that few lawyers dared to state this policy which they know exists. I think it would have been much better if the noble Lord had had the courage to dare to say exactly what he meant so that we should have understood it. But it does not stop there. He went on to say that the Judicial Committee
"is a body which will develop and which Privy Councillors, perhaps as yet undreamt of by the noble and learned Lord, Lord Diplock, might well attend and which will, perhaps in the year 2000, produce a better constitutional court."
If I may repeat, it would be infused with a broader and more fulsome form of policy.
I do not myself feel that I am capable of assessing this argument as it should be assessed because I do not know what the noble Lord, Lord Wedderburn, means about judges being infused with policy, or means by urging that they should be infused with policy in a broader and more fulsome form. It might be taken to mean that he is in favour of some form of selection of people to try particular issues. I could understand if that was a view accepted by the Government. It might be an argument for this particular paragraph, but it is not the view of the Government. It has not been accepted by them.
Paragraph 23 purports to give the House of Lords in its judicial capacity a discretion. Some will ask, "What is the harm in giving this House a discretion as to whether it will hear a devolution issue here or the same people will hear it in Downing Street?" The harm, as I see it, is that it is bound to involve more expense and more time in litigation to the ordinary litigant. I do not believe that it will serve the slightest useful purpose. The harm, too, is that it will appear to make this final court of appeal in this country from the courts of this country not a final court but a judicial committee which does not form any part of the system of courts of this countrty on these particular issues arising in ordinary litigation. I think it would be much better if this paragraph were left out. I beg to move.
3.37 p.m.
Lord WEDDERBURN of CHARLTON: The noble and learned Viscount was gracious enough to give me notice of the fact that he was going to advert to my comments made in your Lordships'
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Committee last Wednesday. He has done so, and I apprehend from the way in which he has done so that I must have made myself astonishingly unclear to the noble and learned Viscount, although it appears that some persons were prepared to go through the lobby with me even so. I should like to clear up the misapprehensions on the part of the noble and learned Viscount and reform the inadequacy of my expression so that I can do rather better than a beta minus.
Paragraph 23 of the Schedule is not entirely to my liking, in exactly the opposite way to the noble and learned Viscount. I said last Wednesday night that I believed that, if we were going to have a constitutional court—and of course the noble and learned Viscount would understand that I mean a constitutional court within this jurisdiction of the United Kingdom (I do understand that the Judicial Committee of the Privy Council has acted as a constitutional court for the Commonwealth in other respects)—then I would prefer that any litigant coming into paragraph 23 through the route that the noble and learned Viscount has explained should have the right to go to the new constitutional court. I shall say why a little later and explain again some of the points which I failed to make clear at 11 o'clock last Wednesday evening.
The major point on which the noble and learned Viscount criticises me is one which I must admit I find utterly astonishing. The issue is one which divided me from the noble and learned Lord, Lord Diplock, last Wednesday when the noble and learned Lord, Lord Diplock, said that the issues that are coming through what the noble and learned Lord, Lord Fraser of Tullybelton, was good enough to agree with me was, within our jurisdiction, an embryonic constitutional court, would be issues of pure law. I said that in the appellate courts every lawyer knew that most documents were not judgments of pure law in the sense that the noble and learned Lord meant; that they had an infusion of policy.
I understand quite well from what he has said that the noble and learned Viscount, Lord Dilhorne, will not accept my judgment upon that, but perhaps he will accept a lecture—or part of it—by the noble and learned Lord, Lord Devlin, published in the Modern Law Review

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for 1976 at page 1. It is headed "Judges and Law Makers". It reads:
"First, law making. I am not one of those who believe that the only function of the law is to preserve the status quo. Rather I should say that law is the gatekeeper of the status quo. There is always a host of new ideas galloping around the outskirts of a society's thought. All of them seek admission but each must first win its spurs; the law at first resists, but will submit to a conqueror and become his servant. In a changing society (and free societies that are composed of two or more generations are always changing because it is their nature to do so) the law acts as a valve. New policies must gather strength before they can force an entry: when they are admitted and absorbed into the consensus, the legal system should expand to hold them, as also it should contract to squeeze out old policies which have lost the consensus they once obtained."
Lord Devlin goes on to an analysis—with which, with respect, I do not entirely agree—as to how this matter comes about in the judgment of the judges. Persons have used words about this matter which I chose not to use. The noble and learned Viscount is quite right; I chose not to use the word, "politics", because I do not think that is a very accurate sociological or psychological description. But if he would look at a hook recently published by my colleague Professor Griffith of the London School of Economics (with much of which I do not agree, but with some of which I do) Professor Griffith concluded—and I quote this in order to quote again from Lord Devlin:
"As we have seen, there are innumerable ways—through the development of the common law, the interpretation of statutes, the refusal to use discretionary powers, the claims to residual jurisdiction and the rest—in which the judges can fulfil their political function and do so in the name of the law".
I do not choose to use the term, "political function"; I choose to use the words, "policy function". There is a real difference. Nor do I choose to use the words that Lord Devlin has chosen to use in reviewing that very book because in a review which is about to appear Lord Devlin says—and I think this is pertinent to what has been said in the Chamber this afternoon:
"The judge who is confident that he has no prejudices at all is almost certain to be a bad judge. Prejudice cannot be exorcised, but like a weakness of the flesh it can be subdued. But it has first to be detected. This is the great value of the book."—
that is Professor Griffith's book—
"It presents the judiciary with its portrait as seen by some of its critics. It is a skilful presentation, moderate and friendly and a pleasure to
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read. If only on the principle of audi alteram partem judges should read it".
I am sure that the noble and learned Viscount has already done so.
If Lord Devlin gives forth today opinions of that kind about what he calls in some cases "policies" and what others use slightly different words about in perhaps a slightly different context but in the same area, I know of no scholar in the field of jurisprudence—I know of no first-year student—who would discuss the question of whether policy infuses judgment with appellate tribunals; the question is the weight, the method, the manner and reason for the inclusion or exclusion of certain policies at certain times. That is as true of the interpretation of Statute or Statutory Instruments as it is of the common law. Of course I agree with the noble and learned Viscount that the courts attempt to find the intention of Parliament, but having sat in your Lordships' House for just a short time I can well understand how difficult it is for anyone to discover the intention of Parliament, being faced with the hare words of the Statute.
Who could really believe that Lord Atkin, perhaps one of the greatest masters of common law between 1930 and 1945, gave vent to no policies in his judgments, be it in developing the common law interpretation of Statutes or challenging the Executive in the midst of the war in Liversidge v. Anderson. How then is this disagreement between myself and the noble and learned Viscount relevant to the issue of paragraph 23? I said last Wednesday that I would support the compromise which the Government have put forward in paragarph 23; that is, that the matter should go to the Judicial Committee as the constitutional court, as it were, and unless the House of Lords decided otherwise I would prefer not to have the rider. But the real point is that it should, if possible, get to the Judicial Committee of the Privy Council.
Why so, if, as the noble and learned Viscount has pointed out today, the personnel of the two courts are much the same—the noble and learned Law Lords and the Lord Chancellor and ex-Lord Chancellor? Because that is true at the moment, it has not always been so. Indeed, it need not be so and I should have said last Wednesday to your Lordships that I wish to take examples from

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which I doubt whether the noble and learned Viscount, Lord Dilhorne, would wish to dissent. One of the greatest common law judges in the world happened to have both an academic and a professional background, and I apprehend also that he is a Privy Councillor to Her Majesty. I speak of Chief Justice Bora Laskin from the Canadian Supreme Court. I should have thought that those who sit in the Privy Council, were he available, would obtain the greatest possible assistance from someone of that kind in dealing with matters, federal and quasi-federal, which are bound to arise under this Bill, and of which lawyers in this country, including, with respect, most judges, have very little cognizance and experience.
I could speak of other great Commonwealth judges, but I should like to add that it may be—and last Wednesday night I spoke of the year 2000—that Privy Councillors, who are expert in government and would not normally find their way to the Bench, perhaps by the year 2000 would be found appropriate to add to what must be a developing and supple constitutional tribunal. It was that prospect which led me with some reluctance to speak in favour of the Judicial Committee remaining in the Schedule and against the idea that the House of Lords Appellate Committee should be inserted in its place.
If I may detain the Committee for one moment, I noticed that one of the arguments used by the noble and learned Viscount was that there was no precedent for what was being done. I was reminded of Professor Cornford's "Microcosmographia academica" in which your Lordships will remember the doctrine of the dangerous precedent. Professor Cornford said that it meant that you must not do something right or just today, for fear that your successors will do more things that are right and just tomorrow, and that it followed that nothing should ever be done for the first time. The fact that it is a precedent is surely no objection at all. As to the fact that there will be expense and delay, proceedings in the House of Lords Appellate Committee are sufficiently expensive and not always undilatory.
Paragraph 25 of the Schedule allows for Rules of Court to be made for appeals
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to the Judicial Committee of the Privy Council which I trust would be much more speedy than the proceedings before the Appellate Committee of this House. As for expense, new briefs would have to be given to counsel. It only needs the noble and learned Viscount and his other friends on the House of Lords Appellate Committee to say that there should not be new briefs and there should not he extra expense, and the profession to which I have the honour to belong I am sure would respond with alacrity.
I will end by saying that for me this is something of a test case, because before I came to your Lordships' House I was told that the matter would be judged according to the arguments and that issues of this kind were not Party issues. I hope and trust that that is correct. I hope it is not a Party issue. I should be as happy to speak from the Cross-Benches today as from any other part of your Lordships' Committee. I hope that the noble and learned Viscount, Lord Dilhorne, will not divide the Committee on this issue, which is in effect the opening matter which was decided on Amendment No. 188, and if he does I beg noble Lords to support the Schedule as it stands.
3.49 p.m.
Lord DIPLOCK: I propose to speak on the Amendment which stands in the name of the noble and learned Viscount, Lord Dilhorne, and myself. I do not propose to go over the same ground as we went over last Wednesday, save perhaps to say that it appears that the noble Lord, Lord Wedderburn of Charlton, wishes to have the Privy Council in the expectation that he will find that it will be possible to appoint to that body judges who have different views on policy from the existing Law Lords. May I say that Chief Justice Bora Lasking in Canada, with whom I spent the best part of a week last month, would be an ornament and an acquisition to any court in any jurisdiction, but he does not happen to be a Privy Counsellor. He is a Privy Counsellor of Canada but not qualified to sit upon the Judicial Committee. I should have thought—the noble Lord on the Woolsack will correct me if I am wrong—that it was practically impossible for him to sit upon that body. I should be only too happy if he did.

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May I turn to this particular Amendment? The real objection to paragraph 23 is not the absurdity of the five old gentlemen getting into their Daimler, going to Downing Street and coming back again. What this paragraph does is to place upon the House of Lords the duty, in every case in which a devolution issue is involved and comes before them, to decide whether or not it ought to be referred to the Privy Council, and this is a duty upon the House of Lords whether the parties apply for it or not. When the Bill was considered in its original form it became necessary to consider what procedure would be necessary in the Judicial Committee of this House in order to carry out the requirements of paragraph 23. When one looked at the procedure the real objection to this paragraph became evident, and it was that it is inevitable in every case which comes to the House of Lords by the ordinary route and in which there is a devolution issue that delay and expense must result.
Cases reach the House of Lords in two ways: either without leave of the House itself—that is, when they come from Scotland, from the Inner House of the Court of Session, where no leave is needed, and when they come from the Court of Appeal in England or the Court of Appeal in Ireland with the leave of the Court of Appeal; the leave of the House then becomes unnecessary. The other way in which they reach the House of Lords is where, leave having been refused by the Court of Appeal in England or Northern Ireland, there is a Petition for leave to appeal to the House itself; the House grants or refuses it. Any case which comes to the House of Lords by the ordinary route is likely to involve issues other than devolution issues, because if that is the only matter in the case presumably it will come by reference the other way.
Let me take the first case, where it comes to the House of Lords without the need for leave from the House of Lords, because it comes either from Scotland or from the Court of Appeal in England or in Northern Ireland which has given leave. The first the Judicial Committee see of that case is when the parties' printed cases setting out the issues and their arguments are lodged. A pre-
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liminary hearing would then be necessary in order to decide whether the devolution issue in the case ought to be referred to the Judicial Committee or not. That inevitably means that a hearing, argument, counsel and solicitors are involved.
But, of course, the matter does not end there. If it is then decided, as a result of that hearing, that the devolution issue should be referred to the Privy Council, then there must be a separate hearing of the devolution issue before a different body, the Privy Council, with briefs to counsel and all the expense and delay that that involves. And that does not end the matter because, the reference having been decided by the Privy Council, back it has to come to the House of Lords for the hearing of the other issues. That again means briefs, fees, counsel and delay. Or it may be that the two hearings are the other way round: the House of Lords first considers the other issues and then refers the devolution issue to the Privy Council. So here we have in the first case, where it comes to the House of Lords without leave, three hearings, three briefs, and all the additional delay that that involves, in place of the one hearing and the one brief which there is under the existing procedure.
The alternative is that the House of Lords decide that there should not be a reference of the devolution issue. What happens there is that there would be two hearings instead of one, first the hearing as to whether there should be a reference and then the hearing which would have taken place anyway. So far as the parties have any influence on what the court will do, it is in their interest to opt for no reference, but the House of Lords has to consider whether or not it would be more appropriate to disregard the wishes of the parties.
Let me take the second case, where it comes to the House of Lords first upon a Petition for leave to appeal because the Court of Appeal in England or Northern Ireland has refused. The question whether there should be a reference cannot be decided upon the ordinary Petition for leave to appeal; that is normally a short hearing, which takes ten minutes or so. The question of reference must be deferred until the cases of the parties are lodged, or else documents similar to the cases of the parties are lodged, because it is not

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possible to decide the question whether there should be a reference or not until the parties have been given an opportunity to develop their arguments in favour or against a reference in the light of the facts of the case. Then you get the same procedure as in the first case; you will have again either two hearings if no reference is made, or three hearings if a reference is made. Let us be practical about this matter. What is the reason for placing on the parties to litigation, who will be, for the most part, ordinary private parties, the burden, the expense and the delay of extra hearings—one extra hearing is inevitable—when nothing is to be gained by it, unless the purpose is that it should be an entirely different body with different views of policy which hears references in the Privy Council?
4.1 p.m.
Lord FRASER of TULLYBELTON: Last week my noble and learned friend Lord Diplock moved Amendment No. 188, which was the Amendment to substitute the House of Lords for the Judicial Committee of the Privy Council in appeals on references. As the noble and learned Viscount, Lord Dilhorne, said a moment ago, that Amendment was unsuccessful. When the noble and learned Lord, Lord Diplock, moved the Amendment, he referred to Amendment No. 188 and said that there were several other Amendments which went with it—Amendments No. 190, No. 192 and so on—and those Amendments have been deleted. Then he said:
"Amendment No. 201"—
which is the one with which we are now concerned—
"is also closely connected and I would suggest should be discussed at the same time, but it does not necessarily stand or fall with the others".
I took him at his word and made a few remarks about the Amendment, and I must now try to avoid repeating myself. However, I cannot help feeling that there is a touch of "the last ditch" about the Amendment. Having been defeated on the House of Lords against the Judicial Committee issue when it was squarely raised, this seems to me to be an attempt to retain some vestiges of employment for the House of Lords in this area of litigation in case it might otherwise he entirely unemployed. That may not be an entirely fair inference to draw, but it seems to
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emerge from the way in which the matter has been dealt with.
I should have thought that, having agreed or decided that the Judicial Committee is to be the body, then paragraph 23 could have been left as it is. I should like to remind your Lordships of our present position. It has now been decided or agreed that the Judicial Committee is to be the body which gives pre-enactment advice. It has also been decided that for decisions on post-enactment devolution issues, if the matter arises either on a reference to the High Court of Justiciary or on a special kind of new appeal from the Nigh Court of Justiciary, it shall go, under paragraph 10, to the Judicial Committee. It has also been decided under paragraph 9 that, if the matter arises on a reference from a lower court to the Inner House of the Court of Session, any further appeal shall be to the Judicial Committee.
The only remaining variety of appeal left is an appeal in the ordinary course of litigation from the Inner House to the House of Lords. Paragraph 23 deals with that one outstanding class of litigation and provides, admittedly in a slightly awkward way but to my knowledge no one has suggested a better way, that the appeal shall come to the House of Lords, which must then consider and remit it to the Judicial Committee on the devolution issue unless satisfied that that would be inconvenient. When one looks at the matter in that context, it seems to me that it is a little absurd to try to preserve this kind of litigation for decision by the House of Lords alone without the possibility of it being sent to the Judicial Committee which is dealing with devolution issues in all other circumstances in which such issues can arise. Only in this one circumstance is the matter to be retained irretrievably in the House of Lords.
It was said by the noble and learned Viscount, Lord Dilhorne, in moving the Amendment that, if parties disagree as to whether the matter should be remitted by the House of Lords to the Judicial Committee, there would have to be a hearing before the House of Lords on that matter. However, if I understood my noble and learned friend Lord Diplock correctly, he said that in every case there would have to be a hearing on that matter. I should

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have thought that if the parties were agreed it would probably not be necessary to have a hearing, because if both parties included in their cases a statement that there was a devolution issue and they both wished it to be heard either by the House of Lords or by the Judicial Committee, then that would probably be conclusive. It may be that that is not always so, but certainly in many cases I should have thought that it would be. There might sometimes have to be an argument about the matter here.
On the other hand, if the Amendment were carried, the result would be that once an appeal came to the House of Lords it would inevitably remain here and could not be transferred to the Judicial Committee. I think that one of the results of that would be that if the parties disagreed about what they wanted then the argument about procedure, instead of taking place here, would take place lower down in the hierarchy of courts. One party would say that it wanted to get the matter ultimately to the Judicial Committee and therefore it would press the sheriff—if it arose in the sheriff court or the Outer House of the Court of Session—to refer the matter to the Inner House so that if there were a further appeal it could go to the Judicial Committee. The other party would say: "No, it is much better left to be dealt with at the end of the case as part of the general decision", and it would get a straight appeal to the Inner House and then on to the House of Lords, with no possibility of its going to the Judicial Committee. So, we would have exactly the same sort of argument there at an earlier stage, and happening, I suppose, more often because a good many cases which look as if they will be the subject of an appeal fade out for one reason or another.
I do not think that the argument based on the possibility of a special hearing in the House of Lords is a very strong one; it would simply be pushed back down the scale a bit. For all those reasons I submit that the proper course is to leave paragraph 23 standing; it seems to me to be the best way of reconciling the various interests concerned.
Lord WILBERFORCE: Are we not making rather heavy weather of this matter? It does not seem to me a very
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difficult problem if looked at on a practical basis. The consequences of removing paragraph 23 are worse than those of leaving it in. In addition to the arguments urged by my noble and learned friend Lord Fraser of Tulleybelton, if one takes out paragraph 23 one would find certain cases going to the House of Lords for final decision on a devolution issue and others going to the Judicial Committee of the Privy Council. Who yields to whom? We cannot have two Supreme Courts dealing with devolution issues within the same framework.
Of course, the Committee was warned of this a long time ago, when I pointed out during a previous debate the difficulties inherent in either conception—the Judicial Committee as the final arbiter or the House of Lords. I then urged the Committee to accept a specially set up constitutional instrument to decide these matters. The Committee is now coming round rather slowly to the idea that perhaps that will be a constitutional court after all—a constitutional court for the United Kingdom, not for anything else. However, the idea has not yet quite germinated.
All the imaginary difficulties which have been so nightmarishly painted by my noble and learned friend Lord Diplock as regards multiple fees, multiple briefs, solicitors, counsel and so on, are surely taken care of by the words in paragraph 23:
"unless the House considers it more appropriate, having regard to all the circumstances, that they should determine the issue".
Under paragraph 23 there is an obligation to refer to the Judicial Committee. It is mandatory unless they can find some reason for holding it where they are. If there is a case of the devolution issue being one among many issues, all the others being House of Lords' issues, then, of course, the saving words would be applied and it will be retained in the House of Lords.
I do not believe that there is the least difficulty about this matter. I do not think that the situation is ideal, because the Committee has taken the wrong course in referring the matter to the Judicial Committee. Having made that decision it seems to me that it would be very much worse to delete the paragraph and create a duality of the House of Lords and Judicial Committee than to accept

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the clause as it stands. I am in favour of retaining paragraph 23.
4.9 p.m.
The LORD CHANCELLOR: In a sense this debate is a replay of a debate which we had earlier, and it is none the less interesting for that reason, particularly in the light of the general difference of view upon broad matters which has been expressed characteristically by noble and learned Lords, a difference of view which has enlightened our proceedings throughout the discussions of the Scotland devolution Bill, yet once again demonstrating the many sidedness of truth. The difference that was manifested between the noble and learned Viscount, Lord Dilhorne, and my noble friend Lord Wedderburn highlighted the beginning of the debate. I hope that the noble and learned Viscount, Lord Dilhorne, will forgive me if I say that I think he approached the debate with rather excessive severity. That my noble friend should be suspected of lack of courage came surprisingly from the noble and learned Viscount, whose avoidance of such personal suggestions has usually been characteristic of his contributions. On reflection, having heard the ready willingness of my noble friend to adumbrate his reasons, I am sure that the noble and learned Viscount, will be disposed to think again about the suggestion of lack of courage.
But, after all, it has been admitted throughout our debates that important constitutional matters fall to be discussed and considered here. We are embarked upon very serious and grave constitutional changes as a result of this Bill. It was not my noble friend Lord Wedderburn who spoke of the Privy Council being a kind of embryonic constitutional court—those words fell from the noble and learned Lord, Lord Fraser of Tullybelton.
Clearly, we are at the beginning of a new phase in our constitutional relationships. The law is a sort of bubbling vat, and this new element has been added to the effect of entry into the European Economic Community as one factor pointing to important future constitutional changes. Then we have the changes that we made recently with regard to direct elections to the European Parliament. Therefore, we are going through a phase
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of great constitutional change and it has seemed appropriate that in the context of the devolution Bill the Judicial Committee of the Privy Council, which has been a great constitutional court for the Commonwealth throughout its existence, should be the appropriate court for dealing with devolution issues arising from the Bill.
As I have said, we discussed paragraph 23 on a previous occasion, and I am reinforced by the views that have just been expressed by the noble and learned Lord, Lord Fraser of Tullybelton, as to the merits of the matter. We gave this very careful thought in the preparation of the Bill. It seemed to us that the flexible solution in paragraph 23 was best; that:
"if a devolution issue arises in judicial proceedings in the House of Lords",
the Appellate Committee will have the discretion—depending upon the circumstances of the case, the application and the willingness of the parties and the cost issues involved—to decide where the matter should be finally adjudicated, whether by the House itself or by the Judicial Committee. My noble friend Lord Wedderburn thought that that was a compromise. However, he voted for it in the end, and no doubt he will desire to maintain consistency in that respect if this matter is put to the vote. I greatly hope it will not be.
I invite the noble and learned Viscount, Lord Dilhorne, to consider carefully what has been said—I am not inviting him to consider carefully what I have said, but I am sure he will do me that courtesy. But I should have thought that the brief, succinct words of the noble and learned Lord, Lord Wilberforce, indicate that we have been over this ground many times before. To cut out paragraph 23 now would be to create the worst of all worlds.
Viscount DILHORNE: In moving this Amendment I said that I did not wish to revive the debate which we had last Wednesday night, and I avoided doing anything more except to remind the Committee of the subject of the two channels for appeal, which is relevant to this particular question. The noble and learned Lord, Lord Fraser of Tullybelton, is right; at the commencement of his speech my noble and learned friend Lord Diplock said that this Amendment dealing

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with paragraph 23 was related to the matter then under discussion and naturally, being related to it, something was said about it. But we were not debating it then, and I thought that my noble and learned friend made it clear to the Committee that no decision was being taken on this Amendment on that occasion.
Therefore, I do not think that the noble and learned Lord, Lord Fraser of Tullybelton, was entirely justified in some of his criticisms of the moving of this Amendment on this occasion. I must say "Thank you" to the noble Lord, Lord Wedderburn, for having made clear on this occasion what he certainly had not made clear to me When he spoke last Wednesday night. He based his observations on policy on a lecture given by my noble and learned friend Lord Devlin. But what puzzles me, if he was basing himself on a lecture given by Lord Devlin, is why he should have said last Wednesday that policy considerations were something which lawyers dare not talk about. One always talks about the lectures of my noble and learned friend Lord Devlin. When I suggested that it was a pity that the noble Lord, Lord Wedderburn, did not have the courage to make clear what he meant, I meant that I hoped that in future he would not shrink from saying what he thought some lawyers might dare not talk about. He then spoke about judges who have prejudices. A judge who has prejudices is almost always likely to be a bad judge.
Then he referred to his observation about Privy Counsellors as yet undreamt of sitting on the Judicial Committee of the Privy Council. When he said that, I never dreamt that he was referring to the Chief Justice of Canada. It was during my time as Lord Chancellor that the practice was introduced of inviting distinguished judges from the Commonwealth to sit as Privy Counsellors on the Judicial Committee. I think it has worked extremely well and that we are all grateful for the assistance that they have given and are giving. I never thought that when the noble Lord, Lord Wedderburn, made those observations he was referring to that matter or anything like it. I shall say no more about that.
My noble and learned friend Lord Wilberforce has taken the view—and I
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think that he is right—that if there is a reference to the House of Lords it must always be mandatory for the House to refer a devolution issue to the Judicial Committee unless this House thinks that other considerations prevail. That being so, I do not think that he is agreeing with the noble and learned Lord, Lord Fraser of Tullybelton, who said that if the parties agreed beforehand it could automatically go to the Judicial Committee and there would be no need for a further hearing and further expense. It is largely on account of that that I regard this whole duplicated procedure as being unsatisfactory.
The argument put forward by the noble and learned Lord, Lord Wilberforce, came to this: which will have the final decision—the Judicial Committee or the House of Lords? Until now a decision of the House of Lords has been binding on all inferior courts; a decision of the Judicial Committee has not, and a decision of the Judicial Committee has not been binding on this House. At present I see nothing in this Bill to say that a decision of the Judicial Committee shall be binding on inferior courts. Therefore, one may well ask which would be the final decision?
I am in a difficulty about this. I do not share the opinion of my noble and learned friend Lord Wilberforce in thinking that this is an unimportant Amendment. If the Bill is left as it is, I think it may give rise to considerable difficulties and perplexities. I have not had the advantage of hearing anything said on behalf of the Conservative Party on this matter, or indeed from anyone who is not a lawyer. I really do not know what the views of the Committee are upon this. The noble and learned Lord the Lord Chancellor has pressed me not to divide on it. I am not sure that I understand quite why, except that he does not agree with the views put forward. I am inclined to test the matter in a Division, and of course abide by the Division.
4.22 p.m.
On Question, Whether the said Amendment (No. 201) shall be agreed to?
Their Lordships divided: Contents, 94; Non-Contents, 107.

CONTENTS

Alexander of Tunis, E.

Forbes, L.

Northchurch, B.

Amory, V.

Fortescue, E.

Nugent of Guildford, L.

Auckland, L.

Fraser of Kilmorack, L.

O'Hagan, L.

Avon, E.

Gage, V.

Orr-Ewing, L.

Baker, L.

Gray, L.

Porritt, L.

Berkeley, B.

Greenway, L.

Rankeillour, L.

Bessborough, E.

Gridley, L.

Rawlinson of Ewell, L.

Birdwood, L.

Hatherton, L.

Romney, E.

Braye, L.

Henley, L.

Ruthven of Freeland, Ly.

Cathcart, E.

Ilchester, E.

St. Aldwyn, E.

Chelwood, L.

Inglewood, L.

St. Davids, V.

Clitheroe, L.

Kilmany, L.

Saint Oswald, L.

Cockfield, L.

Kinloss, Ly.

Sandford, L.

Cottesloe, L.

Kinnaird, L.

Sandys, L.

Craigavon, V.

Kinross, L.

Selkirk, E.

Cranbrook, E.

Linlithgow, M.

Sempill, Ly.

Crathorne, L.

Long, V.

Sligo, M.

Cullen of Ashbourne, L.

Loudoun, C.

Somers, L.

De Freyne, L.

Lucas of Chilworth, L.

Spens, L.

Denham, L.

Lyell, L.

Strathclyde, L.

Derwent, L.

Macpherson of Drumochter, L.

Tenby, V.

Dilhorne, V. [Teller.]

Manchester, D.

Teviot, L.

Diplock, L. [Teller.]

Mancroft, L.

Torphichen, L.

Drumalbyn, L.

Margadale, L.

Trefgarne, L.

Dundee, E.

Marley, L.

Trenchard, V.

Eccles, V.

Massereene and Ferrard, V.

Tweeddale, M.

Effingham, E.

Monckton of Brenchley, V.

Vivian, L.

Ellenborough, L.

Monson, L.

Waldegrave, E.

Elliot of Harwood, B.

Montgomery of Alamein, V.

Ward of North Tyneside, B.

Elton, L.

Morris, L.

Wilson of Langside, L.

Emmet of Amberley, B.

Mowbray and Stourton, L.

Faithfull, B.

Newall, L.

NOT-CONTENTS

Aberdeen and Temair, M.

Evans of Hungershall, L.

Mottistone, L.

Adeane, L.

Fraser of Tullybelton, L.

Oram, L.

Ailesbury, M.

Fulton, L.

Paget of Northampton, L.

Airedale, L.

Gaitskell, B.

Perth, E.

Allen of Abbeydale, L.

Gardiner, L.

Platt, L.

Ampthill, L.

George-Brown, L.

Ponsonby of Shulbrede, L.

Amulree, L.

Gordon-Walker, L.

Ritchie-Calder, L.

Aylestone, L.

Goronwy-Roberts, L.

Rochester, L.

Bacon, B.

Greenwood of Rossendale, L.

Sainsbury, L.

Balogh, L.

Grey, E.

Samuel, V.

Banks, L.

Hale, L.

Scarman, L.

Beaumont of Whitley, L.

Hamnett, L.

Segal, L.

Birk, B.

Hampton, L.

Shinwell, L.

Blyton, L.

Harris of Greenwich, L.

Simon, V.

Brimelow, L.

Hatch of Lusby, L.

Soper, L.

Brockway, L.

Hood, V.

Stamp, L.

Brookeborough, V.

Hughes, L.

Stedman, B.

Bruce of Donington, L.

Hylton, L.

Stewart of Alvechurch, B.

Buckinghamshire, E.

Hylton-Foster, B.

Stone, L.

Byers, L.

Jacques, L.

Strabolgi, L. [Teller.]

Caccia, L.

Janner, L.

Tanlaw, L.

Castle, L.

Kilmarnock, L.

Taylor of Gryfe, L.

Champion, L.

Kirkhill, L.

Taylor of Mansfield, L.

Chitnis, L.

Leatherland, L.

Vickers, B.

Clancarty, E.

Lee of Newton, L.

Wallace of Coslany, L.

Clifford of Chudleigh, L.

Listowel, E.

Walston, L.

Clwyd, L.

Llewelyn-Davies of Hastoe, B. [Teller.]

Wedderburn of Charlton, L.

Collison, L.

Wells-Pestell, L.

Cooper of Stockton Heath, L.

Longford, E.

Wigg, L.

Cork and Orrery, E.

McCarthy, L.

Wilberforce, L.

Darling of Hillsborough, L.

McCluskey, L.

Williamson, L.

Davies of Leek, L.

Mackie of Benshie, L.

Willis, L.

Donaldson of Kingsbridge, L.

Maelor, L.

Wilson of High Wray, L.

Dowding, L.

Merrivale, L.

Winterbottom, L.

Elles, B.

Morris of Borth-y-Gest, L.

Wynne-Jones, L.

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

Morris of Grasmere, L.

Young of Dartington, L.

4.31 p.m.
Viscount COLVILLE of CULROSS Viscount COLVILLE of CULROSS moved Amendment No. 202:
Page 75, line 7, at end insert—
("Status of decisions of the Judicial Committee
23A. A decision of the Judicial Committee under paragraphs 9, 17, 22 and 23 of this Schedule shall be binding on all courts in England and Wales, Scotland and Northern Ireland.").
The noble Viscount said: That matter having been twice decided—or decided one and a half times, according to which view one takes as to whether it was the same point as we discussed last Wednesday—we have now got to the situation where the Judicial Committee will always make the final decision except where, under paragraph 23, the House of Lords on an ordinary appeal decides that it is not appropriate to send the devolution matter to the Privy Council. In those circumstances there arises exactly the point which was mentioned by the noble and learned Viscount, Lord Dilhorne, as to the status of the decisions of the Judicial Committee of the Privy Council in relation to other courts, including this House sitting in its judicial capacity.
It is a very short point to describe. I do not think it has hitherto arisen directly—except, I suppose, possibly under the legislation which set up the Northern Ireland Parliament—because the Judicial Committee is almost never involved in direct domestic litigation in this country. But now it will be and the question is whether its decisions will be binding on inferior courts; indeed, will its decisions be binding on the different courts in the different parts of the United Kingdom? It would seem to me to be essential that they should be, but there is nothing in the Bill; there is no rule of interpretation which says so in the ordinary currency of legal practice at present, and therefore the matter will be unresolved until such time as the courts make their own new rules.
It is the latter to which I object. I quite see that the courts will make their own new rules and that in due course a doctrine will arise, but what of the expense to the private litigant in the course of reaching that doctrine? That is what worries me. Why, for the sake of a few words in the Bill, should a number of litigants in different parts of the United
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Kingdom have to run test cases, very likely at their expense, before the courts finally come to a decided opinion on what they are to do with the decisions of the Judicial Committee of the Privy Council? It is to clear all this up that I suggest the new short paragraph as proposed in the Amendment.
The LORD CHANCELLOR: To some extent, at any rate, we considered this matter on an earlier occasion, in relation to Clause 19, and I undertook then, and I repeat it now, to consider the important matter that had been raised as to the circumstances in which decisions of the Judicial Committee should have final and binding effect. We have done a good deal of work on that matter and I hope that when I show the proposed Amendment to the noble and learned Viscount, Lord Dilhorne, to whom I have given promises about this, I shall also show what we have in mind by way of a general provision in Clause 19 which will cover both ends of the story, both the pre-assent and the post-assent procedures. I hope that in the light of that undertaking and the promise early action in this field, the noble Viscount will not feel disposed to press the matter further.
Viscount COLVILLE of CULROSS: I am grateful to the noble and learned Lord the Lord Chancellor. I am not at the moment persuaded that Clause 19 is necessarily the right place for both ends of the spectrum, but so long as it is in the Bill somewhere I shall be happy to look at his draft in due course. Pending the arrival of that valuable document, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.36 p.m.
Viscount DILHORNE Viscount DILHORNE moved Amendment No. 203:
Page 75, line 18, leave out paragraph 25.
The noble and learned Viscount said: This Amendment was tabled originally as a consequential Amendment, but it has attracted the support of my noble and learned friends Lord Wilberforce and Lord Scarman and now I want to ask the noble and learned Lord the Lord Chancellor only one question with regard to it: is paragraph 25 really necessary and cannot the Judicial Committee themselves draft

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and make rules for the hearing of references? It would seem that if they could, or if they were given a rule-making power if they do not have it already, that would be more desirable than having to go through all the business of Orders in Council.
I say that because it seems that if the Judicial Committee has or was given that power, it would be capable of use with a great deal more flexibility than would follow if the rules always had to be laid down by Order in Council. The point is a short and simple one. I would ask the noble and learned Lord to look at that in any event, because it seems that it would be convenient if the Judicial Committee were entrusted with the rule-making power and did not have to secure an Order in Council for any change of rules.
The LORD CHANCELLOR: The purpose of paragraph 25 is to ensure that whatever rules are made for regulating the procedures to proceedings before the Judicial Committee under Schedule 12 are published by Order in Council. Such Orders are published as Statutory Instruments and it is felt that they would be more readily available to practitioners and others in Scotland than the alternative of practice directions or rules issued by the Committee. It seems to me that as noble Lords have decided to retain the making of references or appeals to the Judicial Committee under the Schedule, it is appropriate to retain paragraph 25. It is a matter of convenience and, as the noble and learned Viscount indicated, there is no great issue of principle here. However, there are precedents for dealing with it in this way. This is thought to be the best means of publicity for and availability of what is being proposed.
Viscount DILHORNE: What the noble and learned Lord the Lord Chancellor said convinces me that it should be by Order in Council, merely to secure that the rules are readily available in all parts of the United Kingdom. My only concern was lest that should be less flexible than the Judicial Committee's having power to make rules from time to time to deal with situations as they occur, rather than to have the delay which sometimes takes place in drafting satisfactory Statutory Instruments. In the hope that that will not take place in regard to these
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rules, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.39 p.m.
On Question, Whether Schedule 12 shall be the twelfth Schedule to the Bill?
Lord MORRIS of BORTH-Y-GEST: At this stage I will not detain your Lordships for more than a moment or two. As the Committee parts with Schedule 12, I wish to give expression to one regret and to one hope. The regret is that which I voiced earlier, namely, that there should be post-enactment review at all. I do not know whether Her Majesty's Government have finally made up their mind on this matter. It was debated in your Lordships' House and there was no Division, and it may be that the Government think it necessary to have post-enactment review. It would be something quite new within these islands. It strikes me as rather incongruous in these islands that if Ministers have gone to Her Majesty, and asked her to give Royal Assent, and have thereby implicitly advised Her Majesty that the measure was intra vires, it might be held at a later date that that was all wrong, that the measure was ultra vires, and that that which Her Majesty had done was in vain.
I am not unaware of what may happen in other countries—Canada or Australia—but do we really need it in these islands? Your Lordships have devoted many hours listening with great care to very learned discussions in the debate on Schedule 12. May I remind your Lordships that four pages of the Bill are taken up in regard to Schedule 12. The result is that if there is a devolution issue of the nature that a measure has been passed which was ultra vires, then seven separate judicial bodies may be called upon to decide that question.
May I remind your Lordships what the seven are. The issue may have to be decided by the Inner House of the Court of Session. It may have to be decided by the High Court of Judiciary. It may have to be decided by the Court of Appeal in England. It may have to be decided by the High Court in England. It may have to be decided by the Court of Appeal of Northern Ireland. It may have to be decided in the House of Lords, and of

167
course it may have to be decided in the Judicial Committee of the Privy Council.
I do not want to go over ground that has been debated before, but I would ask Her Majesty's Government, before the Bill reaches its final stages, to consider again whether it is really necessary to have post-enactment review. If the Government still think that it is necessary to have these four pages of legislation, deciding which courts will have to decide whether something which has been done was ultra or intra vires, I hope that in the future the view will be taken that there should be the utmost possible care, before any measure becomes an Act, that the measure is regarded as being intra vires.
We have the provisions of Clause 19. I think that the words of Clause 19 are to be looked at again. There we have the perfect instrument for deciding—and, as I submit, at the right time—whether a measure is or is not within the powers of the Assembly. The hope I express is that those administering this legislation—if the present Bill becomes an Act, and if the Act is then put into effect—take the very greatest care to ensure that it will be the exception that there could be an issue after enactment raising the question as to whether the Act was infra or ultra vires.
I know that the view has been expressed—and I do not dissent from it—that in the Bill a very elaborate constitution is laid down, but I suggest that in a particular measure which comes before the Assembly the issue would be rather limited. One would not have to consider all the provisions of the Constitution, and I hope that those advising in the Assembly would be fairly sure that a measure proposed was within the powers of the Assembly.
I repeat that I do not want to go over ground that has been debated. Had my view been the view of the Government, we would have been deprived of all these hours of discussion on Schedule 12. We would have been deprived of listening to the most marvellous debating. We would have been deprived of seeing that Law Lords do not always entirely agree, completely and absolutely, with each other. Perhaps that illustrates that it is certainly desirable, if possible, to get finality, and I would submit and urge that that finality should be before the stage of Royal Assent.
Viscount DILHORNE: I wish that my noble and learned friend had made that speech on an earlier occasion; I should have been very glad of his aid then. I wish to add only the following to what he has said. If one is looking at this matter from a detached point of view, I hope that very little will slip through the pre-enactment net. I hope that there would be nothing—at any rate, nothing very obvious. I imagine that the lawyers advising the Scottish Secretaries and the Secretary of State will get together, and will watch very carefully to see that this subordinate legislation of the Assembly is infra vires. If it be right that very little is likely to slip through the net, I think that we are making rather heavy weather in the Bill of what will happen if something of a minor character slips through.
I argued before—and I remain of the view—that, although it is of subordinate legislation, there is much to be said for making an Act of the Scottish Assembly as a distinct form of subordinate legislation and as superior to any other form; it really should be an Act in Scotland, an Act, to all intents and purposes, so far as it can be, as an Act of Parliament.
I was concerned only with the post-enactment review of Assembly Acts, not of subordinate Instruments made under those Acts, under which the ordinary procedure would apply. What I should like the Government to consider, if they respond to my noble and learned friend's request, is a possibility which concerns me here. I am not asking for an answer now. I am alarmed about the difficulties that may arise if there is a challenge to vires of an Assembly Act long after its enactment. The noble and learned Lord, Lord McCluskey, made a powerful speech in the course of our debates on Schedule 12, dealing with the consequences so far as the litigants are concerned. I do not think that they are entirely satisfactory so far as those litigants are concerned. I would ask the Government to consider the possibility—if I am right in thinking that the pre-enactment net is to be so good that little is likely to slip through—of imposing a time limit within which the vires of an Assembly Act can be challenged.
I think that that would be an improvement. If the time limit was, say, two or three years, it ought to give people time

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to spot any defect in the Assembly Act. If it is not challenged in that time, it will not do anyone much harm if it is treated as intra vires. I think that it would be an improvement. I merely ask the noble and learned Lord the Lord Chancellor—I know that he can not go the whole way with me on giving the status to an Assembly Act which I think it ought to have—whether he will give consideration to what I have mentioned.
4.50 p.m.
Lord SHINWELL: The last thing I would wish to do is intervene in a legal discussion. I therefore content myself at this stage—there may be further opportunities, in a debate on another item in the Bill, to expand, though I hope not at inordinate length—with asking my noble and learned friend this question. When it comes to the Referendum, will every potential voter be presented with a copy of Schedule 12 and become fully seized of the nature of the procedure that is likely or unlikely to be adopted, with the possibility of criminal proceedings and with the dire probability of being forced to pay the expenses if a submission is made to a tribunal, et cetera? What I am disposed to do (but I should not like to detain your Lordships longer than is necessary) is to read out every paragraph in Schedule 12. I am entitled to do that in the course of debate. There is nothing in the traditions of the Committee or of your Lordships' House to prevent my doing that. There is no rule of order which inhibits me fron reading out every paragraph in Schedule 12: but I forbear. I merely repeat the question: When it comes to the Referendum, will every Scottish voter, of whatever Party, be entitled to scrutinise every word of Schedule 12 before inscribing his or her vote on the ballot paper?
Lord DOUGLAS of BARLOCH: Although I do not totally agree with the noble and learned Lords who have spoken, I want to support their general approach towards simplifying this Bill. Schedule 12 involves a great deal of complication, and it is a great pity that it should be there at all. I know, of course, that subordinate legislation is liable to challenge on the ground that it is ultra vires, and in the ordinary way that challenge arises in litigation concerning some particular
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case. That is perfectly straightforward; it does not require all the paraphenalia of Schedule 12 at all. Clause 61 and Schedule 12 could have been left out completely, and the courts would have been able to deal with this problem. Therefore, I consider it to be totally superfluous.
On the other hand, it can be avoided, as the noble and learned Viscount, Lord Dilhorne, has suggested, by making an Act passed by the Scottish Assembly unchallengeable after Royal Assent has been given. That is, of course, a somewhat drastic and unusual procedure in respect of subordinate legislation; but, after all, Scotland has many able and diligent lawyers. Measures which come before the Assembly will be subjected to scrutiny. It will not be a one-Party body: there will be people who will be quite happy to find faults in measures brought forward by the Executive, and the chance of anything ultra vires slipping through and getting the Royal Assent after the provisions of Clause 19 have been applied is comparatively remote.
There is one more point about this. Nobody, it seems to me, has mentioned what the consequences are if a measure passed by the Scottish Assembly is found to be ultra vires. If that is so, the whole measure will collapse. It is not one single provision in it which will be invalidated: the whole thing will be invalidated. That is the result of any part of it being ultra vires. Therefore, it would indeed be desirable, as the noble and learned Viscount, Lord Dilhorne, has suggested, to put some limit at least upon that possibility,and not to have it hanging over Scottish legislation for an indefinite period.
Viscount COLVILLE of CULROSS: I share with the two noble and learned Lords on the Cross-Benches the hope, and indeed the expectation, that those who prepare the legislation for the Scottish Assembly, and indeed their counterparts in London, will be extremely vigilant to see that no question of this sort arises as far as they can possibly help it. I suspect that both in London and in Edinburgh vires-watching will be a growth industry within the Civil Service. But the fact remains that, so far as I can see, the whole process of allowing these

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enactments to be challenged on vires is inevitable, in view of the form of the legislation that we have embarked upon and to which we have given a Second Reading. If I had to read out a Schedule I should be happy to follow the noble Lord, Lord Shinwell, by reading out Schedules 10 and 11, because those are the ones from which the trouble is going to come. If we have Schedules of that sort in the Bill, I do not suppose for one single moment it is going to be a matter of the whole of a Scottish Assembly Act being discovered to have been completely ultra vires despite all the care that was taken beforehand and, indeed, the possibilities of the pre-enactment scrutiny under Clause 19. It is much more likely to be a small point.
That does not mean to say that it is not an important point. After all, every year now this Parliament passes something like 2,500 pages of subordinate instruments, and they are only the ones that are printed, which include only about half the ones which are actually passed. Out of that enormous volume of subordinate legislation very few indeed are ever challenged on vires,but the ones that are tend to be rather important. They are certainly important to the individual in whose case the matter arises, and often they turn out to be very important over a large area of activity. I hope that the Government will not shut out this sort of challenge, either permanently or even at the end of a period of time. I am sorry it is my misfortune, and no doubt my unwisdom, to disagree with the noble and learned Lords, but if we are embarking upon this sort of legislation, and if there is going to be a multiplicity of legislation on both sides of the Border impinging upon the areas which are reserved and the areas which are devolved, in due course we are bound to have a mistake being made, a mistake slipping through, and a mistake affecting the rights of the individual when it comes to light.
In those circumstances, although the noble Lord, Lord Douglas of Barloch, may be right in saying that the courts could deal with it under their inherent jurisdiction anyway, here we have Schedule 12, and if the Government want Schedule 12 instead of the courts' inherent jurisdiction—and they will need it if the Judicial Committee of the Privy Council
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is to have the final say—then I would ask them very seriously to consider before they accede to what the noble and learned Lord, Lord Morris of Borth-y-Gest, asked. I believe there should be post-enactment review in the courts, because I believe that that will be a protection to the individual which is inevitable and which may often be invaluable.
The LORD CHANCELLOR: We have discussed on many occasions the matters which have been adumbrated today. It is obvious that the questions which arise on this Schedule are of great importance and of enormous interest. What has been said about the need for eternal vigilance in eliminating the need to fall back on post-Assent judicial review is, of course, absolutely right, and by the various provisions in the Bill, both legislative and administrative, we have sought to see that there are various fail-safe provisions to prevent the ultra vires measure from getting through. But we have thought it right, in case one does, that the citizen who might be adversely affected by an ultra vires Act of the Assembly should have the opportunity of having his rights protected in the courts. The noble and learned Lord, Lord Scarman, described the acceptance of post-assent judicial review as a basically important principle which endeared him to the Bill. I respectfully agree with him. It certainly would be unprecedented to impose a time limit on the validity of an Act of the Assembly and I do not think that I can—
Viscount DILHORNE: I was not proposing a time limit on the validity of an Act; I was suggesting that there should be a time limit—and perhaps a long one—for challenging vires. If the noble and learned Lord says that there is no precedent for that, I think he will find one in the housing field.
The LORD CHANCELLOR: In this broad field where issues of constitutional importance and issues affecting a whole range of activities could theoretically arise, I do not think it would be right to impose that restriction upon the litigant. I will certainly look at the precedents in the housing field but here we have, as has already been indicated by the reference to Schedule 10, a wide potential area. I think that it would be wrong to impose upon the citizen the limitation that is

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proposed. In my submission, although the machinery is inevitably somewhat complex, the post-assent judicial review is I believe, an important element of protection for the citizen in the new situation in which he will find himself.
Schedule 12 agreed to.
5.2 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 327:
Before Clause 62, insert the following new clause:
Speaker's Conference
(".—(1) For the purposes of this Act there may be appointed not less than six, nor more than twelve months after the first occasion on which the Assembly meets a Speaker's Conference, being a conference convened at the request of the Prime Minister and presided over by the Speaker of the House of Commons with the function of considering and making recommendations to the House of Commons relating to the appropriate number of Members of the House representing Scottish constituencies after the enactment of this Act.
(2) Those participating in the Conference shall be Members of the House of Commons invited to do so by the Speaker, who shall secure that the balance of parties in the House of Commons is reflected, so far as practicable, among the participants in the Conference.").
The noble Lord said: I beg to move Amendment No. 327 on behalf of my noble friends. This Amendment proposes a Speaker's Conference after the Assembly has met for the first time in order to examine the numbers of Members of Parliament representing Scotland at Westminster in the light of the existence then of the proposed Assembly. This is the procedure which was recently applied in the case of Northern Ireland leading to the recommendations by that Conference published only in February in the White Paper, Command 7110.
If an Assembly on the lines proposed in this Bill is set up in Scotland, we must face up to the question of representation at Westminster. Should nothing be done even to consider that question I personally am very worried that the electors in England will feel that the system is becoming intolerably unfair to them. This could be a cause of great dissatisfaction and it could have disruptive effects upon the Union. I would remind your Lordships that the Kilbrandon Royal Commission addressed itself squarely to this problem. In particular, page 341, para-
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graph 1147, in the section of the Kilbrandon Report outlining what it described as a scheme of legislative devolution, spelt out the accompanying proposals on this subject. Such a scheme of legislative devolution is indeed the kind of system which this Bill is putting forward. It is that part of the Kilbrandon Commission's Report which corresponds to what the Government are trying to do in this Bill. Paragraph 1147 reads:
"Scotland and Wales would continue to be represented in Parliament. Their representation in proportion to population would be the same as that of England, subject to any allowance which might be found appropriate for special geographical conditions. The probable effect would be to reduce Scotland's representation from 71 to about 57 and that of Wales from 36 to about 31".
The geographical qualification, I suggest, is important. For the Islands and for the large, sparsely populated areas of the Highlands and Borders of Scotland, one cannot expect precise numerical comparisons; one must expect there to be more MPs than otherwise might be the case because of the geographical conditions to which the Kilbrandon Commission referred. But a large majority of Scotland's population live in cities and urban areas and the Members of Parliament there have tasks which are similar to the tasks of Members of Parliament elsewhere in the United Kingdom.
The Kilbrandon Commission published its report at the end of October 1973—some time ago—and I note that the noble Lord, Lord Vaizey, who has frequently attended our debates in Committee on this Bill, has put down two Questions for Written Answer to ask for up-to-date information. One is to ask the average number of electors in Scottish Parliamentary constituencies and the other is to ask how many Members of Parliament would be elected in England if the number of electors in each constituency were the same as the average number of electors in Scottish constituencies. These were put down on 8th May and, no doubt, are about to be answered by the Government if they have not already been so. It is clear, therefore, that the noble Lord, Lord Vaizey, has this point in mind and is seeking the latest information.
The suggested Speaker's Conference is the appropriate way of seeking recommendations on this subject, as the recent Northern Ireland Report has reminded us;

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but there is then the delicate question of the extent to which this House, in a Committee of which we are now sitting, should appear to be making suggestions to another place about its composition. I recognise that immediately; and it must, naturally, underlie everything that we say here on this subject. The Amendment which I am moving recognises this point. If your Lordships will examine its text, you will see that it is permissive and in no way prejudges what the Conference recommendations may be. I do not believe that it provides any reasonable ground for objection to the effect that your Lordships would be seeking to interfere with the composition of the other House. Above all, it would give the other House a full and further opportunity to consider this subject.
The number of Scottish seats in the Commons has been 71 since 1948, when the university seats disappeared. It is worth while briefly to trace the origins of that number, as there have been contradictory versions circulating in Scotland. After the Act of Union in 1707, 45 Members of Parliament from Scotland attended the United Kingdom Parliament. That was considerably fewer than the comparative numbers of the populations North and South of the Border at that time would have justified, but finance and the amounts of tax paid were clearly also taken into account in those days. It was not until the mid-1880s that a Reform Act conferred representation on Scotland corresponding to the numbers of the electorate in Scotland. Then 72 seats appeared. Since that time the figure has remained in the seventies; but, in the meantime, the population of Scotland has increased more slowly than in England and what was approximately in proportion to the numbers of the respective electorates in the 1880s is no longer so.
None the less, the figure of 71 has been continued, no doubt because of special considerations such as difficult geographical circumstances. It has been generally acceptable it seems because, so far as I know, no serious moves have been made to change that figure of 71. However, with the establishment of a new legislative assembly in Scotland as proposed in this Bill, one must expect an understandable grievance to be raised in England. It would, I believe, be shortsighted to ignore
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the probability of complaints from responsible people and responsible bodies that Scotland has now become overrepresented in our Parliamentary institutions. I say this as a Scot, resident in Scotland, because I believe that it is our first duty to preserve the Union. For me, at any rate, that is the top prority. For this reason we should forestall such divisive effects of the Bill as it now stands. We should make sure that, if an assembly of this kind does come into existence, the related question of representation at Westminster is, at least, being looked at. Even if no recommendations emerge to make changes, I believe that there should be provision in the Bill to ensure that the question is being looked at and being looked at in the appropriate way. I beg to move.
5.12 p.m.
Lord WILSON of LANGSIDE: I have listened, as I am sure have all members of the Committee, with great interest to what the noble Lord, Lord Campbell of Croy, said in support of this Amendment. Of course he is right, as he so often is, in much of what he said. He is right when he said that we must face the ultimate question of representation at Westminster if this Bill goes through. He is right when he says that it would be shortsighted to overlook the various problems to which he referred and which your Lordships have been concerned to discuss during these past few weeks. He was right—and I imagine Members of the Committee will agree, if I may say so with respect—when he said that it was desirable to forestall, if we can, the divisive effects of this Bill.
However, I wonder whether this Amendment is the best way of achieving those ends. It is desirable that we should face up to these problems; but I venture to hope that this Amendment will not be pressed or that, if it is, your Lordships will vote against it, for one fundamental reason which is crucial. There are many of us—and we shall be talking about this no doubt when we come to the clauses on the referendum—who think that it borders on the shameful (and I do not want to use divisive language) that after all that has been said in Parliament this Bill should go to the people of Scotland in a referendum. There are many of us who feel that, whatever there

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is to be said for referenda in the scheme of our arrangements for government, there is nothing to be said for taking this to the people on a referendum because most of those who have to vote will have had no such opportunity, as Members of the Committee have had, to understand the full implications of it.
But if we are going to have a referendum, we must be able to tell the people in Scotland who are going to vote the truth of what the price of the measure is going to be. Of course this Amendment, it humbly seems to me, might obscure from the people of Scotland the price that they are going to be asked to pay. If, unhappily for Scotland, this Bill goes to a referendum, what we shall be concerned above all to do—all of us—is to tell the people of Scotland the truth about the Bill without any fudging of the issues or any obscurity as to what the outcome is going to be so far as Scotland's representation at Westminster is concerned. For these reasons, though I think it is altogether desirable that we should face up to it, I hope that this Amendment will not be pressed.
Lord MACKIE of BENSHIE: I always listen to the speeches of the noble Lord, Lord Campbell of Croy, with tremendous interest and great admiration because he obviously puts a tremendous amount of work and thought into them. But I must say that in this case perhaps the first thought and doubt which he, with meticulous honesty, expressed should carry some weight. It is for the House of Commons at any time to appoint a Speaker's Conference to consider the representation of the people of Great Britain. I do not think that this Bill is the place for such a clause. For that reason, perhaps the noble Lord should not press the Amendment, he having made the point to which I have always agreed that if Scotland has what I would call decent devolution and has not things like forestry constantly whittled away from the Assembly, then its representation in the House of Commons could well drop and should drop to a fair number, taking into account the geographical difficulties. As a Liberal, I think I can say that it is a fact that a larger number of Members in Scotland generally benefits Labour and fewer Members might alter the balance in favour of the Conservative Party. I
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know that such a thought would not enter into the minds of noble Lords on either this or the other side of the House.
The Earl of LAUDERDALE: Would the noble Lord allow me to interrupt? Surely, it takes a Liberal to discern the filthy intentions of their adversaries?
Lord MACKIE of BENSHIE: Indeed, we have had ample opportunity to observe without the necessary opportunity to perform, and this too has taught us great wisdom. In this case I must say (to return to the point) that I think this matter would be better left where it should be, in the House of Commons, for them to sort out.
5.19 p.m.
The Earl of ONSLOW: This Amendment, No. 327, and Amendment No. 210 go to the very centre of the Bill. They show up its faults, its exploitations and its unresolved difficulties. I will address myself now to Amendment No. 327 which applies to over-representation of Scotland in the United Kingdom Parliament. No man can morally justify an element of devolution and over-representation; no man can morally justify the political Party advantage which the noble Lord, Lord Mackie of Benshie, has discerned in this matter. No man can morally justify the Scots' tail wagging the English dog. The English have not yet woken up to this point; they have not yet woken up to what is happening to them.
It is impossible to speak to this Amendment and not to slip into a Second Reading speech. Scotland has had more money per head than has England, and Scotland has produced more Prime Ministers than has England this century per head of population. Scotland has had probably more problems over declining industries, than has England in this century. But those things the English have accepted: it has not mattered The over-representation, as the noble Lord, Lord Campbell, said, has slipped in, almost by accident, by the imbalance in the growth of population between 1885 and nowadays.
Scotland will now have the power to legislate for its own local needs, unlike Carlisle, Coventry, Truro, Troon, Dorking or Doncaster. It is then proposed to keep in existence this recently-established over-

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representation of Scotland in another place. The English are being "conned", and when they recognise that this "con" trick is happening to them the Union will be badly in danger. That is terrible for all of us, because this Union has given us great things: it has given us great achievements and great co-operation. We have suffered and we have succeeded together. Noble Lords who are pushing this Bill and noble Lords from the Liberal Benches do not understand it and have not thought it through. They do not realise the danger to the Union that is involved.
I want to be able to continue speaking as a British person and not as an Englishman. This Amendment must be passed. I take the point of the noble Lord, Lord Wilson of Langside, that it is unsatisfactory and perhaps not strong enough, but there is an opportunity to strengthen it at the Report stage. The over-representation of Scotland in a devolved situation and with a devolved Parliament, is going to be a "con" trick on the English. I cannot underline that too much. Nobody is prepared to face up to this fact. One day the English people will, and then we shall all suffer. I sincerely hope that we shall do our constitutional duty and that your Lordships' Chamber is serious on an Amendment concerning over-representation, together with Amendment No. 210, and that it is prepared to go to great Parliamentary lengths to make sure that justice to the English is seen to be done. I do not want injustice to the Scots; I want justice for the English and I want to maintain the Union.
Lord WILSON of LANGSIDE: Before the noble Earl sits down, I wonder whether he could answer this question. I understand his feeling about the English being "conned", but does he not feel that perhaps he has been carried away by his realisation of that into somewhat extravagant statements in support of this Amendment?—because, of course, when one looks at the history of the Union these last 200 years one finds many occasions on which the English have misinterpreted the Treaty of Union, both in the spirit and in the letter. So let us not blind ourselves to this sort of thing. I think that if we talk in terms of "conning" and use that kind of language we tend to mislead one another.
The Earl of ONSLOW: Perhaps I may just try to answer that point. This Amendment is probably very defective and I should like to see it strengthened; but it is better than nothing at all. I would think also that it is perhaps not only the English who are being conned by this Bill but the Scots as well.
Lord WIGG: At an earlier stage of these Committee proceedings we had a debate which touched on this issue of representation of Scotland at Westminster. I ventured the view then that, whatever the number happened to be, that number would be looked at with a very careful eye for the future. To put it in another way, old Abe Lincoln was almost certainly right when he said that you cannot fool all the people all the time; and the fact that the present number of Scottish Members of Parliament is a gross over-representation of Scotland at Westminster meant that that number was going to be looked at with very great care and that, sooner or later, the fact that it suited the Labour Party, or the present Government, to continue that number would come under scrutiny.
I do not believe that the present number can be sustained. I said so at the time. I also do not happen to think in regard to Government, that the Labour Party is the only political Party in this country to have played around, if I may use that expression, with representation and the number of constituencies on its side. After all, the Tory Party has a fair record on this in Greater London. The Greater London Council Bill, for example, was a good old piece of "hooking it up" in order to get the kind of representation that the Tories had not been able to get until they carried out the reform. But the fact that they did it, and it has been done and is being continued by a Labour Government, does not disguise the obvious point, already made by the Liberal Benches, that this Amendment is put down by the Opposition today because they are in some difficulty. They had a very lengthy debate upon this issue in another place and the Motion was defeated on a free vote.
Of all the subjects which really ought to be dealt with by another place, this surely is the one. This is no job for a Labour Government, and I hope very

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much that the Opposition will hesitate before pushing this Amendment to a Division. If they do so, I should certainly find myself in some difficulties because I am opposed to this technique. However, if they were to put down an Amendment indicating what they think the representation should be, and if, for instance, they like to put down "57", I would vote for it—because 57 would be an arithmetical division, as it were, that made some sort of sense. On the other hand, if there were a tolerance of, let us say, between 57 and 62, or about that number—that would be to some extent playing the numbers game—well and good; that would educate the people of Scotland and also of England over the realities which will stem from the fact that Scotland is going to get an Assembly and then is going to be grossly over-represented at Westminster.
But this is only another example of what is apparent to me every time I look at this Bill in detail. Every time I look at it, I find it has not been thought through and that the implications have not been faced up to, because it is a first-class piece of political chicanery. But by putting down an Amendment of this kind, to use a Conservative majority in this Chamber—not on a free vote, be it noted, although that would not be worth very much—to ask this Chamber to reverse a free vote in another place on an issue of this kind is utterly and completely wrong.
5.29 p.m.
The Earl of LAUDERDALE: The noble Lord, with a great gift and experience in these matters, has referred to "political chicanery". When I say that he has great experience, I mean that he is a great judge of chicanery and we respect his capacity to spot it wherever it raises its head. He has just suggested that the Opposition ought to suggest the number of Members that it would be prudent and right for Scotland to send to another place once the devolution Bill becomes an Act and thereafter passes into effect, if it does. But, surely, to invite either Party to propose the number of seats is to invite yet more chicanery. What this Amendment proposes is that the appropriate number should be determined by a Speaker's Conference, properly representative of the Party strengths in another place.
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When it is suggested also, I think both by himself and also, if I understood him aright, by the noble Lord, Lord Mackie of Benshie, (who, although he is of the wrong Party, I still count as a friend) that it is quite wrong for this Chamber to suggest what another place should do, then I ask myself: Why are we here at all? We are here to revise Bills that are brought to us from another place and our function, surely, is to enable another place, particularly when it has been the victim of its own guillotine, to think again. This Amendment is very gentle, indeed. All it does is to use the word "may"; it does not say "shall". It is a suggestion to another place that they should look at it afresh.
I was much struck by what the noble and learned Lord, Lord Wilson of Langside, said a few moments ago. He is always a compelling speaker and I do not think we hear him often enough in this House. He particularly referred to the referendum, which he dislikes, and the circumstances in which, on present form, it will be held, which he dislikes even more. He said, in effect, that the people of Scotland will not and cannot really understand what this Bill contains, and I agree with him. One of the functions that our debates in this House may have is to lay bare some of the issues, so that through time, through exposure and through the media the public will come to grasp some of the points; and it is most important—and here I am entirely at one with the noble and learned Lord, Lord Wilson of Langside—that the people of Scotland should realise what this Bill means and what it implies.
As my noble friend Lord Onslow said, it is difficult on this Amendment not to get a kind of touch of Second Readingitis, because the issues involved in it are much wider than the narrowness of the referendum itself, but I share a fear which has already been expressed that, when the referendum comes, the people of Scotland will simply treat it a little like a Scotland v. England rugger match. If you are for Scotland you vote "Yes", and if you are for England you vote "No". That is the kind of level on which, I am afraid, the campaign may well be conducted in some quarters. It is therefore extremely important that we make some of these matters absolutely clear.
My noble friend Lord Onslow, in language which I thought was not as

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smooth as one is accustomed to expect from Englishmen, spoke of "con" tricks and this, that and the other. But he made one very significant point which has to be rammed home and which is that Scotland does extremely well out of the Union, in terms of public expenditure. My recollection is that figures given in another place by the Government, in a Written Answer in Hansard, made it clear, in effect, that 9 per cent. of the population of the United Kingdom enjoy more or less 12 per cent. of the public expenditure. That simple statistic is buried in a whole lot of figures that have been authenticated by the Government. The Scots have never understood this. They have never understood that the answer if they want separation, to take an extreme case, would be to raise the revenue in Scotland by 25 per cent. to match the same level of public expenditure. This kind of thing has never been put across. They have never been given to understand it. The taxation point does not arise on this Amendment—
Lord McCLUSKEY: When the noble Earl used the word "buried", he suggested that these figures are not readily accessible. Does he not recognise that they are published in the Government's White Paper, entitled Devolution: Financing the Devolved Services?
The Earl of LAUDERDALE: I must apologise, if I implied that they were intentionally buried. What I meant was that the very simple statistic that I have given needs to be extracted from columns and columns of figures which only the statistically minded will readily grasp. But I accept the noble and learned Lord's point, that there is no endeavour on the part of the Government to hide this fact. It is merely a concern for exact statistical accuracy that has led us to be given very many figures, from which the statistic that I have quoted may be extracted.
This Amendment does not strictly relate at all to the taxation point, but it relates to the point of Scotland knowing what is the price, and here is the strength of the Amendment. It is most important for the Scottish people to understand that if they want—and I very much doubt whether they really do, when they look at it properly—a Convention, an Assembly or a
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psuedo Parliament of their own, that must mean surrendering some degree of representation in London. In equity, it cannot mean anything else. Therefore I believe that this Amendment is most valuable. The discussion which we are now having, and the debates that will follow on it will tend to do just what the noble and learned Lord, Lord Wilson of Langside, wants, which is to lay bare the facts before the Scots.
The Scots cannot for ever go on yammering at the English and saying, "We want this, that and the other" and "Give us more", yet for years it has been the impression in London, in Whitehall, that the Scots are screaming for more. Whenever a new factory is opened in Scotland there is a hue and cry, saying that the Scots must be paid at least as much as other people in London, and in the rest of the United Kingdom, although the cost of living is very different. In my old days, when I was an industrial consultant, I went down to South Wales and found that they did rather better than Scotland by yammering less. I have every sympathy with Englishmen who complain that the Scots are for ever saying "Gimme, gimme, gimme". It is not a worthy stance for our country, it is not a worthy language for our people and it is not a worthy position for a Scotsman to be seen to adopt. The time has come to say to Scotsmen and everybody else, "If the Scots want a psuedo-Parliament of their own, they must pay for it" and the first way to pay for it is to surrender a degree of representation at Westminster. That is an absolutely fair bargain.
The more I see of this Bill the less I like it and the less I like the kind of Assembly or Convention that is now proposed. But we must make it clear to the Scots that, in equity, there is a price to be paid and, in my belief, this Amendment goes some way to enabling the other House to look at this matter again, to look at it fairly, cogently, frankly and quietly, if they can ever do that in the other place. For the reasons I have given, I support this Amendment and I hope that one result of this debate, whether or not the Amendment is pressed to a Division, will be to enlighten the people of Scotland to the fact that there is a price to be paid for the devolution for which they have clamoured, if indeed they really want it at all.
5.38 p.m.
Lord MONSON: For all its undoubted good intentions, I fear that I cannot view this Amendment with any degree of enthusiasm. After all, broadly similar Amendments were rejected by the House of Commons during various stages of both the Scotland Bill and the Wales Bill. Quite apart from the fact—
Lord DRUMALBYN: Will the noble Lord forgive me for intervening? We know that the reason why the Amendments were objected to was the timing. Under these Amendments, the Speaker's Conference was to take place before the referendum took place in Scotland, and it was not thought desirable to postpone the referendum while that was done. That was the most cogent argument which caused the Amendments to be rejected.
Lord MONSON: I quite agree with the noble Lord, Lord Drumalbyn, that that was one of the reasons advanced, but it was by no means the only reason. Quite apart from the fact that such Amendments were defeated, honourable Member after honourable Member pointed out that the effects of these Amendments, if they were carried, would be totally inconclusive. Over and above that, a great many Members reminded the other place that, in practice, it was totally impossible to set up a Speaker's Conference that was completely free of subconscious political bias. Now I consider it axiomatic that fair representation is not something to be graciously doled out by the House of Commons, as the fancy takes it. Fair representation is, without question, something to which every elector is absolutely entitled, in any democracy.
It is significant to note that the Scotsman, which might fairly be described as the serious newspaper most favourably disposed towards devolution, wrote on 20th April—less than four weeks ago—that Scotland's over-representation … cannot be justified, though parity for voters in Scotland and England would be perfectly acceptable. I think that we should take very careful note of this shift in serious and responsible Scottish opinion, towards the concept of parity for England and Scotland.
I urge the noble Lord, Lord Campbell of Croy, not to press this Amendment now
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but to defer it until the Report stage so that the House can decide upon a compromise Amendment to Clause 1, to provide specifically for more equal representation, which will meet most of the objections that were raised when a similar Amendment was moved at the beginning of this Committee stage, while at the same time being a good deal more positive and unambiguous in effect than the Amendment which is before us now.
5.40 p.m.
Lord ELLENBOROUGH: I, too, must confess to feeling pretty lukewarm towards this Amendment. It seems to me that it is simply dodging and fudging the real issue which, whether we like it or not, is that a political decision will have to be made as to the proper representation at Westminster of Scotland and Wales after the Assemblies have been set up. It is becoming clear that there is much more widespread support among the people of all Parties, and no Party, for the equal representation of the people in the four parts of the United Kingdom in relation to population, making due allowance for special geographical considerations, and thus for the Scottish electorate to know just where they stand on this issue at the time of the referendum, rather than just setting up a Speaker's Conference in the future. As my noble friend Lord Monson has just said, very similar Amendments have been debated twice and defeated twice in the other place in relation to both the Scotland Bill and the Wales Bill. I believe that the Amendments attracted little or no support either from the minority Parties or from the Members of the Labour Party who are opposed to devolution.
I cannot really believe that a Speaker's Conference is likely to achieve much. I should have thought that it would entail interminable delay. It may well fail to make satisfactory recommendations, and inevitably the role of Members of Parliament, as well as their number, will have to be considered—which surely is a matter which ought to be kept separate.
The main drawback to this Amendment is that a Speaker's Conference will simply blur the issue, as nobody will know the outcome of the Conference for a long time to come and the Scottish electorate at the time of the referendum will not

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know that, in voting in favour of an Assembly inevitably their representation at Westminster will be reduced sooner or later, or by how much. Indeed, as that experienced Parliamentarian in another place, the honourable Member for Pontypool, Mr. Abse, pointed out the other day when a similar Amendment to the Wales Bill was being discussed, the pre-dominantly Labour electorates in Scotland and Wales must realise that by voting for devolution they will be voting to end Labour Governments at Westminster. He went on to point out that there would not have been Labour Governments for the past 28 years if it were not for the opinions which have come from Scotland and Wales and that it would therefore be suicidal to vote Yes in a referendum. Therefore I feel that in all fairness it must be made clear to the Scottish people that devolution will mean a reduction in the number of representatives at Westminster—I would emphasise not unfair representation but equal representation on parity with the rest of the United Kingdom.
It seems to me that virtually everyone outside the ministerial ranks of the Governent is unanimous that, so far as possible, there will have to be equal representation on the basis of population, subject to geographical considerations as advocated in the Kilbrandon Report. If this is not put clearly to the Scottish electorate at the time of the referendum surely the Scottish people will be voting on a fraudulent prospectus. That is why, I understand, certain noble Lords anticipate at a later stage putting down a suitable Amendment to ensure that the Scottish people will know fair and square that devolution will entail a reduction in representation at Westminster and, so far as possible, to what extent such a reduction is likely.
It is well known that the average English constituency has some 66,000 electors, compared with 53,000 in Scotland. The absurdity of the situation is highlighted by the Government's decision that Northern Ireland's representation should be increased from 12 Members to between 16 and 18. If one assumes the actual figure, as may well be the case, will be 17 Members, that will mean an average number of electors per constituency in Northern Ireland of 61,000—slightly better off than the English but still far
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worse off than Scotland which, unlike Northern Ireland, will have its own Assembly.
If the Bill goes through and an Assembly is set up, it will only have a chance of working if it is seen to be fair to all of the people in the United Kingdom, of whom 83 per cent.—no less—comprise the electorate in England. I should have thought that this Government of all Governments would go out of their way to ensure that there is fair play and might take the opportunity, now that they have the chance, to show that they believe in the principle of one man, one vote. We hear a great deal from this Government about one man, one vote in Rhodesia, South Africa and so on, yet in this case the Government seem to be prepared to try to perpetuate after devolution not one man, one vote in Scotland but one man, one-and-a-quarter votes in Scotland, and in Glasgow, where the average electorate is only 42,000, one mart, one-and-a-half votes.
As I have just said, the average size of an English constituency is 66,000 electors. We all know why this is so. Scotland is the Labour Government's stronghold. The game is being given away by people like Mr. Abse, whom I have just mentioned, and many others who know quite well that this state of affairs cannot be allowed to stand. The English electorate, who comprise 83 per cent. of the electorate of the United Kingdom, will not stand for it. The English electorate will not put up with a situation after devolution, when Scottish and Welsh Assemblies have been set up, whereby their political fate on so many domestic issues—really "gut" issues like education and housing—may be decided by 107 Scottish and Welsh Members who represent only 14 per cent. of the electorate. More than that, in very close contests the whole political composition of the United Kingdom and the Government of England will be substantially decided by Members from Scotland and Wales who are not only over-represented at Westminster but who have their own Assemblies in those countries.
It seems to me to be quite obvious that the Government have not the slightest intention of making any gesture of any kind and that they intend to put their head in the sand, ostrich fashion, in the

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hope that the problem will go away. But the problem will not go away, as the Government will find out to their cost. I am sure that the Government will live to regret that they are attempting to perpetuate a gross injustice on the electors of the United Kingdom and the people of England in particular.
It may well be that when the time comes the Scottish electorate will have the foresight not to vote for devolution, as it is becoming increasingly obvious that to set up an Assembly will merely be the breeding ground for the germs of continual instability, distrust and conflict. There is bound to be a consequent clamour for change, as instanced by the Scottish National Party's proposals, to be submitted at their annual conference at the end of May, in which, among other things, they envisage the creation of 16 Ministries, including a Ministry of External Affairs. If this Bill becomes law and if a referendum is to be held, that is why, in fairness to the Scottish people, it is so imperative that the fundamental issue of representation at Westminster should be put clearly, fair and square. I am afraid that I do not think that this Amendment, proposing a Speaker's Conference, serves that purpose with sufficient clarity.
5.49 p.m.
The Earl of PERTH: We have heard a good many Second Reading speeches today. I do not intend to follow the example of various other noble Lords in that respect. However, I recall that again and again in our debates during the Committee stage of the Bill this, that or the other clause has been cited as a recipe for friction between the English and the Scots. If I may say so, the noble Earl, Lord Onslow, ran true to form today in making just that point. To a degree, I take the point seriously. There is a risk that under certain conditions the English may be aroused to anger, but I would hope not in the general working of the Assembly as it is now proposed. Rather do I believe that, if there is goodwill on all sides, we may find that such fears will not develop any more than they developed in the Northern Ireland situation. But there is this one point on which I can agree with the noble Earl, Lord Onslow, and others that there is a potential injustice. Once we in Scotland have an Assembly—if we do have an Assembly—they might
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well say, "All right, but then you cannot expect to have the same representation as before in the Westminster Parliament".
Lord WIGG: Surely the noble Earl is not saying that, supposing devolution dies in its tracks, the over-representation of Scotsmen at Westminster should continue. Surely they are quite separate issues—devolution is one issue, the over-representation of Scots is quite another, and ought to be put right.
The Earl of PERTH: I agree with the noble Lord, Lord Wigg, but I think the point is that this has lasted for a very long time. But, if the devolution Bill goes through and we have an Assembly, it will come to a head and be discussed sooner rather than later. Particularly is that the case under this Amendment. I have always understood that in such constitutional matters a Speaker's Conference is the proper method of considering these things. This Amendment proposes precisely that. Noble Lords who have spoken have been worried not about the constitutional position but what another place might say if we give them this advice. Perhaps it is going too far even to give advice. We are saying, "Please look again", and we find that in the word "may". For these reasons I hope that others will go with the noble Lord, Lord Campbell of Croy, and those who have moved this Amendment.
Earl FERRERS: This Amendment is designed to try to meet the very great concern expressed from all parts of the House at an earlier stage of this Bill. I would be the first to recognise that it is very difficult to accommodate all those points of view. In fact, it is difficult to amend the Bill in an appropriate way, because the Bill is so constructed that however one tries to amend it one runs into trouble. It is one of the great failings, if I may say so to the noble and learned Lord, Lord McCluskey, that the Government have constructed an Assembly and have still not altered or attempted to alter, or even to meet, the problem of representation at Westminster which will follow.
Earlier in this Bill an Amendment was moved by the noble Lords, Lord Monson, Lord Harmar-Nicholls and Lord Wigg and the noble Earl, Lord Onslow, and it

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is not surprising that all those who have spoken have been somewhat muted in their approval of this Amendment, because it does not go anywhere near either of their Amendments. Both those earlier Amendments were defective; the first because it virtually stated the number of Members of Parliament that there should be, and that was obviously unacceptable, and, secondly, they proposed that this should be done before the referendum, so that people knew what they were voting on. We have tried to construct an Amendment of the most modest nature which tries to take into account the situation which will exist. We have all known that the Scots were given greater representation per capita than the English for reasons which we all knew about. Now that there is to be an Assembly the trouble is that they will be getting special representation twice over.
Of all the Amendments I would suggest that this is a fairly modest one because it seeks to allay the fears expressed earlier by people from all parts of the House. It does not delay the referendum; it does not determine the number of Members of Parliament who should be sent from Scotland. Indeed, contrary to what my noble friend Lord Lauderdale quite wrongly said, it does not in fact say that there should be any reduction at all. All it does is to recognise that the situation has changed now that there is an Assembly; should not Parliament therefore reconsider the situation? Several noble Lords, including my noble friend Lord Campbell of Croy, referred to the sensitivity of sending such an Amendment to another place, but as the noble Earl, Lord Perth, said, it only says "may"; it does not say that there shall be a Speaker's Conference. It does not give any sanction; it merely invites the Prime Minister to set up a Speaker's Conference. Indeed, it recognises that the change has come in the same way that it was recognised that there was a change in the Northern Ireland situation and a Speaker's Conference was set up then to recognise the change.
All I would say about this Amendment is that I hope your Lordships will think that it is reasonable, that it tries to meet the very genuine fears expressed earlier and indeed those expressed today. When the noble and learned Lord, Lord Wilson of Langside, says that this obscures the
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issue and we must not fudge the situation for the referendum, one can only conclude that he would like to see a specific figure put into the Bill, so that people in Scotland would know what the price is (an expression that was used earlier) when they come to vote. With great respect to the noble and learned Lord, I do not think that is right. I do not think that one can say at this juncture, "Ah, within a few months we will pick on a figure". It is necessary to have advice as to what that figure should be. The right way to have that advice is presumably by a Speaker's Conference. It only asks for that. It may well be that they would say that the representation should be the same. At least if we pass this Amendment we have tried to meet the real fears that have been expressed, and at least we give another place an opportunity to consider this point again and indeed, if they see fit, to amend the Amendment.
Lord MACKIE of BENSHIE: Before the noble Earl sits down, may I ask whether he is recommending the Amendment because it is wholly negative and harmless? This is the impression he gave me.
Earl FERRERS: The noble Lord, Lord Mackie of Benshie, is quite extraordinary in the construction which he likes to put on almost anything that is said by anyone other than the Liberal Party. The reason why I am suggesting this Amendment is because in fact it ought to be acceptable even to the Liberal Party.
Lord WIGG: May I explain one of the reasons why what I say tonight is muted compared with what I said at an earlier stage in our proceedings? It is because I hoped that at Report stage there would be agreement. I do not need to be consulted, but noble Lords on that side of the House and on the Cross-Benches have expressed views similar to mine. If in fact this Amendment is carried tonight, of a certainty another place is going to reject it. They will reject it for the very good reason that it was on a free vote that they turned down the idea of a Speaker's Conference. I hoped that we would separate the issue of the representation at Westminster from the issue on devolution, plus one other point which I made as strongly as I could at an earlier stage.
It is not a question, as was stated by the noble Lord a few moments ago, of one

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man, one vote; it must be one vote, one value. It was that point which I stressed. I thought I had made some impression on the Committee when I was asked not to press it to a Division—not that I hoped or thought that it would be successful but because I believe that once the issue of Scottish over-representation at Westminster has been raised it will not just go away. It must be dealt with at some time and this Bill is not the place to do it.
The Earl of ONSLOW: I should like to ask my colleagues on our Front Bench a question or two. When my noble friend Lord Ferrers said "may", I am afraid that I got the same impression as the noble Lord, Lord Mackie of Benshie—that my noble friend was under-estimating the effect of it, and that he was saying that it is so gentle that nobody need pay any attention to it. Will my colleagues on the Front Bench please give an undertaking that, if there is a Conservative Government in power soon, they will recommend a Speaker's Conference and will recommend reduction?—because if they do not do that we shall be in a terrible muddle, even on this clause.
Earl FERRERS: If I may answer that question, I think it is customary to use the word "may" because if you use the word "shall" you then have to put in the Bill the sanctions to be employed if the obligation is not met. In fact if we were to continue my noble friend's suggestion and if we were to insert the word "shall" I think it would be appropriate to put in the sanctions if that was not met. If one inserts the word "may" that is as inoffensive as possible.
When the noble Lord, Lord Wigg, says that "one man, one value", ought to be considered I think he is quite right, but I do not think that is the kind of thing that we should consider here. That is precisely the reason why there should be an impartial body, to consider that type of suggestion.
6.5 p.m.
Lord McCLUSKEY: If the noble Earl will consult his noble and learned colleague on the Front Bench, Lord Rawlinson of Ewell, I think he will discover that the first reason that he gave for putting the word "may" rather than the word "shall" is nonsense. This debate began
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about an hour ago and it is proper that I should reply and deal with the matters that have been raised in the course of the debate on this rather important Amendment. I shall illustrate, if I can, its defects and its irrelevance to the devolution debate.
The Government have consistently maintained from the start—and I go back to September 1974 when the White Paper was published, which your Lordships will recall was the White Paper published immediately before this Government was elected to power—a commitment not to change the present levels of representation for Scotland and for Wales as a consequence of devolution. That is quite plain from the White Paper and the Government's position has always been the same. The Government's proposals for devolution do not carry with them any inevitable consequence or change in the representation in another place.
We entirely reject the argument that the proposals are in some way flawed because of the continuing and full participation of Scottish and Welsh members in the consideration of matters which will come before the other place when devolution is achieved. No doubt we shall come to that point when we deal with the other related Amendment. The Government's view derives from a clear appreciation of what the devolution contained in this Bill—and for that matter in the Wales Bill—really entails and also what best provides for the continuing unity of the United Kingdom.
If I may say one word about history, the noble Lord, Lord Campbell of Croy, referred to the history, but my reading of history books has been slightly different from his because I think there was a change in 1832, following the Reform Bill, and that led to an increase of eight in the number of Scottish Members of Parliament.
Lord CAMPBELL of CROY: If the noble and learned Lord will give way, I did not follow the various changes of the Reform Bills in the last century; I said that it was not until the 1885 Bill that representation which reflected the numbers of population was reached.
Lord McCLUSKEY: I am obliged to the noble Lord for making his position

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clear on that, but I think it is right that I should say something about the history because, when I hear my noble friend Lord Wigg saying that the question of Scottish representation has to be looked at again and I hear the noble Lord, Lord Ellenborough, talking about the gross injustice which must be remedied, I must emphasise that what members of this Committee must fully appreciate is that the Treaty of Union wrote in over-representation for Scotland. Those who are now saying that we should come to population parity or something of that kind are really saying that we should re-write the Treaty of Union. If that is not a recipe for breaking up the United Kingdom, I do not know what is. When I hear other noble Lords saying that the threat will come because the English will become discontented with their under-representation I wonder whether I am in some kind of asylum. The threat to the unity of the United Kingdom does not come from the discontented English who have hundreds of Members in a House of 645, or whatever it may be; it comes from discontent in Scotland. That is what the threat comes from.
The Marquess of LINLITHGOW: I should have thought that the re-writing of the Union was one of the things that this Bill is doing.
Baroness ELLIOT of HARWOOD: I should like to remind the noble and learned Lord that if we go back as far as that there were no votes for women in those days. The representation of the people was of a very limited nature and it was only when we reached the 1920s that we got a fair representation. It is no use saying that we are re-writing the Union because the voting at the time of the Union bore no relation to the present electorate since it is only in the present age that women have had a vote.
Lord McCLUSKEY: With respect, I did not say that we were re-writing the Union; it was the noble Marquess, Lord Linlithgow, who said that we were rewriting the Treaty of Union.
The Marquess of LINLITHGOW: If the noble and learned Lord will please forgive me. I hope that I did not misunderstand. I understood the noble and
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learned Lord to say that we would have to re-write the Act of Union. What I am saying is that we are now re-writing the Act of Union with this Bill. If I am wrong, I should like to be shown why.
Lord McCLUSKEY: What I was endeavouring to make clear was that if we take away the over-representation of Scotland—which was part of the Act of Union, was also re-enacted in 1832, was re-enacted in 1918 and even after women got the vote was re-enacted at the end of the war, and which is now contained in the Representation of the People Act of 1948—then we are in fact removing something that was a bargain struck between the Scots and the English in 1707. At that particular time the Scots wanted 50 seats in the Westminster Parliament, the English offered 38 and a compromise was struck with 45, but that was over-representation on any basis. In fact, the basis was probably wealth, not population, but on any basis it was over-representation. That is part of the pillar of Union. It is not I who am trying to re-write the Treaty of Union; it is those who have moved this Amendment and who are striking at this part of the Treaty of Union.
If I may be allowed to continue, having sat very patiently in my seat for an hour—
A noble Lord: This is the Committee stage.
The Earl of PERTH: I just wish to ask the noble and learned Lord, Lord McCluskey, whether he is sure that he is right about the basis of population in regard to the figures at the time of the Act of Union and now.
Lord McCLUSKEY: I think that was not the basis upon which it was approached in 1707. It was based upon the wealth of the country and at that time I think it was estimated that the wealth of Scotland was one-fortieth of the wealth of England. At least that is what the history books tell me. I should like to say something else which is of some importance, particularly to those noble Lords who are in this Chamber and who supported another measure in the lifetime of the last Parliament. This disproportion between population and representation is hardly unique

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to the United Kingdom. It is not uncommon to find over-representation in related situations. In other words, weighting is commonly to be found where there is a desire to compensate for the disadvantage of smallness and to prevent the small partners in some kind of union or association from being swamped by the larger partners.
This is true of the European Economic Community. When I refer to figures, I shall give the 1973 figures, which still obtain, but, from a German point of view, everybody else who participates in the work of the European Parliament or that of the Council of Ministers or any other EEC body is grossly over-represented—some more so than others. I shall give some examples from the United Kingdom point of view. The United Kingdom has 36 Members in the European Parliament; it has a population of 55 million. Luxembourg has a population of about 300,000 and it has six Members. On a proportional basis, Luxembourg ought to have one-fifth of a Member, or perhaps a Member attending every fifth session. Yet Members, who are prepared to wring their hands about disproportion now, did not point out this anomaly or suggest that it should be ironed out in 1972 or 1973.
The Earl of LAUDERDALE: Would the noble and learned Lord allow me to intervene? He is being very patient, and I am sure when he has had his dinner he will feel better. As a matter of fact during the speech on the European Parliament and the Bill to send British Members to it, it was made clear over and over again that Luxembourg was over-represented for the reasons the noble Lord has given. There has been no mystery about it; it has not been hidden away. We all know it. Everybody who has followed the European legislation is very well aware of it. But I do not want to taunt the noble Lord. I hope he will have a good dinner and enjoy it when the Division is over.
Lord McCLUSKEY: If the noble Earl would care to listen to me, what I want to ask him is what did he do about it. The answer is, nothing; he voted for the measure and the over-representation for perfectly good and understandable reasons. We are talking about a Parliament. Exactly the same situation is to be found in the Council of Ministers, which is a
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Government, where we have 10 votes on the Council. Everyone knows the structure of voting. Luxembourg has two votes when it ought to have about one-tenth of a vote; Ireland has three when it ought to have fewer than one on a strict comparison; Holland has five when it ought to have 2½. The same situation is to be found in relation to the Senate of the United States. This is nothing unique, nothing new.
The Earl of ONSLOW: It does not apply to the House of Representatives, which has equal representation.
Lord McCLUSKEY: I did not mention the House of Representatives; I quite deliberately mentioned the Senate. If this situation is found elsewhere, and is approved, as it was in the case of Europe, by noble Lords opposite, if it was acceptable at the time of the Treaty of Union, and acceptable since, including after women got the vote in 1918, and in 1948, it must be something in the devolution Bill which has upset noble Lords opposite, and I ask myself what can it be. Is the Treaty of Union to be rewritten? The answer is surely, No. All those matters which are essential to the unity of the United Kingdom will remain the sole responsibility of the Parliament at Westminster and that responsibility will continue to be exercised here and will be in no way diminished. It is here that conduct of international affairs will be decided. It is here that policies will be decided on national security and defence. It is here that we deal with trade and industry, employment, industrial relations, the whole management of the economy, energy, our system of social security and many other essential matters which will be formulated, questioned and decided here.
The exercise of responsibility for those matters vitally affects every single member of the United Kingdom, and there can be no good argument for seeking a reduction in the representation of the essential interests of those who happen to live in Scotland, or for that matter Wales, on the achievement of devolution. These matters I have mentioned are not to be touched significantly by devolution at all. What is more—and this ought to be remembered—the proposals before this Committee in this Bill in no way diminish

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the inherent sovereignty of Parliament to legislate on all matters, including those to be devolved. The maintenance of that sovereignty is essential to the concept of devolution; it is both essential and inescapable.
Parliament is being asked to provide for devolution to elected Assemblies in Scotland and Wales. It will retain its power to modify and transform this Bill—in other words, the devolution settlement itself—and that sovereignty needs to rest on full representation from all parts of the United Kingdom. I think much of this was said in a different form by my noble and learned friend the Lord Chancellor when we debated the earlier Amendment, but it is important to repeat it as I apprehend that some Members may wish to vote on this matter. The exercise by the Secretary of State of his reserved powers, to reject an Assembly Bill, to prevent or require Executive action, and to revoke subordinate Instruments which would or might affect a reserved matter or which would not be in the public interest, will be subject to approval by Parliament, except of course where certain international obligations are concerned. There is, therefore, every reason not to change, but to maintain, the full right of representation from Scotland and Wales.
Let me come on to some of the points taken in the debate. The noble Lord, Lord Campbell of Croy, mentioned Northern Ireland. There was an agreement between the Parties to a Speaker's Conference on Northern Ireland, and that agreement implied a further agreement; namely, that it was possible and desirable to consider and deal with that issue now without simultaneously considering the position of the rest of the United Kingdom. It also implied agreement that there was at least a prima facie case for an increase in Northern Ireland representation. Whatever one may think about the merits of this argument, there is no such measure of agreement in relation to representation from Scotland at the present time.
The noble Lord, Lord Campbell of Croy, said, and other noble Lords repeated, that we should give the Members of another place a chance to look at the matter again. They looked at it on 1st February 1977, and defeated a similar proposal; they looked at it again on 31st January 1978, and defeated a similar proposal;
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they looked at it again, in relation to the Wales Bill, on 25th April 1978, and defeated a similar proposal. Surely, as the noble Lord, Lord Campbell, said, or at least implied, and Lord Mackie perhaps said it more clearly, this is a matter on which this undemocratic House should not lecture the democratic Chamber—the structure of the democratic Chamber.
I want to come to a serious, and, I believe, a vital political consideration. Many moderate Scots—I will not endeavour to assess their number—support devolution and renounce more extreme solutions. They consider that the degree of devolution in this Bill is moderate and reasonable and does not deprive them of a proper say in vital United Kingdom matters. But if, as a result of this type of Amendment, they come to lose perhaps one-fifth of their representation in the United Kingdom Parliament, will they not be bound to reconsider their attitudes? Some of them may be driven to the logical conclusion that more power should be devolved, if this is the price to be demanded. Others may in fact lose their moderation altogether.
I believe that this Amendment—not our refusal to accept it—could engender, encourage, foster very dangerous attitudes indeed. I will not be outdone by Lord Campbell or anyone else in proclaiming support for the unity of the United Kingdom. The Government are fully supporting and trying to preserve that unity. In our judgment, this kind of Amendment, saying to the Scots, "You must lose the representation that was part of the Union settlement", is an invitation to depart from that settlement in a most serious way.
Earl FERRERS: If the noble and learned Lord reads the Amendment, it does not say that.
Lord McCLUSKEY: I am just coming to read the Amendment; the noble Earl should not have tempted me. First of all, what this Amendment displays is that the Conservative Party lack the courage to say to Scotland what they want. They will not put a number here because they are frightened to say to the Scots what that number, in their view, would be. They will not even tell us what it is that they would represent to the Speaker's Conference. That is why the Amendment has

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taken this form, which was described eloquently and certainly accurately by the noble Lord, Lord Mackie of Benshie; it is a limpid thing indeed, starting with the word, "may".
May I point out something else. It is also suggested by the noble Earl, Lord Ferrers, that it does not necessarily involve a reduction in Scottish constituencies. It certainly does not necessarily involve a reduction, but it does not even give the option to this Conference of considering perhaps raising the number of English constituencies as well, as part of the readjustment which might be necessary. That is a technical defect, but it is one that is not put before the Speaker's Conference. In my submission, this Amendment is misguided in the context of devolution. It has been rejected repeatedly in the other place. In my submission, it should not be moved into the Bill in this House. It should he rejected here and now.
6.20 p.m.
Lord CAMPBELL of CROY: The Amendment, which I moved rather quietly a little over an hour ago, has certainly stimulated some lively debate. I shall deal very briefly with some of the points that have been raised because my noble friend Lord Ferrers dealt with others.
On the one hand, the noble and learned Lord, Lord Wilson of Langside, criticised the Amendment because he thought that it did not go far enough. He was thinking in terms of the referendum, and that the people of Scotland who were entitled to vote should know what was involved as regards representation in the future in our Parliamentary institutions. On the other hand, the noble Lord, Lord Mackie of Benshie, did not look with great favour upon the Amendment because he thought that we should not be suggesting almost anything to the other place on this subject. Later he intervened to criticise the Amendment as being too limpid and not having enough in it.
However, as I explained when I moved the Amendment, we were very conscious of the delicacy involved in not appearing to lecture another place. We have no intention of doing that. I am not surprised that the noble Lord, Lord Mackie, himself indicated that he was in favour of
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a reduction in the number of Members representing Scotland in Westminster if there were to be an Assembly established with devolved legislative powers in Edinburgh. I am not surprised because his Leader, Mr. David Steel, has publicly stated that he accepts that there would be a need for a reduction in the membership of Scottish Members at Westminster. So, in principle the Liberals differ from the Government—there is a breach in the Lib-Lab pact over this point—and the noble Lord's only criticism of my Amendment is that we should not seek to send anything at all to the other place on this subject.
Lord MACKIE of BENSHIE: The noble Lord is making my criticism somewhat limpid too! All I said was that if the other place wants to have a Speaker's Conference it will have it. It seems to me to be a perfectly simple point.
Lord CAMPBELL of CROY: I turn to the noble Lord, Lord Wigg, and his criticism. He said that the Amendment did not go far enough. I must again point out to him that the Amendments which were considered in another place and which related to a Speaker's Conference were not the same as this Amendment, and suffered from the defect that the Speaker's Conference would have been set up at an earlier stage—not after the Assembly had sat—and would therefore have had the effect of delay. This Amendment is different from what has been considered in another place. The noble Lord, Lord Wigg, expressed in colourful terms his dislike of the Bill as a whole. But I should say that to stipulate, as he suggested, a figure of 57 in an Amendment which we sent to another place would surely be much more open to the charge that we were interfering or seeking to fix the representation in another place than what is proposed in this Amendment. For that reason, it would indeed be much more certain of being rejected in another place than this Amendment.
Lord McCLUSKEY: I can understand the noble Lord, Lord Campbell of Croy, not wanting to offend the other place, but can he inform the Committee as to what representation his Party will make to the Speaker's Conference about the numbers?
Lord CAMPBELL of CROY: That is a long way ahead, but I shall come to that point. I have already indicated, when referring to the report of the Royal Commission which spent four and a half years discussing these constitutional matters, that in its scheme for legislative devolution it suggested the figure of about 57. I was delighted that the noble and learned Lord, Lord Kilbrandon, came into our debate soon after I had been speaking on that subject. Indeed, I see that he is here now. I should have thought that that in itself was an indication from an impartial body of the kind of figure which a Speaker's Conference could anyway have at the back of its mind. However, that would all happen some months ahead. I have not gone further than to point out that the Kilbrandon Commission did not run away from the problem. It squared up to it and addressed itself to the question of representation, and indicated that in its opinion it would have to be a related subject if an Assembly with legislative powers were to be set up.
I must make it clear that this Amendment does not seek to lecture to another place or in any way to interfere or dictate. That is why it is in these terms. It has been criticised as limpid and not going far enough. It would not have effect unless the Prime Minister of the day initiated the action, and it would be after an Assembly had been set up. I agree that there can be no question of your Lordships' Committee and later your Lordships' House telling another place what to do about this matter. There is no question of that at all. It is simply a question of giving another place the opportunity again to consider this matter in a different form.
The noble and learned Lord, Lord McCluskey, said at the beginning—and this is what really must, of course, be the background to his whole approach to the matter—that the Government have given a firm commitment, and did so some time ago, that in putting forward proposals in a Bill for devolution of this kind they would not in any way disturb the representation at Westminster of Scotland or Wales. Given that the Government have given that commitment—whether or not they were wise to do so is another matter—it means that the noble and learned Lord is in an impossible position today
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to give way at all on this matter and he has to stick to that. However, I say to him that the Government may have given that commitment contrary to the recommendations of the Kilbrandon Commission, but that will not remove the probability that there will be great dissatisfaction, even resentment, in England later on. That is what I am worried about: that is what is known as the English backlash.
Clearly the noble and learned Lord and I have a different estimate. I believe that he has underestimated what could be the situation in two or three years' time. Of course, I am fully aware, like him, of certain dissatisfactions with the present system North of the Border. Having been the chief executive under the devolved administration for nearly four years I would be the last person to try to defend exactly the position as it is now. However, that is quite a different matter from saying that there will never be any dissatisfaction South of the Border—that England will just be happy and we need not bother about the English; it is the Scots who are really causing the problem.
The noble and learned Lord also referred to international organisations and the EEC. I shall only say that as soon as we get into international organisations the whole question of parity of voting powers and representation disappears completely. In the United Nations Assembly the United States of America has one vote and Luxembourg and all the tiny independent countries in the world only have one vote. As soon as we get into the international sphere, of course, the situation is quite different.
The noble and learned Lord who has helped us a great deal with great stamina, for what is now nearly 12 days of the Committee stage, when some of his colleagues fell by the wayside through illness—I am glad to see that the noble Lord, Lord Kirkhill, is back again today—has today told us that a commitment has been given. That, of course, has restricted anything he had been able to say to us today because the Government have given that commitment and they will not go back on it. So I know that it is not possible for me to persuade the noble and learned Lord, and with his distinguished advocacy he has been putting the Govern-

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ment's case. However, I believe that the reply which he has given should strengthen those who consider that the Amendment does not go far enough, to support it. I believe that this is a matter which we should now put to the test.
6.29 p.m.
On Question, Whether the said Amendment (No. 327) shall be agreed to?
Their Lordships divided: Contents, 102; Not-Contents, 93.

Stewart of Alvechurch, B.

Wallace of Coslany, L.

Winterbottom, L.

Stone, L.

Wigg, L.

Wynne-Jones, L.

Strabolgi, L. [Teller.]

Wigoder, L.

Young of Dartington, L.

Tanlaw, L.

Willis, L.

Younger of Leckie, V.

Taylor of Gryfe, L.

Wilson of High Wray, L.

Taylor of Mansfield, L.

Wilson of Langside, L.

Resolved in the affirmative, and Amendment agreed to accordingly.
Clause 62 [Status and remuneration of certain officers and servants]:
[Amendment No. 204 not moved.]
6.38 p.m.
The Earl of SELKIRK The Earl of SELKIRK moved Amendment No. 205:
Page 30, line 12, leave out ("state") and insert ("United Kingdom").
The noble Earl said: As I came to read this Bill, at Clause 62 I came upon the phrase:
"the home civil service of the state".
Previously I have never seen the home Civil Service referred to in these terms. I should have thought it might have been adequate to have said, "the Home Civil Service". However, if you want to add anything to that, I should have thought that the correct words were, "the United Kingdom". The reason—apart from other things—is that the word "state" is equivocal in the English language; it can refer either to a province of the federation or to the federation government. Both those are possible interpretations of the word. I should have thought that it would be very much clearer if we said "of the United Kingdom".I think I am right in saying that it does not in any way change the meaning.
As I am speaking I should like to ask the question: Why is the Diplomatic Service not included? Why must it be the Home Civil Service? Indeed, the Chairman of the Highlands and Islands Board was from the Diplomatic Service. Is there any reason why the phrase "Diplomatic Service" or the phrase "the Home Civil Service" should not, in fact, be included? I mention that only because it is a possibility that should not necessarily be excluded. I beg to move.
Lord McCLUSKEY: In fact, a variety of terms are used in legislation to refer to the Civil Service. I would refer the noble Earl to Article 2(1)(a) of the Minister for the Civil Service Order 1968, which refers
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to the "civil service of the state" as an omnibus expression covering all branches of the Civil Service, including the Home Civil Service. That is the wording that has been adopted in the Scotland Bill and, for that matter, in the Wales Bill. On the other hand the Civil Service Order in Council of 1969 refers to "Her Majesty's home civil service". This wording could equally well have been used in the present case. We use the term "home civil service" because that is continuing the status quo. The people who now do this kind of work are members of the Home Civil Service.
Although different forms of wording could have been used, one point is clear beyond doubt; the reference to the Home Civil Service of the State could in no circumstances be construed as referring to a separate Scottish Civil Service, because Scotland is not a State in any sense of the word, and not in either of the senses figured by the noble Earl. If there were any doubt about its meaning, the reference could not in any case be taken to imply that the Assembly could establish its own Civil Service. The Bill does not give the Assembly legislative competence in this field. This was a point which my noble friend Lord Ponsonhy recognised when he moved Amendment No. 170, which sought to add a group—namely, Scottish Public Service—to Schedule 10.
If the noble Earl is dissatisfied with my explanation and with the wording in the Bill, then perhaps we could consider together—and I should be happy to do this at any time with him—possibly using "Her Majesty's home Civil Service". But I do not know whether that is really satisfactory to cover the point that he has in mind. Certainly I would argue that the wording in the Bill is adequate for the purpose that I have sought to explain.
6.42 p.m.
Lord CAMPBELL of CROY: My noble friend mentioned the Diplomatic Service and made a reference to the chairman of the Highland Board. I ought just for the record, as that was an appoint-

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ment for which I was responsible, say that it was not a secondment. Nowadays people can be seconded between industry amd the Civil Service—and personally I think the exchanges of this kind are fruitful—but in that case it was someone who had retired, so it was not an appointment made as a civil servant.
Lord MORRIS: May I briefly support the noble Earl's Amendment just for one small but important reason. The term "State" has a rather unpleasant totalitarian ring about it, be it of the Left or of the Right.
Lord HARMAR-NICHOLLS: Why does the Front Bench opposite shy away from wanting to use "United Kingdom"? It seems as though they are terrified that this Scotland Bill will be associated with the United Kingdom. Perhaps it would be better if my original word of "dynamite" were brought into it. But I should have thought that "United Kingdom" would express what the Government ought to have in mind. My noble friend has an Amendment that will eventually be reached which says what my noble friend Lord Selkirk may have had in mind. The Long Title of this Bill is not adequate. We ought to amend it to make it a clean Parliamentary measure. It ought to be the "Scotland Bill and the United Kingdom" because there are so many things in it which affect the United Kingdom.
I have been looking at these matters now for nearly 30 years and I have never seen a Bill of this length and fundamental importance where the Government Front Bench has refused to accept even the most minor Amendments. I have never seen a greater reluctance to appear to accept even minor Amendments in order to give satisfaction than we have seen on this Bill.
Lord McCLUSKEY: Would the noble Lord give way a moment? I am not reluctant to accept a change in the wording of the Bill, but I do not think that until I spoke the noble Earl had heard the reason for using these words. The words which he proposes are not precedented. The words which I use are precedented. It may be that in the light of these exchanges the noble Earl and I can reach an agreement about this matter.
Lord HARMAR-NICHOLLS: One has to distinguish the Government from the noble and learned Lord. I do because I have such an admiration for him, and I have the opposite of admiration for the Government that is sponsoring this measure. He has said that he is prepared to think of calling it "Her Majesty's home Civil Service" as an alternative. Why cannot we have the United Kingdom mentioned in this? It is going to be very much affected by it. It is on those grounds that I support my noble friend. This is one little concession—if you can call it that—which could give at any rate the appearance that the Government have not made their minds up so completely that they are not even prepared to have a dot or a comma altered. The Long Title of the Bill eventually has to be altered to use the words "United Kingdom". Therefore we may just as well start now.
The noble and learned Lord retrieved himself to some extent, but not sufficiently. Why be so anti the poor United Kingdom? I can understand it from the noble Lord, Lord Mackie of Benshie, because he has made no bones about it that his only concern is for Scotland. I admire him for that, but since he sits here in the middle of the United Kingdom I should like to see from him, and certainly from the noble and learned Lord, just a little recognition that Scotland for the time being is still part of the United Kingdom.
Lord MACKIE of BENSHIE: I have constantly said that I was concerned about the United Kingdom and that my concern for an Assembly was for Scotland and the United Kingdom. But the noble and learned Lord is so obtuse that he cannot possibly take in what is said to him repeatedly from all sides of the Committee, so perhaps I am not alone in being misunderstood.
Lord McCLUSKEY: While I have been listening with one ear to the noble Lord—and he will forgive me for not employing both—I have been rapidly looking through the Bill, and I find that "United Kingdom" is mentioned in the Bill on page 16, line 36, page 17, line 37, page 18, line 29, page 22, line 24, and page 29, line 35. These are the only pages I have looked at so far.
Lord DRUMALBYN: I think that the noble and learned Lord's suggestion is a

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very happy one, and I hope that my noble friend will accept it. I am sure that the Home Civil Service in Scotland serving the Assembly will be glad to be identified as Her Majesty's Home Civil Service. May I just ask one question, to which I ought to know the answer but I am afraid I do not: is the Civil Service of Northern Ireland part of Her Majesty's Home Civil Service? I gather it is not. Then surely "United Kingdom" are not the right words to use, because it is the United Kingdom of Great Britain and Northern Ireland.
6.47 p.m.
The Earl of SELKIRK: I am happy to accept the noble and learned Lord's suggestion. It is a very small matter, which I accept. We are now on the tenth day and I think we have been given one Amendment. The Government should remember that: one Amendment in ten days; 80 hours of discussion. That is all the Government have given. I am not asking very much, and I shall not press it. When I read this Bill through the question passed through my mind for a moment, are they going to call Scotland a State? I admit that when you read it more carefully it does not leave any doubt. I think the word is ugly. We talk about "Government's servants" and "Government offices", and we talk about nationalised railways. We do not talk about State railways in this country. I can only say that it shows how careful we must be not to let the Government set up a bad precedent. I personally think it is an ugly phrase, but I will not go further than that. I beg leave to withdraw the Amendment.
Lord WIGG: May I just help the Government with some statistics?
The DEPUTY CHAIRMAN of COMMITTEES (Lord Nugent of Guildford): There is a Motion before the Committee that this Amendment be withdrawn. Is it your Lordships' pleasure that this Amendment be withdrawn?
Amendment, by leave, withdrawn.
6.49 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 286:
Page 30, line 39, after ("any") insert ("description of").
The noble and learned Lord said: There are two Amendments which are related: Amendments Nos. 286 and 287. They are both to the same effect. They are related in fact to Amendment No. 261 which has already been made to paragraph 23 of Schedule 10. These Amendments are all to ensure beyond doubt that the references in Clause 62(5) to "designnated persons" are not construed as references to persons as individuals but to persons described by reference to the capacity in which they perform the services. I hope I may be forgiven, in dealing with this Amendment, if I briefly try to answer a point raised by the noble Earl, Lord Selkirk, when he spoke on the 10th May, and his question was asked in cloumn 983 of the Official Report. He raised two points, one of which has already been dealt with on the previous Amendment. The other point was whether a person appointed by a Scottish Secretary could enjoy Civil Service terms and conditions of service.
This is the position: Scottish Secretaries will appoint their own officers and servants under Clause 20(9) and these officers and servants will be members of the home Civil Service under Clause 62(1). For normal, what might be called permanent, appointments, the individual concerned will need a certificate of qualification issued by the Civil Service Commissioners. Scottish Secretaries will also, like Ministers, be able to make period appointments. Special advisers to Ministers are normally appointed on this basis and it would be open to Scottish Secretaries to make similar appointments. Holders of period appointments would be civil servants and would be appointed on Civil Service terms, but they would not be certificated by the Civil Service Commissioners; such appointments are of less than five years' duration and can be repeated or extended only in exceptional circumstances.
Paragraph 23(a) of Schedule 10 enables the Scottish Secretary to determine the terms and conditions of service of persons who are paid by a Scottish Secretary, except those persons who fall within the coverage of Clause 62. Paragraph 23(a) can therefore apply only to those people who cannot be described as officers and servants and who are not therefore civil servants. For example, if a Scottish

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Secretary wished to employ a consultant on a fee-paying basis, he could do so under paragraph 23(a). Thus, the answer to the question put to me by the noble Earl, Lord Selkirk, is that a Scottish Secretary will be able to appoint his own officers and servants, who must be civil servants. Paragraph 23 of Part II of Schedule 10 would not enable a Scottish Secretary to bring in non-civil servants on Civil Service terms because anyone employed on this basis would be classed as an officer or servant and would, by virtue of Clause 62, have to be a civil servant.
The Earl of SELKIRK: I am grateful to the noble and learned Lord for that information. I understand, then, that the Scottish Secretary cannot employ anyone unless he has a certificate and is approved by the Civil Service Commission or the Minister in charge of the Civil Service. In that event, the Amendment is no more than a drafting Amendment making it clear that these people are appointed by their tasks and offices and are not necessarily referred to individually. I hope I have understood the noble and learned Lord aright. This is very important because it means that he will have nobody on his staff who is not part of the home Civil Service.
Lord McCLUSKEY: I accept entirely what the noble Earl said, except that holders of period appointments would not be certificated by the Civil Service Commissioners, as I said.
Lord WIGG: I now make the point I had intended to make a little earlier. It is simply to tell my noble and learned friend Lord McCluskey not to be downhearted at the statistics given by the noble Earl, Lord Selkirk, who pointed out that after 10 days and 80 hours of deliberations only one Amendment had been accepted. When one compares that record—the fact that one Amendment here has been accepted—with the Conservative Party's record on the European Community Act (not only here but in another place, and both in Committee and on Report) one sees that not one Amendment of any kind did they accept. I therefore feel that the Government are doing rather well in having accepted one.
Lord McCLUSKEY: An Amendment or two was accepted in the other place

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and we are certainly going to accept more Amendments—
Several noble Lords: Hear, hear!
Lord McCLUSKEY: —or redraft certain parts, so one must say, "Live horse and you will get oats".
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 287:
Page 30, line 42, after ("person") insert ("of a description").
On Question, Amendment agreed to.
Clause 62, as amended, agreed to.
Clause 63 agreed to.
Lord STRABOLGI: This may be a good moment to halt the Committee to take other legislation and a break. I therefore beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

FILMS BILL [H.L.]
6.55 p.m.
Lord BIRKETT: My Lords, I beg to move that this Bill be now read a second time. I hope to detain your Lordships for an extraordinarily short time in moving this Motion. This is I believe an entirely beneficial and simple Bill. It is, as its title implies, a Bill to amend one particular section of the Films Act 1960. That Act dealt largely with the question of quota, "quota" being the cinema industry's short term for the obligation laid on cinemas to show a certain number of British films in any given year. That obligation of course is now to show a certain proportion of British and Common Market films, but the proportion remains the same, usually about 30 per cent. in the case of first feature films.
Section 6 of the Act dealt with one particular and rather individual problem. It sometimes happens that a cinema showing a foreign film will find quite by surprise that it has on its hands a success and that the film continues, by public demand as it

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were, to run for a considerable length of time. Because the provisions of the quota run year by year, exactly annually, it can happen that a cinema finding itself with a successful and long-running film on its hand is or might be obliged to take it off for a while simply to fulfil its quota obligations for that particular 12-month period and then put it back on again. By the time it comes back on again public interest may have evaporated, so that the whole business of taking it off in these circumstances would be frustrating for the public and obviously very poor business for the cinema.
Section 6 of the Act was designed to cope with the situation simply by saying that a cinema might, if it wished, make application to the Board of Trade, as it then was, via the Cinematograph Films Council, the most representative and authoritative body in the film industry, for a direction to be issued that its quota obligations could be taken over a two-year period; two years could be lumped together and averaged out. This amounted to, as it were, borrowing one's allowance of foreign films from the next year, and the effect of course was that exactly the same numbers of foreign and British films were shown as would have been shown, but there was simply an averaging out.
It was an entirely helpful piece of legislation. Unfortunately, the phrase in the Act which deals with this application says that the application must be made before the film is shown. Noble Lords will realise that in most cases it is not possible to predict which films will and which will not become great successes. This provision is intended to deal only with considerable success because it specifies that the film must be running for eight weeks before it applies, so it is clear that in most cases it is not possible to know in advance whether or not one will have that sort of film on one's hands.
Cinema proprietors are nothing if not optimistic, so noble Lords can imagine the result; they simply make application for every foreign film they are about to show on the off-chance that it may become one of the successes for which the provision was intended. This means of course that an enormous amount of wasted effort goes on because the Cinematograph Films Council and the Department of Trade
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must process an enormous number of applications which in the long run will be useless because they will not apply.
The Amendment proposed in the Bill deals with this problem simply. At this point I should perhaps mention two other small alterations in drafting which are what one might call modernising amendments simply to cope with the situation as it now is. For example, there is a bracket after the words "foreign film", so that it reads
"a foreign film (other than a Community film)"
That has come upon us with EEC legislation since the Films Act 1960 was passed. Also, where it used to say "Board of Trade" the phrase now reads, "Secretary of State for Trade". Those are automatic and what one might call modernising amendments, but the real amendment lies in some simple words. The 1960 Act said at the appropriate point:
"Where a film is to be exhibited at a cinema, and before it is exhibited there, an application for a direction"
may be made. The new Bill that I am proposing to your Lordships today says:
"Where a film … is to be or is being exhibited at a cinema and before or while it is exhibited there…".
In these tiny phrases is contained the entire amendment proposed by the Bill. I believe that the Bill will save an enormous amount of wasted effort on the part of cinemas, the Cinematograph Films Council, and the Department of Trade. It will have no other effect whatsoever, except to prevent this waste of labour. I believe, therefore, that it is a Bill which will be of advantage to many people, and of disadvantage to no one whatever. Accordingly, I beg to move.
Moved, That the Bill be now read 2ª—(Lord Birkett.)
7.1 p.m.
Lord REDESDALE: My Lords, we should all congratulate the noble Lord, Lord Birkett, upon bringing forward this small, but very useful Bill. I shall detain your Lordships only for a very short time, as I felt that the noble Lord, Lord Birkett, put the case very clearly. From these Benches we entirely, and wholeheartedly, support it. It would seem that the Bill could save a considerable amount of time for the Department of Trade and for the

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Cinematograph Films Council. As the noble Lord said, very few films are runaway successes, and even on the most optimistic figure only about 30 per cent. might be regarded in this way. So the Bill should save 70 per cent. of the labour on the applications which are brought forward. I hope that the Bill passes speedily through the House.
7.2 p.m.
Lord BEAUMONT of WHITLEY: My Lords, I, too, should like to join in the general welcome for the Bill. It is very nice to have Bills which enable people to do things rather than stop them doing things. It is very good to have Bills which mean less work and less bureaucracy, rather than those Bills which mean the opposite. The Bill proposes a highly desirable amendment, and I believe that everyone is extremely grateful to the noble Lord, Lord Birkett, for putting it forward.
Of course, I cannot resist the opportunity —even though it will take me one minute, instead of the nought that is still on my "board"—to say that this does not necessarily mean that one approves of the quota system as such, and that a far greater simplification would be to abolish the quota system. Like most methods of protection, it in fact probably has rather harmful results. It may be to a certain extent responsible for the appalling state in which the British film industry is at the moment, or has been until fairly recently, and it may also deprive the few good films that we produce of some of their share of the overseas market, because of reciprocal feelings and actions on behalf of other countries. But as the noble Lord, Lord Birkett, courteously pointed out to me on the phone when I raised this matter, it is hardly germane to the Bill, which itself is totally to be welcomed, and I so welcome it.
7.4 p.m.
Lord HARMAR-NICHOLLS: My Lords, I should like to say a few words in support of what has been said in welcoming the move being made by the noble Lord, Lord Birkett. Any assistance, no matter how tiny, that can be given to the cinema industry in this country, and in particular to proprietors of cinemas, can only be welcomed. The Bill represents a tiny, but welcome, contribution to help
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counter the paper work, the increases in the rates, the interference, and all the other matters which have made it almost impossible for people who have provided cinemas or leisure centres in small towns and villages to continue to do so.
The Bill will not make a great contribution to turning the tide which flows against these people; nevertheless, it is a contribution. Those of us in business today know how overwhelming paper work can be, particularly the kind of paper work in which, if a certain date is missed, a matter of principle has to go by default. The Bill is a tiny contribution towards helping to maintain cinemas in this country; this can only be welcomed. I hope that it is the first of many other moves to remove bureaucracy, so that people who want to provide these kind of leisure activities can do so without being stifled.
7.5 p.m.
Lord WALLACE of COSLANY: My Lords, I should like to support the noble Lord, Lord Harmar-Nicholls, in this move to do away with a certain amount of bureaucracy—that may stagger him. First, I wish to thank the noble Lord, Lord Birkett, for bringing forward this small, but very important and useful, Bill, and indeed for the way in which he presented his case for it, albeit briefly. Before going further, I should add that the Government warmly support the Bill, and I hope that the House will give it a speedy passage. I have no authority to make any further comments for another place. The noble Lord, Lord Beaumont of Whitley, mentioned quotas in his speech of commendation. Of course this is a vexed question, and I would remind him that the committee chaired by the right honourable Sir Harold Wilson is looking into all matters relating to films and can, if it wishes, report on the future of quotas. Perhaps the noble Lord will contact my right honourable friend, or his committee, and put forward various suggestions.
The noble Lord, Lord Birkett, has explained the purposes of the Bill so well that there is no need for me to add anything other than a few words of explanation, which may be helpful towards underlining what he said. Section 6 of the Films Act 1960 allows the Secretary

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of State for Trade, after application by a exhibitor, before—and it is important to note the word "before"—exhibition of a registered foreign film at the exhibitor's cinema, and after consultation with the statutory advisory body, the Cinematograph Films Council, to issue a direction enabling that cinema to fulfil its statutory quota by showings of British and Community films over the current year and the following year taken together, rather than in one year. This is, of course, of great convenience to exhibitors when they find that they are likely to have a long run of a foreign film which they do not wish to interrupt in order to fulfil their quota obligations within that same year.
I have stressed that the application has to be made before exhibition of the registered foreign film commences. This is a statutory requirement, and as far as we can discover, there is no reason why this time bar provision was put into the Act. It has, however, proved to be of great inconvenience to exhibitors. It means that they have to apply before they know whether the pulling power of a film is as good as they hope. Consequently, many exhibitors apply for a direction in anticipation of a good run—which direction is later found to be unnecessary, the film not having lived up to expectations.
This causes a great deal of work for exhibitors, and at the end of April 1977 nearly 70 per cent. of the directions issued had been of no effect. In February 1975 the Cinematograph Films Council recommended that Section 6 of the 1960 Act be amended to enable exhibitors to apply for a combination of quota periods before, and after, exhibition had commenced. The Government were awaiting a suitable legislative opportunity to take action on this recommendation, but the noble Lord, Lord Birkett, has stolen the march on us. It is a sensible amendment, and one which, if enacted, will save work and remove a slight source of irritation to cinema exhibitors. The Government commend and support the Bill, and I, in turn, commend it to your Lordships.
7.9 p.m.
Lord BIRKETT: My Lords, I am extremely grateful to all noble Lords who have so kindly supported this small Bill.

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I am grateful to the noble Lord, Lord Redesdale, for emphasising the statistic of 70 per cent.; 70 per cent. of wasted effort is indeed a very large amount. Having said what I said over the telephone, it would not behold me to make much reference to the fine free trading speech that came from the Liberal Benches, but it was nice to hear it. I was pleased to note that the noble Lord, Lord Harmar-Nicholls, has warmth and sympathy for the film industry in general, and I know that it will hearten everybody to read his words.
I am also grateful to the Government for their support of this Bill. I, too, am looking forward enormously to the very much larger issues which will be discussed by Sir Harold's Committee. I think the whole film industry is looking forward to that as being the most important thing in our lives. I am grateful to noble Lords for all their support.
On Question, Bill read 2ª, and committed to a Committee of the Whole House.
Lord STRABOLGI: My Lords, I beg to move that the House do now adjourn during pleasure until 8 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[Sitting suspended from 7.10 p.m. until 8 p.m.]

SCOTLAND BILL
House again in Committee.
Clause 64 [Public bodies]:
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 207:
Page 31, line 18, at beginning insert ("Subject to the reservation of functions listed in Schedule 15 to this Act").
The noble Lord said: The noble and learned Lord, Lord McCluskey, will immediately recognise that this is another Amendment on Schedule 15; and the last Amendment which I moved served as notice that an explanation was needed about how Schedule 15 fits into the Bill. On that occasion, the noble and learned Lord was good enough to say that he himself was somewhat mystified and not

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completely satisfied about the role which Schedule 15 is to play in the Bill, and that he hoped at a later stage to be able to inform the Committee about it; and, of course, I was very glad to give him the time in which to do that. I hope he may be ready today to tell us more about Schedule 15, because that is the purpose of this Amendment; it is simply a probing Amendment.
Perhaps I may remind your Lordships that I had two points. First of all, Schedule 15 has against it, in the rubric, reference to Clause 77. It is therefore related to that clause. But Clause 77 is simply the definition clause, and contains the definition of "reserved functions"; and that raised in my mind the question where Schedule 15 fitted in, as it was related only to a definition clause. Then, the second point which I raised, and which I think the noble and learned Lord very much took on board, was that, even if one gets that explanation, there is a danger of some ambiguity in the Bill because, al-although the definition of the term "reserved functions" is in Clause 77, the term "reserved functions" appears in different parts of the Bill; and when someone is reading the Bill they may well think that it simply means functions which are reserved rather than devolved, whereas under the definition, "reserved functions" has a very specific meaning in the Bill. They are simply functions reserved for certain bodies which are listed in Schedule 15. So, quite apart from the first point about how Schedule 15 fits into the Bill, I think one also wants to raise the drafting point of whether it is satisfactory to have a possible misunderstanding about the term "reserved functions" when one meets it in the Bill.
If we can go to the immediately preceding clause (I did not raise this on the Question, Whether the clause shall stand part? because I realised it would be more convenient to the Committee if I raised it now) we see that in Clause 63, at the beginning of line 13 on page 31, there is the term "reserved functions". Without studying it in great detail, I immediately wonder, because I know this point of ambiguity exists, whether that means reserved functions in the general sense, as opposed to functions which are devolved, or whether it means reserved functions in the specialised sense of the definition in Clause 77.
There are some other points in the Bill where the term "reserved functions" appears and where there could be this ambiguity; a misunderstanding to those who will have to deal with the Bill later, if it is enacted. So I hope that the noble and learned Lord, in the time between the last probing Amendment on this subject and now, has been able to deal with these questions. I beg to move.
Lord McCLUSKEY: I hope I will not disappoint the noble Lord by my answer, but I certainly will not surprise him if I say that, of course, when one looks at a part of the Bill and finds that it is not immediately satisfactory—that was his experience, and I shared it with him—it is not necessarily very easy simply to alter one or two words, because it sometimes affects the structure. The position is that we are still looking into the matters that were discussed on the previous occasion and which the noble Lord has touched upon on this particular occasion. We are reconsidering Schedule 15, and the current state of progress, as I am advised, is that a submission has been put to the draftsman and we are awaiting his deliberations and decision on that. I can only say, therefore, that I shall be returning to that matter when we come back to this part of the Bill on Report.
So far as Clause 63(2) is concerned, I think it is clear that the use of the words "reserved functions" is as defined in Clause 77. Indeed, that is so whether the words appear in this clause or elsewhere. As I pointed out on the previous occasion, the words appear in some of the Schedules. So it is really just a holding operation at the moment. We are hoping to make progress, but I cannot report progress at this stage.
The Earl of PERTH: If I understand the noble and learned Lord aright, he is going to have another look at the words "reserved functions". I am sure this is a good thing, because the phrase is confusing I think, to the ordinary person. We who have gone all through the debate understand it, but come a year or two it might be a matter of great puzzlement. So I hope those two words will be looked at again.
The Earl of SELKIRK: I am very glad that the noble and learned Lord is

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looking at this. I find it very difficult to reconcile Schedule 15 with Schedule 10. I thought that in dealing with Schedule 10 —this monstrous Schedule— we had settled this business. I do not even know whether Schedule 15 reconciles itself with Schedule 10. So I am delighted to hear that some consideration is being given to that. I do not know whether it will be possible to replace it with a Schedule saying which of those local authority subjects w ill receive specific grants. This is not unimportant, particularly in view of a letter I received from the noble Lord, Lord Kirkhill, on this. As I understand it, specific grants reserved to local authorities will be paid directly by the Secretary of State and will not form part of the block grant. I think that, in point of fact, it was worth putting that into this Schedule in place of what is there. Many of these subjects in Schedule 15 will be part of the block grant, but not all of them. I think that it would have been not without some significance if we could know which ones will be singled out for specific grants and which will not. I do not know whether the noble and learned Lord can consider that point, perhaps, when he is examining Schedule 15.
Lord McCLUSKEY: I think that if one looks at where these words appear in the clauses of the Bill one sees that they in fact arise only in Clause 63(2). Plainly, the functions referred to there are functions which are not necessarily functions which receive specific grant payable directly to the local authority. But I am certainly looking at the whole matter, because the one thing I want to avoid is any possibility of confusion; and it was because, when we looked at the Amendment moved on the previous occasion, Amendment No. 169, we recognised the possibility of confusion that we decided to look at the whole matter again. So all these points are being taken into account.
Lord CAMPBELL of CROY: I am grateful to the noble and learned Lord. I will make it clear that I do not think there will ever be a complaint from me on this side of the Committee if the Government say they are looking at something and need time to look again at it, because I think that these matters are so important that, if there is doubt about the role which a Schedule is to play in the Bill, I
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for one would far prefer the Government to take their time and have the benefit of the advice which is available to them, and, if necessary, rewrite that part of the Bill. So I make absolutely no complaint that the noble and learned Lord, after several days, still cannot give us a complete reply; and I am glad that this reexamination is taking place.
I realise, as the noble Earl, Lord Perth, has said, that it would be difficult for the layman picking up the Bill not to fall into a trap when he met the term, "reserved functions". I recognise also that those who spend their lives dealing with legislation, if they pick up a new Bill, probably start by looking at the definitions clause to see whether there are in it any special terms of art for that Bill before reading any of the clauses. Most people who are involved in legislation, certainly if they see only extracts of legislation, are not to know that what looks like an ordinary expression has a special meaning whenever it appears throughout this Bill. For all these reasons I am glad that the Government are taking this seriously and continuing their re-examination of it, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.11 p.m.
Lord WIGG Lord WIGG moved Amendment No. 388:
Page 31, line 27, at beginning insert—
("Subject to subsection (2A) below").
The noble Lord said: I beg to move the Amendment standing in my name on the Marshalled List. With permission, I should like to deal with Amendments Nos. 388 and 389 together for they hang together and it will save time. The purpose of Amendment No. 389—if the Government accept it, as I hope they Will—is to make it clear that the powers of the Secretary of State, if an order is moved under Clause 64, will be limited to the existing powers that the Home Secretary possesses under the Acts which are mentioned in Schedule 13. On 10th May I troubled your Lordships on the Motion that "The clause stand part" by raising this subject. I thought that I did it fairly; that is to say, I made it perfectly plain that I did not expect a reply, that I was unable to ascertain the reasons why betting and gaming were devolved subjects and that I was unable to ascertain from

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any of the bodies concerned what it was likely that the Government had in mind would result from the devolution of these powers. I regretted (but I do not complain) that the noble and learned Lord, Lord McCluskey, thought that I ought to have given notice. All I can say is that I intended to raise the subject and I give notice again now. I shall pursue this matter until I get not an answer that I necessarily accept but an answer which makes it quite clear that the Government have considered, and fully considered, the steps they have taken.
The only other point I would make in connection with what the noble and learned Lord, Lord McCluskey, said to me—and I do not think he was complaining that I had not attended all the debates—is that he said that on two previous occasions we had debated betting and gaming or various aspects of them. I thought that I had read all the debates reported in Hansard at which I had not been present; and I did not remember that. So the next morning I phoned up the Scottish Office and asked them if they would be good enough to give me references to what the noble and learned Lord had in mind. They referred me to a debate—it was very late at night, I think on 3rd May, and it was reported in the Hansard of 4th May—when the question of a national lottery came up in the Small Lotteries Bill which has nothing to do with the subject that I am raising. Therefore, the noble and learned Lord, I am sure not wittingly, misinformed the House when he said that the subjects referred to by the enactments in Schedule 13 had been before the House on two previous occasions. This is not so. We all make mistakes; this is one easy enough to make.
I want to come back to the real point. Why have the Government devolved these subjects? What do they think is involved in that devolvement? I am going to take as an example (and I will be as brief as I can) the Gaming Boards. In the 75th Annual Report of the Gaming Board, which is a report presented in conformity to Statute, to the Secretary of State for the Home Department, and which is tabled and can be obtained in this House and in another place, the Gaming Board noted that a White Paper on devolution had been circulated and that the Gaming Board was included in the appendices.
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They made it quite clear that in the seven years of the Board's existence and in cooperation with the police forces of England, Wales and Scotland:
"We built up a system of control for an activity in which the real dangers of infiltration by unwelcome elements are never very far remote".
They made it clear that the Gaming Board was in opposition.
This was a board of some substance. Its Chairman, Sir Stanley Raymond, had held that post for nine years, appointed by successive Governments. It was the considered view of him and his colleagues that this should not be devolved. He said that it would be more appropriate to consider possible devolution of gaming and lotteries after the publication of the Report of the Royal Commission on Gambling, a Royal Commission appointed by the present Government. That was in 1975. In 1976, the Gaming Board came back to the subject and said:
"In our Report for 1975 we said that the board had represented in the context of the White Paper on Devolution to Scotland and Wales, Our changing Democracy, that the regulation of gaming and lotteries should continue to be on the same basis throughout Great Britain and should not be a devolved matter".
They said:
"Other views prevailed. The Scotland and Wales Bills now before Parliament provide that devolution shall extend to gaming and lotteries. The Government have never said why nor have they given any indication to the Gaming Board or to anybody else of the reason for this action".
The report goes on:
"We have made known our firm opinion that the arguments in respect to devolution in Scotland and Wales apply with greater force to regionalisation".
They made it absolutely clear that they were opposed. They regarded it as tied up with the concept of law and order and it should not be devolved.
That is not all. I reminded your Lordships that the chairman was Sir Stanley Raymond. In 1976, evidence was given to the Royal Commission on Gambling—and the evidence has been published—which says:
"As to lotteries, the law and order issue does not arise in the same acute way; but it must be recognised that any sensible system of control must apply both to where a lottery is organised and where the tickets are sold".
They go on to warn that if this is not done —and I cannot believe that the Minister

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who replied to the debate on May 10th ever read this evidence; and certainly the Home Office had not read it—
"the abuses which the Government have taken action on about the Irish Sweepstake lottery and multi-lotteries would most certainly reappear".
They go on to say:
"The Board see no substantial argument specifically on gambling in favour of devolution but agree that there is a general contention for the devolution of control. Against this, the Board would say that as regards gaming, local interests are cared for in the same system of licensing arrangements and the Board would see no substantial advantage but considerable danger in departing from this concept of a single gaming board for Great Britain".
They go on to argue throughout the whole of the evidence against this.
On this occasion I must stress that the chairmanship of the Gaming Board had changed. Sir Stanley Raymond had resigned after nine years and his place was taken by one of the Membership of this House, Lord Allen of Abbeydale, who had the distinction of being a very wise and competent Permanent Secretary of the Home Office, the very Department responsible for all these activities. So there is a statutory body publishing annual reports and giving evidence to the Royal Commission. In its first evidence, which it repeats, it says, "Leave it at least until the Royal Commission has reported."
The Royal Commission's report is imminent. It has had a very arduous task; but I have no doubt that before the Summer Recess the report will come. I should have thought that the Minister who is replying to me—and in my poor way I was only seeking information—would have said: "We have taken all this into account. We are waiting and we are going to see what the Royal Commission says." The Secretary of State has shuffled to the Royal Commission every single issue that has been at all difficult, every hot potato has been shuffled off to the Royal Commission. I have no doubt that it has now completed its work and that it is at the printers. There is no earthly reason why the Home Secretary should not have asked for an advance copy and advised the Committee of what was said. But no; here is a conception of gambling which has been built up over the whole length of these islands, which is clearly influenced not by any country's boundaries but is subject to influences that
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come from abroad, and vice versa. This is completely ignored.
I drew attention in the debate on 10th May to the fact that the only sections that are mentioned in Schedule 13 are those sections of the Gaming Act, and those sections of the Betting, Gaming and Lotteries Act in relation to the Horse-race Totalisator and the Betting Levy Boards which deal with the appointments to the boards. There is no other section. Therefore, I in my innocence, thought that probably what the Government were doing—and I still believe this to be true—was to put another dummy in the shop window. Somebody has said: "What are some safe subjects to devolve that we can mention"? This was one of them. They had it in mind to propose to add perhaps another member to each of the boards, and that would amount to devolution.
However, when the noble and learned Lord, Lord McCluskey, came to reply, he repudiated that concept. He said, "No it means far more than that". If it means far more than that, would the Minister tell us what it is? I have mentioned gaming and that is a subject in which I am not interested, but it has been thrown up by my researches as another example of the way that the Government have handled this subject, despite highly competent and responsible advice which they have had front the chairmen of the statutory boards that they have appointed.
Now let us turn to the question which is much nearer my heart—racing and the levy. The noble Baroness, when she was replying on 3rd May, talked about the modifying of the operations under the Small Lotteries Act. If one starts to modify it I believe one is only a step away from trying to introduce a levy from Scotland. Only a pure-minded Member of a Labour Government could really think in such barmy terms as that. Somebody who has never had a bet in his life and believes that it is utterly immoral to have a bet, would have thought of that. if there were two levy boards—and I can imagine how attractive this would be—a levy board for England and a levy board for Scotland, the revenue from the bets in Scotland would accrue to Scotland and those in England would accrue to England. But please remember that racing is indivisible. The Scottish

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punter will have a bet: 10p each way on a horse running at Ayr; any to come, 20p each way on a horse running at Folkestone: 10p each way on a horse running at Folkestone; any to come, 20p each way on a horse running in Scotland. What do you do—put kilts on the Scottish part of the bet and play the bagpipes? To work this out is beyond all human reason. It is beyond human experience.
Lord MACKIE of BENSHIE: Surely—
Lord WIGG: The noble Lord may interrupt in a moment. I want to make the point about racecourses. In Scotland there is Ayr, which is a great racecourse. It is equal to any racecourse anywhere in these islands. There are a number of small jumping courses. Apart from the Ayr meetings, there is no important racing in Scotland. I say that with great respect to Scottish people. There are many horses trained in Scotland which come South of the Border to race, and many of the horses which race in the North of England are going over the Border to race in Scotland. To try to have a concept which splits them is nonsense. What is true of horses is also true of jockeys, owners and trainers. The whole concept is one: it is a United Kingdom concept. Betting associated with it, whether it be on horses, football, gaming or the running of lotteries, is all one. To break this up without thinking what is to be done is madness. I give way to the noble Lord.
Lord MACKIE of BENSHIE: All I was going to say to the noble Lord was that it is perfectly easy to split up the money paid by the Scottish punter. That is very easy. It does not matter where he places his bet or on what horse he places it. If it is his money, then one could take a lien on it.
The Earl of ONSLOW: May I ask the noble Lord, Lord Mackie of Benshie, to qualify that?
Several noble Lords: Order, order!
The DEPUTY CHAIRMAN of COMMITTEES (Earl Cathcart): Amendment proposed:
Page 31, line 27, at beginning insert: "Subject to subsection (2A) below".
Lord WIGG: May I finish? That concept of course is nonsense. One cannot split it up in that way because if one did Scotland would be the loser. For example, the big punter in Scotland does not bet in cash; he bets on credit. How one is going to assess the man in Scotland when he has a telephone and he telephones through to England is utterly and completly beyond me. One can go into a betting shop in Scotland and say one is going to take a percentage off the "take". But if the same bookmaker has a cash office there and has a credit office in England, and the punter prefers to come to the credit office, obviously the matter is beyond the realm of handling. As my speech has been shortened by the Deputy Chairman, I shall put him in order by resuming my seat. If I am provoked, I shall carry on later.
Lord INGLEWOOD: I should like to follow the noble Lord, even if I cannot follow every intricacy of his speech. I am not a racegoer but I have contacts with people who are. I think that these Amendments deserve support by the test of common sense. There is no case here for further devolution in this field. With further reference to what he said about racing, I submit that racing in Scotland is only a small part of racing if one takes the United Kingdom as a whole. The greater part is centred, as the noble Lord said, South of the Border. I live just on the English side of the Border. The area is one where a lot of horses are in training on both sides of the Border. Those in training on the North side of the Border spend, I would submit, more than half their racing time South of the Border. By the test of common sense, it does not seem to me that there can be any case for further devolution.
Gaming, and the laws dealing with gaming, create great difficulties for the police. Already North and South of the Border we have differences of law which do not make the tasks of the police any easier. If we have further devolution in this field, we shall have different developments in time, whatever anybody may say now about their intention. Those developments and those differences will create increased problems for the police on both sides of the Border, and that is something about which those who sit in your Lordships' House should take

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great care before further legislation is passed.
8.29 p.m.
Baroness STEDMAN: May I say at the outset that I have nothing like the expertise of my noble friend who moved these Amendments. Indeed, I stand before the Committee as a very poor pupil at my noble friend's hands in that I took advice from him for a matter of two or three hours before taking part in a debate a couple of years ago in the House. My knowledge of horseracing and betting bodies has not increased very much since those days. Therefore I stand here at perhaps somewhat of a disadvantage against such an expert as my noble friend Lord Wigg.
Clause 64 is essentially a consequential clause. Matters are devolved by virtue of Clause 59 and the groups in Schedule 10, but many of the functions which relate to the devolved matters are at present exercised on behalf of the central Government by public bodies operating on a Great Britain basis. As a result, the Scottish Executive will not be able to exercise their functions fully on devolved fields unless arrangements are made to divide the responsibilities of these bodies so that they can be made accountable to, and perhaps financed by, the Scottish Executive for their activities in Scotland.
There are three bodies in the field of betting, gaming and lotteries: the Gaming Board for Great Britain, the Horserace Levy Board and the Horserace Totalisator Board. These are listed in Part II of Schedule 13. This means that, on a request from a Scottish Secretary and after consultation with the body concerned, the Minister may by order make any or all of the arrangements which are described in subparagraphs (a) to (f) of subsection (2) of that clause. This order will, if Government Amendment No. 387 is accepted later this evening, be subject to the Affirmative Resolution of both Houses of Parliament.
As Schedule 10 now stands as part of the Bill, betting, gaming and lotteries will by virtue of Group 21—the miscellaneous section—be a devolved matter. So it will be necessary in due course to make an order under Clause 64, since without functions in relation to these bodies the
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Executive will be unable effectively to discharge its functions. If the intention behind these Amendments is to prevent any real functions being devolved in relation to these bodies, then they would make a nonsense of the decision already taken by your Lordships in regard to devolution in the matter of gaming, betting and lotteries. So on these grounds these Amendments ought to be rejected.
The noble Lord, Lord Wigg, as he said, was good enough to give notice that he planned to raise the matter of the treatment in the Bill of the Gaming Board, the Horserace Betting Levy Board and the Horserace Totalisator Board. I hope he may find my explanation of some value. The Committee are aware that betting, gaming and lotteries are devolved by way of their inclusion in Group 21 of Part I of Schedule 10. I had hoped that during our debate on the Amendment to insert a new clause about a Scottish national lottery I had clarified the Government's intentions with regard to lotteries.
Perhaps I may take a moment to remind the Committee that we intend the Assembly to have full legislative competence over this matter, including the right to legislate to bring in a national lottery of their own if they wish to do so. So far as betting and gaming are concerned, our intention is that the Assembly should have a wide-ranging power to legislate on these matters which are, in our view, primarily of a social and leisure nature and therefore ones which should be the responsibility of the elected Assembly in Scotland. There will inevitably be restrictions on the Assembly's competence: for example, they will have no power to change any duties, such as the general betting duty, as that falls within the matter of taxation and is reserved in paragraph 4 of Schedule 2.
It has been argued that these matters are not suited to devolution because they have more to do with the maintenance of law and order than of leisure, and that there must be unified wide control throughout Great Britain to prevent abuses of the law. We recognise that the essential control aspects of the subject are being discussed, but the Government do not see how controls can be detached from their social aspects. The control, unless it broadly reflects the morals and standards of a society, is likely to be difficult to enforce, and Scottish opinions on these

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matters are not necessarily those of London.
Next we turn to the Gaming Board of Great Britain, whose job essentially is that of control of gaming and gambling. Before I enter into a more detailed consideration of its role after devolution, I should like to echo the tributes already paid to this Board, to the Horserace Betting Levy Board and to the Horserace Totalisator Board. The Gaming Board, the Horserace Betting Levy Board and the Bookmakers' Committee all submitted comments on the 1975 White Paper: the Totalisator Board did not. As a result of the representations received, the Government reconsidered the devolution of betting, gaming and lotteries but concluded that the White Paper proposal should stand. It is understood that both the Gaming Board and the Horserace Betting Levy Board have submitted evidence to the Royal Commission on Gambling about the effect of devolution on their activities. I shall have more to say about that later.
The Gaming Board, which was set up in 1968, has the task of maintaining a very broad oversight over the development of gaming in Great Britain and to check the issue of prospective gaming licences and to advise the Home Secretary on making regulations about the subject. The Board is listed in Part II of Schedule 13, so all executive and legislative competence in relation to it are withheld until a Minister of the Crown, at the request of the Scottish Secretary, makes an order under the terms of Clause 64 and such an order is approved by Affirmative Resolution of both Houses of Parliament, providing that the Government Amendment No. 387 is accepted later this evening.
Thereafter, the Board may account separately to, and may be financed by, the Scottish Executive for its activities in Scotland. Once an order is made, the Assembly will be able to legislate about the Board, but they will be as aware as anyone of the dangers of slackening control and it will be in their interests, as well as Westminster's, to ensure some uniformity of approach and to concert action across the Border. If it is decided, for example, that a separate Scottish Board should be formed, that alone would not prevent arrangements being made for a single joint inspectorate to serve both Boards.
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There is one aspect of the making of a Clause 64 order which I must emphasise. That is that before he approached a Minister to make an order, a Scottish Secretary must have consulted the body concerned. I have already assured the noble Lord, Lord Wigg, that the Gaming Board, like all the other bodies listed in Schedule 13, was consulted about the Government's proposals at the time of the White Paper on devolution, and its chairman, Sir Stanley Raymond, wrote to the Government setting out the Board's views, as the noble Lord has told us. But, even so, nothing can be done to the Board, and not even an additional Scottish member can be appointed to it, before yet further consultation takes place.
I should like to say just a few words about the Horserace Betting Levy Board and the Totalisator Board. These boards were also specifically invited to comment on the November 1975 White Paper. The Betting Levy Board was set up in 1961 and their job was to assess, collect and distribute contributions from bookmakers and the Totalisator Board throughout Great Britain. The levy is collected by a sub-committee of the Levy Board, the Bookmakers' Committee, and although that Committee is not listed in Part II of Schedule 13, it should not be assumed that it is in any way unaffected by devolution. It is not there because its parent body, the Levy Board, is, and any Clause 64 order about the Board would take into account the Bookmakers' Committee.
The arguments for allowing no Assembly responsibilities towards these boards are in effect the same as those used about gaming: namely, there is a need for centralised control over betting. It is asserted that if the levy rate were lower in Scotland than in England there would be a considerable transfer of betting and in particular credit betting and laying off by bookmakers from England and Scotland, with the result that the amount of money available to the English Levy Board for the support of those races on which the majority of betting in Scotland and in England and Wales takes place would be reduced. Of course, it would be possible, once the Assembly had full legislative competence over the Levy Board, for it to vary the levy rate from that in England; but surely it is difficult to imagine that it would wish to endanger the English

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racing scene to the extent envisaged. In the last resort, it would be open to Parliament to legislate to prevent that happening. Certainly, in the Government's view, it would not be right to reserve the activities of the board to guard against this hypothetical possibility alone.
A few words now about the Royal Commission on Gambling, which was referred to by my noble friend: this was set up in 1975, when this Government's commitment to devolution was well recorded and I understand, as my noble friend has said, that it is expected to report in the near future. Doubtless it has taken the very fullest account of devolution in its considerations. My noble friend argued that we should have waited until the Royal Commission had reported, before we decided upon our attitude towards the devolution of betting. But if we were to await every report pertaining to the matter to be devolved, we should never have a Scotland Bill to present to the House.
Several noble Lords: Hear, hear !
Baroness STEDMAN: While that may find favour among some Members of the Committee, it is not the Government's intention not to have a Scotland Bill. Devolution is a fact, which must be taken into account when proposals are made about a very wide range of subjects, and betting and gaming are no exceptions. Nevertheless, consideration of the Royal Commission's findings could have a bearing on the timing of action under Clause 64, and it may be that all parties, including the Scottish Executive, will see merit in delaying action until the full implications of the Royal Commission's report have been considered. To the Government, it seems eminently desirable that Scotland should be able to make its own arrangements about those subjects. It may well be that no great divergence will appear, but that will be for the elected Assembly to decide.
In an earlier debate, we were asked to indicate what is intended in this Bill. I hope that I have given an adequate explanation as to how we see the Bill working in respect of those bodies which were referred to by my noble friend. I admit that I cannot say precisely what will happen, what form the Clause 64 order
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will take, or how the Assembly will use its legislative competence, because that is up to the Assembly and we cannot here tonight prejudge what will be its attitude. I hope that what I have said has been of some use to my noble friend and to noble Lords in demonstrating that this is a scheme which is workable and that these Amendments are not necessary.
Lord WILSON of LANGSIDE: There are many areas within the scope of your Lordships' discussions, on which I regard myself as relatively ill-informed. But if I were to choose that area upon which my ignorance is most profound, I think that I would choose the area covered by this Amendment. Furthermore, if I had been asked upon which Amendment should be least likely to speak throughout these weeks of debate, I should have chosen this one.
However, I listened to the presentation of his Amendments by the noble Lord, Lord Wigg, with a fascination which I am sure all of your Lordships in the Committee shared, and what I said to myself was "Well, the answer had better be a good one." I have listened to the case of the noble Baroness, which she presented with that charming persuasiveness with which she always presents those very full explanations which she gives to the House, and I rise simply to say, in spite of the state of profound ignorance from which I start, that, having listened to the competing contestants, if the noble Lord, Lord Wigg, persists in his Amendment he will have my support, for what that may be worth.
8.43 p.m.
The Earl of ONSLOW: I also listened to the noble Lord, Lord Wigg, with fascination. One could possibly even make jokes about rabbits and snakes, but I shall let that pass. I, too, have no great knowledge of betting and gaming, but we have heard only the Government's bland assertion that everything will be all right on the day. They totally failed to acknowledge the cross-Border games which people will get up to, with the English horse in Scotland backed by people in Glasgow, or the Scottish horse in England backed by people in Northumberland. The scope for confusion, for laying-off and for making a muddle of everything seems to me beyond comprehension.

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For the noble Baroness just to say that it will be all right on the day, is a very frightening answer from the Government, because that shows that they have not thought this through. I did not feel particularly strongly about this Amendment until I heard the Government's answer.
Viscount MASSEREENE and FERRARD: May I ask the noble Baroness whether this means that the Jockey Club, which is the supreme arbiter of racing in this country, will have no jurisdiction in Scotland?
Lord WIGG: No. The Jockey Club does not come into this. Gaming is carried on under the Gaming Act. The Horserace Totalisator Board's functions, and the functions of the Horserace Betting Levy Board, are carried on under the statute, the Betting, Gaming and Lotteries Act 1963, which is a consolidated measure. The Gaming Board, to which I have referred, is a statutory body performing its duties and presenting a report to the Home Secretary, who tables it for both Houses. The noble Viscount can get a copy in the Printed Paper Office. That is true of all its activities.
May I just turn to the noble Baroness, and thank her very much indeed. Her charm almost completely overcomes me, but I have had to stick in two pins and I have conic to one simple conclusion. I was going to suggest that she gave seven days' CB to the person who wrote her brief. But I would now say that she should give him detention, because he has not read the Act. The most amazing errors were contained in her brief, one of which is in regard to the functions of the Bookmakers' Committee. The Bookmakers' Committee is also a statutory body, appointed by a Conservative Government under the 1961 statute, and it meets at the request of the Levy Board to make recommendations about the levy for the ensuing year. That is all. It does not collect—that is done by the Levy Board—and it has no other function. But if there is a dispute between the Bookmakers' Committee and the Levy Board, it is decided by the Home Secretary.
I must say this to the noble Baroness: Her charm is such that I am quite sure that what she said about the question of consultation was done with her tongue in her cheek. What form does the con-
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sultation take? There was an invitation to the statutory bodies to submit views. It is not consultation if you ask somebody to write you a letter, which you consign to the wastepaper basket, because that is obviously what was done.
No noble Lord can seriously believe that there was consultation, in the full meaning of the word, when in 1975 the Gaming Board, a statutory body with a chairman of many years' experience—both Governments had appointed him—made a recommendation, and said "For Goodness sake, do not devolve this subject", and put it in his report which could have been debated in this House. The same thing happened in 1976. Then the chairmanship changed and now there is a very distinguished and respected Member of your Lordships' House, who was Permanent Secretary to the Home Office, the very Department which is responsible for this matter.
Evidence was given to the Royal Commission, and it was again said "Do not do it. This is a very intricate and dangerous subject, which goes right to the heart"—very strong words were used— "of the concept of law and order", which is the point made by noble Lords on the opposite side. That has been completely ignored. But the Government have come along and said tonight that they have consulted; they have asked people to write to them. The Totalisator Board did not write, and the other two bodies protested.
I come to your Lordships tonight, because I have had some little experience of this matter. I believe that your Lordships are heading not only for chaos, but for the breakdown of law and order. What attracted me to this subject, when I accepted nomination, was that I sensed, as a constituent Member of Parliament the dangers to the integrity of the police from illegal betting. I have constantly paid tribute to a Conservative Minister who had the guts to tackle the subject. The legislation has had to be looked at before, and it has been looked at again by the Royal Commission.
I do not want to press this Amendment to a Division, but I shall do so. I shall be failing in my duty, if I do not do so. If I cannot get somebody to act as Teller, then that will be too bad. But I do not

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think that the Government's action is right. I believe that they ought to leave this matter. It should never be devolved, and before they go ahead they should at least wait for the Royal Commission. Therefore, I invite somebody to join me as Teller and to divide the Committee upon this issue.

CONTENTS

Auckland, L.

Harvey of Tasburgh, L.

O'Neill of the Maine, L,

Berkeley, B.

Harvington, L.

Onslow, E. [Teller.]

Carr of Hadley, L.

Hatherton, L.

Redesdale, L.

Chitnis, L.

Hemphill, L.

Reigate, L.

Clitheroe, L.

Inglewood, L.

St. Davids, V.

Colville of Culross, V.

Kilmany, L.

Sandford, L.

Cork and Orrery, E.

Kinross, L.

Sandys, L.

Drumalbyn, L.

Long, V.

Selkirk, E.

Dundee, E.

Lyell, L.

Strathclyde, L.

Ellenborough, L.

Massereene and Ferrard, V.

Sudeley, L.

Elliot of Harwood, B.

Monson, L.

Swinfen, L.

Faithfull, B.

Morris, L.

Thorneycroft, L.

Ferrers, E.

Mottistone, L.

Tweeddale, M.

Gainford, L.

Mowbray and Stourton, L.

Waldegrave, E.

Gray, L.

Northchurch, B.

Wigg, L. [Teller.]

Greenway, L.

Northesk, E.

Wilson of Langside, L.

Harmar-Nicholls, L.

O'Hagan, L.

NOT-CONTENTS

Birk, B.

Janner, L.

Ritchie-Calder, L.

Boyle of Handsworth, L.

Kirkhill, L.

Seear, B.

Castle, L.

Lee of Newton, L.

Shepherd, L.

Champion, L.

Llewelyn-Davies of Hastoe, B. [Teller.]

Shinwell, L.

Crook, L.

Snow, L.

Davies of Leek, L.

McCluskey, L.

Stedman, B.

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

Mackie of Benshie, L.

Stewart of Alvechurch, B.

Gaitskell, B.

Maelor, L.

Stone, L.

Gardiner, L.

Melchett, L.

Strabolgi, L.

Greenwood of Rossendale, L.

Milner of Leeds, L.

Taylor of Mansfield, L.

Gregson, L.

Morris of Kenwood, L.

Thurso, V.

Hale, L.

Murray of Gravesend, L.

Wallace of Coslany, L.

Harris of Greenwich, L.

Northfield, L.

Wells-Pestell, L. [Teller.]

Hatch of Lusby, L.

Oram, L.

Willis, L.

Hood, V.

Peart, L. (L. Privy Seal.)

Wilson of High Wray, L.

Home of Troon, L.

Perth, E.

Winterbottom, L.

Hughes, L.

Phillips, B.

Wynne-Jones, L.

The DEPUTY CHAIRMAN of COMMITTEES (Viscount Hood): There have voted Contents, 50; Not-Contents, 50. There being an equality of votes, in accordance with Standing Order No. 53, which provides that no proposal to amend the Bill in the form which is before the Committee shall be agreed to unless there is a majority in favour of such Amendment, I declare the Amendment disagreed to.
[Amendment No. 389 not moved.]
[Amendment No. 301 not moved.]
8.59 p.m.
Lord KIRKHILL Lord KIRKHILL moved Amendment No. 387:
8.50 p.m.
On Question, Whether the said Amendment (No. 388) shall be agreed to?
Their Lordships divided: Contents, 50; Not-Contents, 50.
Page 32, line 14, leave out subsection (4) and insert—
("(4) No order shall be made under this section unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.").
The noble Lord said: This Amendment follows from a similar Amendment made in another place to the comparable provision in the Wales Bill. Its effect is to bring the Scotland Bill and the Wales Bill into line. Clause 64 and its accompanying Schedule 13 deal with public bodies which have responsibility for matters to be devolved and which at present operate upon a Great Britain or United Kingdom basis.
The purpose of the clause is to create an order-making power for a Minister of

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the Crown. This order-making power would make possible the division of the responsibilities and reporting of the bodies after devolution to take account of the devolution of matters with which they deal. In fact, in a sense it could be said that Clause 64 is consequential upon Clause 59 and its accompanying Schedule 10.
Because orders made under Clause 64 are essentially concerned with the consequences of devolution, the clause currently provides in subsection (4) for them to be subject to the Negative Resolution procedure. But having listened to the points made in another place about the comparable provision in the Wales Bill, the Government accept that although the provisions of Clause 64 are consequential they are of sufficient importance to warrant the Affirmative Resolution of both Houses; and that is the purpose of the Amendment.
On Question, Amendment agreed to.
Clause 64, as amended, agreed to.
Schedule 13 [Public bodies]:
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 288:
Page 75, leave out line 35.
The noble Lord said: This is a consequential Amendment following the decision taken about forestry by your Lordships' Committee at a previous sitting. On behalf of my noble friends and the noble Lord, Lord Taylor of Gryfe, and myself, I beg to move this Amendment formally.
Lord MACKIE of BENSHIE: I know that this is a consequential Amendment but I should like to seek a little information. When the previous Amendment, which was carried, was moved, the noble Lord proposing it indicated that he had the support of the whole of the forestry industry in Britain, and today in the Scotsman newspaper there appeared a letter in which the Secretary of the Forestry Commission said that no one spoke for the Forestry Commission except the Government and that therefore this statement was incorrect. I sincerely hope that the Government will correct this Amendment, which in my view emasculates the Bill and takes far more from the Assembly than is apparent from this
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one Amendment. I should like to ask the Minister if he would say what the attitude of the Forestry Commission was to the splitting of responsibility between the Government on the one hand and the Assembly on the other, and whether they were opposed to it or thought it was administrably possible and could be worked without difficulty. I must say that this is my view and my information, but I should very much like to hear what the Government have to say about this new point which has arisen since the last Amendment was moved and carried.
Lord McCLUSKEY: As the noble Lord, Lord Campbell of Croy, said, this Amendment is consequential and for that reason the Government do not oppose it. In relation to what the noble Lord, Lord Mackie of Benshie, has said, the Forestry Commission were of the view that the proposals as contained in the Bill were workable. Let me make that quite plain. I have no doubt we shall be coming back to the matter of forestry on another occasion.
Earl FERRERS: The noble and learned Lord said that the proposals as contained in the Bill originally were workable. I thought that the question which the noble Lord, Lord Mackie of Benshie, asked was what was their view now that the Bill had been amended. I assume from what the noble and learned Lord said that they will find that workable as well.
Lord MACKIE of BENSHIE: My views have again been misinterpreted. I wanted to clarify that there was information or fact not brought out properly when the last Amendment was made.
On Question, Amendment agreed to.
Schedule 13, as amended, agreed to.
Clause 65 agreed to.
9.7 p.m.
Clause 66 [Planning]:
Viscount COLVILLE of CULROSS Viscount COLVILLE of CULROSS moved Amendment No. 208:
Page 32, line 26, leave out from beginning to ("any") in line 28 and insert ("A Scottish Secretary may exercise").
The noble Viscount said: This short clause introduces a very strange exception to the general pattern of the Bill, because

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although the powers dealing with the whole realm of town and country planning are devolved to the Scottish Assembly and the Scottish Secretaries the general fiscal override powers as to the executive action of the Scottish Secretaries in Clause 36 are not applied, and a special machinery as set up for intervention, I think it must be in individual cases, in Schedule 14. I am not sure how this is supposed to work or why it is considered desirable, and Amendment No. 208 is simply a probing Amendment to see what it is all about. Therefore the noble Lord, Lord Kirkhill, will certainly do me a great service if he will explain why we have this curious procedure for the planning world in Scotland.
It is not easy for the layman to understand. One of the difficulties about planning is that it affects an enormous number of people, some of a very humble nature who need to know who is going to deal with their problems and how the whole thing is to be sorted out, and this method of drafting does not enable them to find out more easily than would be the ordinary case.
The second Amendment, No. 209, to which perhaps I could make reference in order to save time, is a request for explanation as to why it is that if the standard override powers in Clause 36 do not apply to executive action the standard override powers in respect of subordinate instruments do apply. There are not many subordinate instruments made under the Town and Country Planning Act but there are some. There are special development orders and these can he of extreme significance. After all, did we not have yet another debate on a special development order for Windscale in another place yesterday? There are various powers made in relation to industrial development, office development and the exemption limits, and things of that sort.
I do not understand what is the philosophy which is supposed to be underlying this. In the first place the executive action is subjected to the extraordinary provisions of Schedule 14, but the equally individual cases which can be dealt with sometimes by statutory instrument are not dealt with in the same way, and the illogicality is such that I wonder whether
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there is any explanation at all. I have been quite unable to work it out but I am sure that the noble Lord, Lou] Kirkhill, will explain it with the greatest lucidity so that we shall all understand it. I beg to move.
9.9 p.m.
The MINISTER of STATE, SCOTTISH OFFICE (Lord Kirkhill): At the outset I should say that standing at this side of the Table is a humble citizen who would have great difficulty in understanding the complexity of this part of the Bill were it not for the fact that I have an adviser who has been advising me, but I shall do my best to explain this part of the Bill to the noble Viscount. I must start by saying that it is obvious that if we are going to have an Assembly, town and country planning is a matter which should be devolved, and Group 6 of Part I of Schedule 10 specifically does just that. In the view of the Government it is clearly right that decisions on most planning issues, those that concern matters of local or regional importance but do not affect people living outside Scotland, should be dealt with by the Scottish administration. I say that just to set the scene.
I shall go on to say that not all planning issues are of purely Scottish concern and that important activities which will, to an extent, depend on planning decisions will continue after devolution to be the responsibility of Government Departments and of bodies accountable to Government Departments. An example of that would be the major nationalised industries. Parliament therefore retains a direct interest in those important aspects of planning and Parliament will expect Ministers to continue to take full responsibility for ensuring that such matters are properly safeguarded in the United Kingdom interest. If a non-devolved interest was prejudiced by action or inaction in the devolved area of planning, Parliament would not accept lightly the fact that such prejudice could not be forestalled and prevented.
The activities of Government Departments and other bodies accountable to Parliament may be affected by planning proceedings in two ways: first, planning permission may be required for new development, although not, of course, for developments by the Crown itself.

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Secondly, prejudicial uses of land may be proposed by other developers, for example within the safeguarding area of a military airfield. When land use disputes arise requiring a judgment as to priorities between devolved and non-devolved interests, in the last resort they can be resolved only at the level of Central Government since the devolved administration by its nature does not have the same authority to assess the implications for the non-devolved interests. The constituency for such interests is the entire United Kingdom and not merely Scotland. Accordingly the Bill provides a procedure by which the Secretary of State can arrange for planning issues potentially affecting non-devolved matters to be brought before him for decision—that is, to be called in: for example, planning applications, planning permission appeals and enforcement procedures. Where an intervention is made, the subsequent actions of the Secretary of State will be determined by the requirements of the planning legislation. For example, he must give the parties an opportunity to be heard at a local inquiry, and Schedule 14 makes it specific, at paragraph 8, that a Scottish Secretary must be given an opportunity to make representations at a hearing. The Secretary of State will be able to call in cases which are either before a local authority or before a Scottish Secretary.
Obviously it can be argued that the general intervention powers of Clause 36 should be adequate to meet the need, but the Government do not accept that view, for this reason. Intervention under Clause 36 would take the form of a direction from the Secretary of State to the Assembly, requiring subsequent approval by Parliament. A procedure of this kind, unlike that provided for in Schedule 14, would deny interested parties the rights to express their views which vest in them under planning procedures generally. It would also involve inviting Parliament to take a view on issues which should as a rule be, and certainly are at present, determined in a quasi-judicial rather than a political way. It is for these reasons that the Government consider that, where the special planning intervention procedure applies, the intervention powers normally exercisable under Clause 36 should not be available.
If I may speak to Amendment No. 209 at the same time, as the noble Viscount touched on his second Amendment, the
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noble Viscount did say when introducing his Amendment that there would be cases where certain Statutory Instruments made under other provisions of the planning legislation and laying down procedures or forms of notices would relate in part to the exercise of some of the powers listed in Schedule 14. The noble Viscount's Amendment would relate to Instruments of this kind, since they apply "for the purpose of the exercise of" listed powers. It would make it impossible for such Instruments to be revoked under Clause 37, even though they might deal with matters in no way the subject of special intervention under Schedule 14. The Amendment would, therefore, have no direct effect on the matters covered by Clause 66 and Schedule 14, but it would apply to Instruments to which the special intervention arrangements do not extend. In the Government's view, this seems an unwarranted restriction on the use of Clause 37, in no way comparable with the disapplication of Clause 36 powers proposed earlier by the Government. Clause 36 intervention, in so far as it relates to specific executive decisions, is an alternative, although in the Government's view an unsatisfactory one, to the exercise of the Schedule 14 powers. But Clause 37 would not bite on determinations under Schedule 14 powers, only on certain procedures, most probably of general application, which might indirectly affect the exercise of the Schedule 14 powers.
It is most unlikely that the Government would ever wish to exercise Clause 37 powers to revoke any Instrument of a kind which would bear indirectly on the exercise of the powers listed in Part I of Schedule 14. But a procedural Instrument might at the same time contain other provisions which had a direct effect on reserved matters. The Government accordingly believe that, since the Amendment might conceivably result in the removal of protection for reserved interests, the availability of Clause 37 powers should be retained without restriction as proposed in the Bill. I acknowledge that that is a complicated explanation, but, as the noble Viscount said earlier, the matter is complex. I have taken the best advice that I can on the matter, and this is the explanation which I have been given.
Viscount COLVILLE of CULROSS: I do not think it is particularly complex,

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but what the noble Lord has now told us points in my view to great areas of complete illogicality. I am only sorry that something seems to have gone wrong with my Amendments, because I had some down on the extent of the list of intervention opportunities in Schedule 14; I shall be asking the noble Lord why some have been left out. I understand now the philosophy of what the Government are seeking to do. I do not wish to make anything dramatic out of it. But shall we take the case of Windscale which is in everybody's mind, where the new process is being inquired into under the ordinary planning procedures at a planning inquiry presided over, as a great exception, by a High Court judge, followed by a planning refusal and the laying before Parliament of a Special Development Order; if it was done in Scotland it would be done under Section 21 of the Town and Country Planning (Scotland) Act. That would be a Statutory Instrument.
Let us examine the situation on the basis of what the noble Lord has said. This would be a matter of national interest on which I would think the Secretary of State would wish to intervene under Clause 66 and Schedule 14. At the stage where there was a planning application, I think by British Nuclear Fuels—there would be a different set of circumstances if it was a statutory undertaker, but let us take British Nuclear Fuels—it would be possible, as the noble Lord put it, for the Secretary of State to call this in, not leaving it to the Scottish Secretary to decide it but having the requisite public inquiry and so on and coming to a decision.
On the other hand, let us suppose that he did not recognise that matter as being of sufficient importance for him to call it in in the first place; he did not appreciate the extent of public feeling that there was going to be; he did not take his opportunity under Schedule 14, which is, after all, time limited—it can only be done at a certain stage of the proceedings—and he allowed the matter to proceed under the auspices of the Scottish Secretary. Let us suppose that there was a massive public inquiry during which it became apparent that there was a great deal of national interest, as opposed to purely local interest, produced by various people who were exercising
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their rights to appear. At the end of the day, the Secretary of State not having intervened, the decision will be made by the Scottish Secretary. The first thing that happens is that Clause 36 does not apply, so he cannot do anything about it. He has missed his opportunity by failing to take advantage of Schedule 14 and his call-in powers, so he cannot stop the Scottish Secretary making a decision. He cannot use Clause 36 to do that. So he is powerless.
The next thing that happens is that the Scottish Secretary, having looked at the implications of the situation, decides to do it by way of a special development order. In those circumstances, the Secretary of State has only one option to bring to bear: he can override the thing executively under Clause 37 as it stands, because the noble Lord will not take Clause 37 into the same ambit as the override procedures in Clause 66. In those circumstances the Secretary of State can only override the decision to make the special development order by Parliamentary proceedings.
Might he not have wanted, had he wished to do so, to hear a wider range of United Kingdom opinion upon this matter as it had emerged at the inquiry? Is it right, as the noble Lord himself said, that these matters, which are normally quasi-judicial, should be dealt with in Parliament rather than at a local inquiry? Both ways, as drafted at present, the Scottish Secretary and Secretary of State are locked into an impossible situation. The Scottish Secretary can take the decision which the Secretary of State wishes that he could not, but the Secretary of State cannot intervene. Then the Scottish Secretary makes the special development order which is a statutory Instrument, and the only way in which it can properly be examined is at a public inquiry, which is the one way in which the Secretary of State is debarred from examining it, because he can only take it to Parliament. Is that a satisfactory way of dealing with the situation? It may be an unusual set of circumstances and I know that I tend to pick on unusual circumstances, but after all, it has only just happened and it was not 100 miles from the Scottish Border that it happened. The noble Lord, having now set out why this has been included in its present form, has opened a huge area of discrepancies and incongruities which should be thought about again.
Lord KIRKHILL: I agree that the type of hypothecation to which I have listened with great interest could certainly quite accurately lock the planning door. However, I say to the noble Viscount that at present local authorities in Scotland, when a major issue is developing, usually seek the Secretary of State's call-in permissions. A Scottish Administration sensitive to public opinion would certainly take that first step at the correct time. I should certainly envisage that as being the practical outworking of the situation, and I should at least put that point to him.
Viscount COLVILLE: I am sure that that is right, and I am not trying to say that the Government in their philosophy are necessarily wrong. It may very well be that this is a most sensible thing to provide. I am saying that if we look at the nuts and bolts of it, they have set themselves up a very rigid structure which will not serve all the exigencies which may occur. Why is it that they cannot look at this once more to see whether they can make it a little more flexible? I do not think that it would cause tremendous offence, either in Edinburgh or Whitehall, if we had a structure which could bend a little more to the way in which matters develop.
Would not the Government like to look at this point once more? I do not believe that it has been discussed in detail before. Would they not like to look at the matter to see whether they have really taken account of all the possibilities? I should have thought that such a course would be wise, otherwise we shall have a silly situation of the sort that I have described, from which there is no way in which people can extricate themselves. I should have thought that that was most unfortunate.
Lord KIRKHILL: I am not able to say at this point that the Government will look at this matter again with a view to change. I can say that the noble Viscount's interventions are always carefully examined both by Ministers who are his opposite numbers and by ministerial advisers. I shall certainly closely examine the points that he has made this evening.
The Earl of PERTH: When the noble and learned Lord says that one cannot look at it with a view to change, I wonder
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whether that goes quite far enough. Surely one looks at it for precisely that reason. It may be that the sequel to that is that one decides not to look at it in that way; but to say that it will not be looked at with a view to change seems to me not to look at it at all. I hope that the noble Lord will consider those words.
Viscount COLVILLE of CULROSS: I am sure that the noble Lord will. I do not want to take up any more time on this, pending his consideration. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 209 not moved.]
On Question, Whether Clause 66 shall stand part of the Bill?
9.27 p.m.
Lord CAMPBELL of CROY: I should like to raise one matter, which is the position of the Housing Corporation. I wrote to the noble and learned Lord, Lord McCluskey, a week ago saying that I should be raising this point. In the Scotland and Wales Bill of last Session a relationship between the proposed Assembly and the Housing Corporation was defined. In the present Bill there appear to be no corresponding detailed provisions. As a result, it is not clear what the Government have in mind; nor is it clear whether responsibilities, where the Housing Corporation is concerned, will be divided between Westminster and Edinburgh, and if so, how that division will be carried out.
Today I have received a written reply from the noble and learned Lord. I certainly do not expect him to reply in the detail which is contained in his letter to me. As I understand the effect of the letter, the Government's intention is the same as was spelled out in the Scotland and Wales Bill, but that they do not intend to carry out the devolution of any responsibilities until after the Assembly has been set up, and in what the noble and learned Lord has described as the running in period of the Assembly.
According to the letter, the Government's intention is that certain responsibilities related to housing in Scotland—particularly concerning housing associations—would be devolved to the new Assembly and the Executive, and

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that this would be done by means of an order which the Government would bring before Parliament. That is my summary of the letter which I have received. If it is correct, I think that it will have saved the Committee some time, and I am grateful to the noble and learned Lord for having replied. However, it is important that this should be on the record.
Lord McCLUSKEY: I am happy that our postal arrangements work better than they sometimes do and that the noble Lord received my letter today. I am content with his summary. Perhaps I could make the offer that if anyone else is interested in seeing the more detailed explanation—and it would be an impertinence if I were to read out the letter on this occasion—I should be perfectly happy to send them a copy of the letter.
Clause 66 agreed to.
Schedule 14 [Intervention by Secretary of State in Planning Matters]:
On Question, Whether Schedule 14 shall be a Schedule to the Bill?
9.30 p.m.
Viscount COLVILLE of CULROSS: There are two points which I want to raise here, and again I apologise to the Committee for the fact that somehow my Amendments do not seem to have been printed. That is certainly my fault and not the fault of officials of the House. The first point I want to raise is a very short one and arises out of the reference which the noble Lord, Lord Kirkhill, has already made to paragraph 8 of Schedule 14. It is perfectly true that when the Secretary of State takes a matter out of the hands of the Scottish Secretary, under that paragraph he is required to give that Scottish Secretary an opportunity of making representations at a hearing in front of the reporter. The only thing that worries me about this is that it is not tied in, in terms, to the ordinary machinery for holding public inquiries and allowing other people to make representations before a reporter. It looks, on the face of it, as though it is a separate inquiry at which only the Secretary of State is heard.
I am quite sure that this is not so. I am quite sure that what is intended is that
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the Scottish Secretary's intervention shall be a part and parcel of the overall inquiry which is held under the ordinary planning procedure. I would suggest, with great deference to those who have drafted this Bill, that it could be made a great deal clearer that this is so by making a reference to the ordinary inquiry procedures which are provided for in the Town and Country Planning (Scotland) Act 1972, and merely adding the Scottish Secretary in these circumstances as another person who is entitled to be heard. That is the first thing. I think it would be a great improvement. The second matter is of rather more substance. The list of occasions, or topics, upon which the Secretary of State can intervene, and indeed override the ordinary powers of the Scottish Secretary are listed in paragraph 1. For your Lordships' convenience, I will say what these sections refer to. Sections 32 to 34 relate to ordinary call-ins from the regional district authorities to the Scottish Secretary, and appeals from refusals or non-determinations. Then we have revocation or modification orders, discontinuance orders, appeals against enforcement notices, call-ins and appeals against established use certificates, and Section 260 is default powers in so far as they relate to the provisions which are listed.
I can easily see, in the light of the philosophy that the noble Lord explained, why we have Clause 66 and Schedule 14 at all, that that is a good starting point. Now I should like him to tell the Committee why there are so many exceptions in areas where I should have thought that those considerations of United Kingdom policy, which is the basic justification of the whole of this system in the first place, could very easily be involved but are not covered by this machinery.
May I just list the occasions that have occurred to me as being relevant. First, we do not have an opportunity for the Secretary of State to intervene on the special development orders I have already mentioned (which are made under Section 21 of the Act), or indeed on general development orders. Supposing, for the sake of argument—and getting away from Windscale—that the Scottish Secretary decided to make a general development order which allowed anybody to use any piece of land in Scotland, without planning permission, for building oil rig platforms.

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This is, so far as I can make out, a fairly touchy matter of United Kingdom policy, certainly crossing the Border to the English side, and one upon which United Kingdom policy could very easily be involved. But, under the Bill as it stands, the Scottish Secretary could make such an order, and the only method of overriding it would be under Clause 37, which is the political override giving nobody an opportunity of being heard at any inquiry because there would only be a Parliamentary opportunity.
The next one that I would ask about is the planning inquiry commission under Sections 44 and 45. There never has been one yet, and very likely, after the third London airport episode, which was the next best thing, there never will be. Pray God there is not, because it was an appalling performance. But if there is—and it is still on the Statute Book—is it right that the Scottish Secretary should be able to set up one of these inquiries into what is, by definition, a matter of national importance, without any power to intervene by the Secretary of State? This would be something which I think would fall within the powers normally detailed under Clause 36 of the Bill, because it would be an executive action; yet it is not in Schedule 14 and the Secretary of State could not intervene.
Then I consider the question of listed buildings, and the related matter of listed building enforcement notices and other matters of control. It occurs to me that there are in Scotland some buildings which are listed under the ordinary planning legislation, and which are of national significance. There is machinery under the taxation statutes, which are not devolved, whereby properties of this heritage standard can be exempted for the purposes of capital transfer tax if they are handed on from father or mother to child. This is based entirely on the worth of the property as seen in terms of the national heritage. It is looked at primarily by the estate duties office of the Inland Revenue, but in fact they are advised by the Department of the Environment, South of the Border, and, I imagine, the equivalent Scottish Department, North of the Border.
Supposing the Scottish Secretary were minded to allow the demolition of one of these nationally important heritage prop-
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erties. Is it really right that the Secretary of State should wish to avoid the opportunity of intervening altogether because, first, he will not be able to do it under Clause 36, having foresworn that by Clause 66 and, secondly, he will not be able to intervene because he has not listed the power in Schedule 14? This would seem to me to be a strange state of affairs, and the same applies to listed building notices under Section 92 of the Town and Country (Scotland) Act 1972.
The next item, I suggest, arises out of what the noble Lord said about major nationalised industries. The ordinary provisions for applying for planning permission by, say, the South of Scotland Electricity Board or the Hydro Board is covered not by the ordinary provisions at the beginning of the 1972 Act but by the provisions which occur from Section 214 onwards which relate to statutory undertakers. Cannot the noble Lord imagine the proposals of one of those two electricity authorities, or of some other major nationalised industry which counts as a statutory undertaker, raising issues and interests which transcend the Borders of Scotland? Yet in the same way as I have just said, the Secretary of State will not be able to intervene under Clause 36, and as he has not listed Section 214 as being a power to intervene under Schedule 14, what is he to do? The answer is nothing. He has debarred himself completely from intervening in a way that would not occur if we did not have this strange machinery.
Lastly, there are the general inquiry powers under Section 267 of the Act. These are not often used—I do not know whether they have ever been used in Scotland—but they are used sometimes and I recall a celebrated occasion (which I should have thought was chosen for the exercise of these powers because of the national interest involved); namely, the first inquiry into the roads system for the City of Oxford. It was not an inquiry into any specific proposal; it was an inquiry at large and it was held under the equivalent English provision of Section 267 of the Scottish Act. That matter raised representations from all sorts and conditions of men, as it were, both within and without Oxford, and a great deal of national interest and, afterwards, a debate in your Lordships' House.
The Scottish Secretary has equivalently been left totally in command of that kind

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of affair; only he can hold one of those inquiries because of the reasoning I explained before; namely, that it is not in Schedule 14. I appreciate that this is a collection of extremely fast balls to bowl at the noble Lord, Lord Kirkhill. He cannot be expected to answer them tonight and I gave him only about half an hour's notice of them, but they require an answer and at some stage during the passage of the Bill I should be extremely grateful if he would apply his mind to them.
9.40 p.m.
Lord KIRKHILL: I readily acknowledge that the noble Viscount gave me advance notice that he would pose this series of questions to me. I have to teil him, as I indicated to him earlier, that my advice, while quite comprehensive, is recently to hand. However, I will attempt to pick up the points he made, if only to show those who read Hansard tomorrow that I did my best. With regard to the first question which the noble Viscount put to me, I can say that the Secretary of State is not actually required to follow normal planning inquiry procedures, but in practice of course he would do so. There is no need, therefore, to put a specific requirement in the Bill. This would in any case be inflexible and would not allow for a possible future change in procedure—
Viscount COLVILLE of CULROSS: May I intervene? In that case will the inquiry procedure rules, which I imagine exist in Scotland, be amended so as to take account of the possibility of this form of intervention, and fit it in? It can I think easily be done by means of the regulations, rather than in the Statute.
Lord KIRKHILL: I hope that the noble Viscount will bear with me, as I was going to round off with a flourish and say something rather more positive, which might be to his liking. But for the moment I should like to move on to speak on the other points which he has placed before the Committee. The powers listed in Schedule 14 have been selected with considerable care. They all involve planning cases set in motion by, or against, individuals, and which involve, as we have said earlier, quasi-judicial proceedings leading to a decision taken by a Minister. After devolution such decisions will be
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taken by a Scottish Secretary, unless the powers in Schedule 14 are invoked. It is necessary, therefore, to consider the points which the noble Viscount raised with me against that criteria.
The noble Viscount mentioned special development orders. These do not involve a ministerial decision, but, indeed, a Parliamentary procedure. It would be inappropriate to use intervention powers where a Scottish Secretary has decided to use the special development order procedure. In these circumstances protection for reserved interests would be found in the override provisions, as was indicated at Clause 37.
The noble Viscount mentioned the general powers to order and hold inquiries, and the powers to refer a case to a planning inquiry commission. But the provisions to which he has referred are not substantive provisions in their own right and are not, therefore, appropriate for inclusion in Schedule 14. This is not to say that Schedule 14 does not make appropriate provisions for such matters. This is achieved by paragraph 4(c) in Part II of the Schedule, which gives the Secretary of State, where he intervenes, all the powers and duties which would have been available to a Scottish Secretary. Thus he will have any necessary powers to hold an inquiry, or to refer a case to a planning inquiry commission.
Planning applications by statutory undertakers were also referred to by the noble Viscount. Where an application is made by an undertaker operating in reserved matters (an example would be the National Coal Board) the Schedule 14 intervention powers will be available in the same way as for other planning applications, and there will be nothing to prevent two Secretaries of State acting jointly, as presently provided, in respect of applications by statutory undertakers, by way of Section 214 of the Town and Country Planning (Scotland) Act 1972.
I should now like to turn to the question of listed building procedures. Listed building enforcement will be a devolved matter by virtue of the ancient monuments and historic buildings in Group 19, and town and country planning in Group 6. Sections 92 to 97 of the Town and Country Planning (Scotland) Act 1972, as amended, set out the arrange-

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ments for listed building enforcement. Since these are devolved matters, the Scotland Bill translates the references to the Secretary of State to references to the Scottish Secretary. The call-in procedure in Schedule 14 does not apply to the powers exercisable in relation to listed buildings; nor should it, since no United Kingdom interest can be affected apart from buildings owned by the United Kingdom Government, post-devolution, in Scotland.
However, these are interests which are protected by the treatment of Section 253 of the Town and Country Planning (Scotland) Act 1972. In particular, subsection (2) states:
"Except with the consent of the appropriate authority—
(a) no order or notice shall be made or served under any of the provisions of sections 49, 58, 63, 84 or 92 of this Act…in relation to land which for the time being is Crown land".
Head (f), against the Town and Country Planning (Scotland) Act 1972 in Part III of Schedule 10 of the Scotland Bill, states that the powers under Section 253,
"except so far as exercisable in relation to land vested in the First Secretary or held for the purposes of a Scottish Secretary"
are not included. This means that, post-devolution, the consent of the appropriate authority, which will not be the Scottish Secretary, will be necessary to protect the the interests of the United Kingdom Government in any listed building enforcement.
Perhaps I might point out, not as an incidental but because I am aware of the situation, as regards capital transfer tax, that this is totally reserved as a matter of United Kingdom taxation, together with any waivers or special arrangements. Now, I have attempted to respond to the points which the noble Viscount has put to me, but I think they would merit a careful study and consideration by me. I shall give them that. I intend to write to the noble Viscount; and from that point onwards, of course, he will either be satisfied with what I say to him or will respond.
Viscount COLVILLE of CULROSS: The noble Lord has been more than helpful and most generous, and I am extremely grateful to him. Perhaps at this stage I will take up only three short points.
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The noble Lord need not be expected to reply to them this evening; they are just matters which I do not understand arising out of what he said. First of all, I do not understand how the statutory undertakers are brought in if you do not make a reference to Section 214 and the consequential sections when you are dealing with applications by statutory undertakers, because it appears to me to be a separate code; and I do not think the National Coal Board is a good example, because that is not a statutory undertaker within the definition. The electricity authorities I chose because they are; that is the difference. The National Coal Board of course has to make an ordinary application, but I do not think that that is the point with which I was dealing.
The next point is this. The noble Lord said that paragraph 4(c) of the Schedule allowed the Scottish Secretary to deal with matters by way of a planning inquiry commission or a general inquiry. Yes, the noble Lord is perfectly right, provided that there has been a triggering application in the first place. Yes, indeed, if somebody has put in a planning application or has done something which brings the matter within the sphere of the listed sections in paragraph 1. But if it is to be a matter which is to be dealt with at large, as it were, then paragraph 4(c) avails the Secretary of State nothing, and he has not acquired any powers to act in the way that the noble Lord said.
The third point is this. I understand that, in terms of listed buildings, those which are owned by the nation and have therefore been defined as being of national interest are protected by Section 253; but that is not my point. I should have thought that if the Government considered that industrial or economic matters which transcend the boundaries of Scotland are in the national interest, it is a Philistine attitude to beat all Philistine attitudes to say that matters of national architecture do not fall into the same category. I do not understand why the noble Lord shakes his head and says that there will never be a case in Scotland where a national architectural treasure protected by the listed building controls is at issue. If it is a privately-owned one, it is in no way covered by Schedule 14 and the Secretary of State has debarred himself from intervening, either under

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Schedule 14 or under Clause 36; and this, I should have thought, would be a disaster.
Lord KIRKHILL: I apologise for intervening, but I want to make this point. It is purely a matter of judgment, no more, no less, as to whether these buildings of great historical and architectural merit should or should not stand devolved. I can see the contrary argument, but I think that the emphasis in the Bill is that that which is of especial interest to those who live in a particular area had best stand devolved, if at all possible.
Viscount COLVILLE of CULROSS: I am in total agreement with the noble Lord. I am afraid that I explained myself badly. Of course, they should be devolved, it is right that they should be devolved;
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they are devolved. What has happened is that by taking the area of town and country planning out of the override powers in Clause 36 and by not listing the listed building control and enforcement provisions in Schedule 14, this is one of the very few areas in the whole of the devolved section where the Secretary of State has debarred himself from intervening at all. That is what I am saying, that he has totally debarred himself from doing anything about it in a case where, I should have thought there was, at any rate potentially, a national interest. That is what happened under the drafting as it now stands. That is what I am complaining about and not that they are devolved as a matter of course. I am grateful that the noble Lord is prepared to look at this again, for I believe we have some loose ends which we shall need to tidy up.
Schedule 14 agreed to.
9.52 p.m.
The Earl of SELKIRK The Earl of SELKIRK moved Amendment No. 210:
After Clause 66, insert the following new clause—
Voting by Scottish Members of Parliament.
(". Following the first meeting of the Scottish Assembly, Members of Parliament representing Scottish constituencies shall not be entitled to vote on any matter in respect of which legislative competence in relation to Scotland has by this Act been devolved to the Scottish Assembly.")
The noble Earl said: I beg to move this Amendment and I would ask the Committee to note that of the supporters of the Bill, two come from that part of the United Kingdom which is called Scotland and two from that part of the United Kingdom which is called England. I regret that the noble Lords, Lord Duncan-Sandys and Lord Houghton, have said that they were sorry to be unable to be here and that the noble Lord, Lord Shinwell, not unnaturally at this time of night, has found it necessary to depart.
This is called the West Lothian question and no doubt that name is due to the resolution and stamina of the Member of Parliament for that area; but, in fact, it is a misnomer, as the Government explained earlier, and it applies to every single constituency in Scotland. It has been referred to constantly in the other place; it has been referred to not infrequently in this place, but it has never been discussed as a substantive Motion either here or in the other place. It is because of that particularly that I want to direct attention to it.
Perhaps I should explain it briefly. I had thought that it was an ailment which grew round the shale bings of West Lothian; but it is actually a problem which affects not only every constituency but a large part of perhaps the most popular matters which Members of Parliament have to deal with; that is, education, housing, the health services, transport and things like that. Those subjects will no longer be the responsibility of Scottish MPs. Scottish MPs can deal with education, housing, health services and transport in so far as they affect England. I think it is pretty obvious that that raises quite a real problem and I want to make this point.
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It is not a side issue. You cannot side-step it; it is absolutely inherent in the very structure of the Bill itself. It is nothing to do with number. It does not matter whether there are 10, 20, 50 or 200 Scottish Members. The problem is there; and my object in this is to make us face it.
There is a further problem that, if it is not faced, it will muddle the clarity of members of the public in knowing where the responsibility lies. I think this is something which we must face up to. We cannot sweep it under the carpet and pretend that it does not matter. I want to ask the Committee to face it. Who is to decide this? I think it is perfectly clear that it has to be decided by the House of Commons. That is why I say that we must send back an Amendment which they will look at, and on which they can decide what they want to do about this problem.
I am not going to argue particularly the precise merits of the Amendment which I have put down because it is up to them to decide what they want. It merely says this, in effect: when you come to a subject which is devolved in Scotland, Scottish Members cannot vote on that in respect of England. That is to say, if there is a question on education, the manner in which education is discussed in England, this will no longer be a matter on which a Scottish Member can vote. At the present time, as the Bill is drafted, he can vote and take part in regard to education in Southampton but cannot do it for education in Dumbarton.
This is a lack of balance in the Bill which somehow has to be put right or at least faced up to; a decision must be made as to which way it should go. It is our duty to see that the other place have a full opportunity of making their minds up exactly which way they want it to be. Once it is decided, that is their business. It is their responsibility and they must face it squarely. Though I am not going to argue closely on this Amendment, there are one or two side issues to which I want to make reference. The purists will say: "This has the effect of dividing the other place into certain classes. This Bill already divides Members of the other place into classes. There are those who

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are responsible for certain things in their constituency and there are those who are not." The division is perfectly clear. What is not clear is where the line should be drawn. It is on the question of where you draw the line that this Amendment makes a certain proposal. I am not going to say that this is the only way it can be done. Somebody has to decide where that line should be drawn.
It is also sometimes said that the effect of this Amendment would be to prevent Scottish Members from voting on those parts of the Bill in which overriding powers are used. That is not so. This only applies to taking action on matters which are devolved. In so far as we use overriding powers, that is not a question of devolved matters at all; that is a normal matter for Members of Parliament. Any single clause in this Bill can be repealed by the Westminster Parliament. The whole Bill can be repealed by the Westminster Parliament. That has nothing to do with devolution as such; that will be the normal function. It only refers to taking action, or responsibility for those actions which are devolved in this Bill.
The third matter which we have to ask is: Is it our business to deal with a matter which is clearly and obviously an issue for the other place? My interpretation of this is simply that the two Houses are complementary, the one to the other. We are different in structure, we are different very often in approach. We should seek to complement one another. Our common task is to see that the Government do not bully the members of the public, to see that they provide good government. We had a discussion on this subject both in this House and in the other place only yesterday. The Government have very frequently, with much skill, tried to avoid that criticism by pretending that the two Houses are fighting each other instead of having the criticism directed towards them. It is for that reason that we must send this or another Amendment to the other place. They can either refuse, agree or amend it in the way that they want. It cannot be ignored; it cannot be passed over. To do otherwise than consider it I believe would create a source of considerable discontent.
A second point I want to make is that earlier on today we had some discussion
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about what was called the English backlash. With great respect to the noble and learned Lord, the Solicitor-General for Scotland, he turned this aside a little lightheartedly. This is a very serious matter, and anyone who has had any experience of relations between Scotland and England in the legislative sphere knows there is a very high degree of tolerance required on both sides. If that tolerance is upset, it will be to the disadvantage of both parts of this Island. I think it is immensely important that that tolerance should be continued.
If you ask anyone today in the South of England: "What do you think about Scottish devolution?" they will almost certainly say: "Of course Scotland can have devolution, provided they pay for it themselves." The blunt answer is that nine-tenths of the cost of devolution is going to come from the English taxpayer: let us be under no illusion about that. That is where it is coming from, and I think we must recognise the fact. Scotland is doing nothing but receiving. There is no single concession in this Bill which Scotland has to make at all; she is at the receiving end the whole time. I believe that people in Scotland who want an Assembly would be perfectly willing to make a concession. We get certain things and we recognise that we have to pay something for them. I think that most people, including most Scots people, know that you never get anything which is worth while unless you pay for it. I think they recognise that fully and that if we ask them to make some concession they would do so.
I think this backlash is very serious. Every penny is going to come from the Exchequer here; and let us not forget that there are things such as the industrial development certificate, because the whole economic development is enormously important. If we get an "edge" on the relationship between the two countries and everything is granted in a grudging spirit, then it will be very much to the disadvantage of Scotland. I put this forward not in any sense of altruism but, frankly, in a spirit of self-interest. I think it is in the proper interests of Scotland that the Scottish people should recognise they must pay something if they think that the Assembly is really going to give them something.
We must not let this be pushed aside or pushed under the carpet; it must be faced squarely. I think it is right and it is important for Scotland not in any way to accelerate or excite a backlash which I believe is already taking shape, possibly in this Chamber and possibly in another place as well. Therefore I say: let us ask the other place to decide what they want to do about this vital problem. I beg to move.
Lord MONSON: I strongly support the principle underlying this Amendment, which I believe to be of the utmost importance. I believe we need both the "belt" of fair and equal representation in Parliament for all the component parts of the United Kingdom and the "braces" of this Amendment, or something very like it, in order to uphold the rights of the English majority in these Islands.
After devolution, for example, the Scots will be able to decide for themselves their own educational policy without any English interference or influence. On what moral grounds, therefore, can the right possibly be denied to the English to retain, if they so wish, their own valuable and old-established grammar schools if there should be a majority of English MPs in the other place in favour of so doing? This Amendment may be technically imperfect in one way or another, but that is something which can be remedied at a later stage. The important thing, it seems to me, is to support the principle of this Amendment in the Division Lobbies tonight.
Viscount MASSEREENE and FERRARD: I, too, as the noble Lord, Lord Monson, has just said, support in principle this Amendment. I agree that politics are not logical and of course this Amendment represents logic; but what my noble friend Lord Selkirk said about the English backlash is perfectly true. The average Englishman will say: "Look at the Scottish MPs: they are having their cake and eating it. They are having it both ways."
I should also have thought that it was rather insulting to the Members of the Assembly that they should be, not overruled, but perhaps thought to be not
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sufficiently competent themselves to vote on devolved matters so that they had to have the support of Scottish MPs in Westminster. It will be very dangerous if the English think that the Scots have it completely their own way. One can use the excuse that politics are not logical, that our Constitution is not logical and even that democracy is not logical. But I hope that at some later stage the Government may accept some kind of alteration to the Bill, such as my noble friend has proposed in this Amendment.
10.5 p.m.
Lord RAGLAN: I speak as a Member of the British Parliament and not as a Welshman or an Englishman, although I live in Wales and have a Scottish mother. I have always considered myself a Briton, and I dislike the motives which have caused the bringing in of this Bill. As the noble Earl, Lord Selkirk, said, this is a very important Amendment which goes to the heart of the matter. Time and again during the passage of this Bill, the Westminster Parliament has been admonished that it should be careful not to tread upon the susceptibilities of this delicate and sensitive plant which is to be established in Edinburgh. Yet essential, as I see it, to the presentation of this Bill in the Westminster Parliament is the creation of the anomaly, to which the noble Earl has drawn attention by his Amendment, and which can do nothing but create friction.
I venture to suggest that if the proposal had been the other way around, that Members from England should vote on certain matters affecting Scotland, while Members from Scotland were excluded from voting on the same matters affecting England, this measure would never have been entertained for one moment, and this Amendment underlines that fact as nothing else does. This Bill is an attempt to appease Scottish nationalism, while retaining an illusion that the United Kingdom will remain a politically united realm.
As I see it, democratic Government must be both seen and understood to derive and apply its authority equally as between one part of the State and another. In Parliamentary terms, this is more or less true in our country at the moment,

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though I hope on Third Reading to draw attention to the wholly anomalous constitutional position of the Scottish Secretary of State. But the Scottish Secretary of State is just, and only just, classed as an administrative post, although I believe for several reasons that, whether or not this Bill passes into law, that post will not be retainable for much longer.
However that may be, the Parliamentary balance has so far been kept. Members from England can vote on measures intended only for Scotland and vice versa. But this Bill upsets this arrangement and sets out matters affecting Scotland, which Members of this Parliament—mainly from England, of course—would be excluded from voting on, while retaining the right of Members of this Parliament from Scotland to vote on the same matters when they affect England. It is true that we already have several anomalies in the case of the Channel Islands and the Isle of Man, which came about by accident and are probably too small to concern us very much. We used to have Stormont which, at the time that that arrangement was made, appeared to be a brilliant solution, but it came to grief because, like this Bill, it was not a solution; it was only the illusion of a solution.
The Nationalists in Scotland will vote for the Bill, because for them half a loaf is better than no bread, and they reckon that they will get more next time if they wait. The quasi-Nationalists—who are often indistinguishable from the Nationalists because they also encourage the view that Scotland is a colony of England, and a deprived one at that—support this Bill and present it in Scotland as a significant change which will make a great deal of difference, while in England and at Westminster people are being told that, on the contrary, it will make very little difference and everything will go on much as before.
I think that I can forecast with confidence that, whether or not it makes much change in Scotland, things at Westminster will not go on as before. Members from Scotland, however nice they are—and I am glad to say that many nice people come here from Scotland—will become unpopular, not personally but because of their presence. Therefore the more sensi-
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tive will probably become difficult to Whip. They will take less part in debates; they will become unaccountably absent on important votes; or they will discover vital research work to do in the British Museum, or somewhere out of the way of the Division Bell, because they will have become vested with power without accountability, while Members of Parliament and Peers from England and from Wales, if the Wales Bill is rejected, will have accountability without power. Such an arrangement cannot last, because it is inequitable and unfair.
If it is said that Members of Parliament from Northern Ireland are in the same position, that is true. First, however, nobody enjoyed that arrangement, except certain Conservative Governments. Secondly, the Labour Party always, understandably, detested it but tolerated it because the Northern Ireland Members of Parliament were few in number and the occasion for constitutional change did not present itself. Thirdly, Members of Parliament from Northern Ireland were—and still are, unfortunately—under-representative. Therefore, at least, some attempt was made to correct the anomaly which their presence created.
I hope that Stormont will not return and that representation from Northern Ireland will be increased. However, I ought not to discuss the future of Northern Ireland on this Amendment. Here we are speaking not about a dozen Members of Parliament from Northern Ireland but about 71 Members of Parliament. The Government and the supporters of the Bill could hardly devise a more potent formula for friction, divisiveness and resentment. That is exactly what the Nationalists would like. The question is whether that is really what the voters in Scotland, where we are told that this will be the effect of the Bill, would like. It will happen inevitably. It must in all honesty be put to the voters in Scotland that voting for this Bill will inevitably lead to breaking it all up.
If this Amendment is carried, it will serve to bring to the Government's notice once again, and very cogently, some of the mischief which this Bill would create. As the noble Earl has said, this is not a little point to be glossed over or to be evaded. It must be faced up to, in the

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same way that, if the integrity of this realm is to be retained, Scottish nationalism must be faced up to. I believe that it is no use appeasing it, which this Bill is an attempt to do; it is no use bending backwards to try to accommodate it as a benign phenomenon, as the Government in this Bill are trying to do.
There have been innumerable anomalies exposed during the passage of this Bill—a couple in the last hour or two—and the anomaly which this Amendment is designed to correct is probably the biggest of all. It certainly is the most glaringly absurd, as well as being unfair, so I support the Amendment. It will at least have the effect of mitigating the absurdity and unfairness, and if the noble Earl presses the Amendment I shall follow him into the Lobby.
10.15 p.m.
Viscount THURSO: Those who are supporting this Amendment would like to class themselves as trying to preserve the United Kingdom. In fact, the effect of this Amendment is to cut large chunks of legislative power out of the United Kingdom and to hand them totally and completely to Scotland. You could not find greater separatism than is expressed in this Amendment. I find it quite extraordinary that this should be supported by noble Lords who would like us to think that they are for the preservation of the unity and integrity of the United Kingdom. This Amendment does nothing of the kind.
I am among those who are supporting this Bill not because I am afraid of Scottish Nationalists and not because I think there is some kind of furious mad menace loose in Scotland; I am supporting this Bill because I believe in a federal solution for these Islands. I think it will ultimately give us more efficient legislation. It will relieve Westminster of work; it will give satisfaction to voters and bring Government closer to the governed. I believe that one must keep the element of federal government, even though devolution as expressed in this Bill falls short of federalism. I think we must ultimately accept that a federal solution is the answer. If one has a federal solution, then, although legislative competence is devolved to every part of the Islands—to Scotland and Wales
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and perhaps even to parts of England—there will still necessarily be areas where a federal concept would need to be discussed in a United Kingdom Parliament.
Lord RAGLAN: We are not discussing a federal Bill, we are discussing this particular Bill. If a Bill to establish a federated United Kingdom comes along, we can talk about it then. I am addressing myself to the Amendment.
Viscount THURSO: I think the noble Lord will accept that we are discussing a federal Bill as much as we are discussing Northern Ireland. Whatever one does in the way of devolution in this Bill—and in the Wales Bill when it comes here—there will remain a federal element in everything that is done which will need to be discussed on a United Kingdom basis. We have just seen this in an Amendment moved by the noble Lord, Lord Wigg, where the noble Lord was most upset that legislative competence for certain matters was being devolved so that the action of the Scottish Assembly might affect the situation on this side of the Border in England. We were assured that in that case there was a sort of bracketing arrangement in that there were levy boards and so on which operated on both sides of the Border. In other words, there was a kind of federal link. If in areas of legislative competence that have been totally devolved it is said that Members of Parliament sitting in Westminster and representing people from Scotland are not even allowed to talk about those parts of the devolved subjects that may perhaps affect all parts of the United Kingdom, then one is talking total separatism. I think we must accept that there is a federal element which continues. If you do not like the word "federal" and if it makes you wonder what I am saying, then there is a United Kingdom element that continues. People who are for the integrity of the United Kingdom, just as I am, and yet for devolution, just as I am, would wish Scottish Members of Parliament to be able to discuss this United Kingdom element and not to be totally debarred from discussing a subject.
Viscount MASSEREENE and FERRARD: Before the noble Viscount sits down, will he not agree that, owing to the imbalance of population in the United

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Kingdom, the federal solution is not really 100 per cent. practicable, because the population of England is about 87 per cent. of the population of the whole of the United Kingdom? It is not like America, and I think it would be very difficult to have a completely federal system in this country owing to the imbalance of population in these Islands.
Lord DRUMALBYN: I should like to make a point before the noble Lord replies. The noble Viscount has been talking about discussing matters: this Amendment has nothing to do with discussing matters, it only relates to voting upon them. Surely he can distinguish between the two. There is no reason at all why Scottish Members should not contribute their wisdom—or what they believe to be their wisdom—to a consideration of English matters, but that they should be able to vote on them when the English cannot vote in the Scottish Parliament seems to be absurd in relation to those particular devolved matters.
The Earl of ONSLOW: I think it would be possible to agree with the noble Viscount, Lord Thurso, on the federal state. It would be possible to split England up into a heptarchy and have Scotland and Wales—say, 10 States in the United Kingdom. That is a completely legitimate and sensible solution; but what is not a sensible solution is the anomaly that we now have. The Member of Parliament for Glasgow, Garscadden can talk about tourism in Surrey but not in Inverness; he can talk and vote on the Tower of London but he cannot talk and vote on Dunsinane or Holyrood. This is the idiocy of it. This is what is going to make the English so cross and it is what will give the English the feeling of being "conned".
The noble Earl, Lord Selkirk, has understood this. He has not said "take, take, take". He has said "give and take". I have an elderly relative who, when she was married, replied when her husband asked her, "Dear, do you know that marriage is all give and take?" "Yes, you give and I take". This is what this Bill is to the Scots at the moment, and it is something that will cause the English to get cross. I have said this once, I shall probably say it again and
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everybody will be bored to distraction by my saying it, but I happen to believe it from the bottom of my heart. I think that this will happen and that suddenly the worm will turn. This is putting a ratchet screwdriver on the worm to make sure that it turns. It is unfair and it is wrong.
10.24 p.m.
Lord MOTTISTONE: Perhaps I may intervene briefly because I am sure the Front Bench will want to speak after me. I must apologise to the Committee for not having been here throughout this particular point and also to my noble friends who promoted this Amendment, because it seems to me that the argument put forward by the noble Viscount, Lord Thurso is absolutely first class, more especially because we have inserted Amendment No. 327 in the Bill. We must not forget the fact that we want to keep the Scots as part of the United Kingdom. You will remember the very long lecture that the noble and learned Lord, Lord McCluskey—and it was a learned lecture—gave to us about Schedule 10, which is the most complicated part of a Bill I have had to deal with for many a long day. It is going to be a matter of technical difficulty to classify on the spur of the moment the bits of it on which the Scots will be told, "No, you cannot vote". It seems to me quite ridiculous. If we had not managed to put Amendment No. 327 in the Bill, I should have thought my noble friends who are more English than I am would have had a very good point; but because we have put No. 327 in the Bill I would strongly suggest that we need to give the Scots an untrammelled part—on a reduced scale, which it would be—in the Parliament at Westminster.
The Earl of ONSLOW: Does not my noble friend agree that Scottish MPs can vote on English matters but because of this Bill not on Scottish matters? This is the lunacy of it.
Lord MOTTISTONE: If my noble friend will allow me, the Scots are not so different from the English as all that. I am half Scot, so I know. We are all a group of people trying to rationalise arguments, and the difficulties of that particular issue seem to me to be something on which we could go on forever

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and never get the right answer. On the wider issue, to take some MPs sitting down at the other end of the corridor and say to them, "You cannot vote on X", seems quite wrong. I never liked the idea of some of us in this Chamber being allowed to speak but not vote. It seemed to me absolutely ludicrous. If you are going to be in a Chamber and take part in a legislative system you must either speak and vote or get out. I do not agree with the principle of trying to narrow it and refix it; it cannot be done. If you have a proper balance of Scottish MPs in the House of Commons and you have an arrangement by which because of technicalities they can vote on English things and not Scottish things, so be it.
10.28 p.m.
Lord HUGHES: I do not intend to speak for long, but I feel constrained to say something because of the way in which this particular debate has been going. All the time I have been in politics in Scotland I have been aware, as almost every other Scot has been, of the extent to which people in Scotland have said, "I am not a Scottish Nationalist, but" and then they proceed to recite one or other of the grievances which they think arise from being handled at Westminster instead of Edinburgh. That is not a state which has diminished with the passing of the years. What I dislike about the discussion, on both this Amendment and No. 327, which has been put into the Bill, is the suggestion that these are going to be held out as threats to the Scots, "If you want devolution this is what you have got to suffer in order to get it. You have got to have fewer Members of Parliament; you have got to have Members of Parliament who will be able to vote only on certain things." I regretted very much that that aspect of it was much stressed by my noble friend when he was talking in support of this Amendment, that it should be emphasised to the Scots that if they want this Bill this is what they have to pay for it.
I think the noble Viscount, Lord Thurso, put his finger straight on the point, that if you want to create separation in Scotland this is the way to go about it, because if you are going to have a situation where there are going to be fewer Members from Scotland in the House of Commons, and they are going
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to have only certain powers, you are going to put into the hands of the Nationalists a weapon which they do not have at the present time, the weapon which is saying: "It is not worth while being down there because we do not need to be there to discuss our own affairs; we can do so in Edinburgh. We do not need to be there to discuss English affairs because we shall not be allowed to do so. We might as well go the whole hog and have a complete separation."
Therefore, in my opinion this Amendment, if it were put into effect, would be the biggest weapon that could be given to the Scottish Nationalists. It looks—and I only put it that way—as though Scottish nationalism is on the ebb in Scotland. If that is so, it is, to a certain degree, because of the extent to which this Bill has, at present, gone through Parliament.
Lord DRUMALBYN: I hope that the noble Lord will forgive me for interrupting him, but would he not agree that there is no particular difficulty in separating the subjects that Scottish Members of Parliament would be able to vote about if they were not allowed to vote on purely English matters, because so many English Bills include, towards the end, the words:
"This Act shall not apply to Scotland".
On the face of it, they will know that that is something that they need not bother with and cannot vote on and in point of fact most of them do not bother to do so now!
Lord HUGHES: I would suggest as regards that matter that the noble Lord should look at the last two or three Sessions of Parliament and find out how much of the legislation that has gone through the House of Commons Scottish Members of Parliament were debarred from taking part in. He will find that it was a very substantial part of the business of another place. He shakes his head. There is an easy way to find out. Let us look at it, not at this moment but I am quite happy to do so at a more convenient time. I think that we shall find that I am right and that he is putting a gloss on the matter.
My noble friend referred to Northern Ireland. The fact that this situation has existed for 50 years in Stormont is overlooked. People are inclined to think,

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because there are 71 Members of Parliament from Scotland but there are only 12 from Northern Ireland, that we are not comparing like with like. They can tolerate a situation and an anomaly when there are only 12 people involved, but it becomes different when there are 71 involved. I should point out that for the greater part of that time the effect of results, so far as a Conservative Government were concerned, was that there were eight Northern Ireland votes which they could count on during a Division, because they had 10 and there were two the other way.
At present, with 41 Labour Members in Scotland and 30 otherwise, the Government can count on only 11. So, it is a difference in detail so far as Party machinery in the House of Commons is concerned. If it could have been tolerated all that time for Northern Ireland, I wonder why, at this particular time, it should be regarded as so absolutely fundamental that it must be held out as a threat, not to stop the situation arising, but to try to do so. It will be one of the things which will be brought out in an attempt to get a "No" vote.
Lord MONSON: Would the noble Lord not agree that if this Amendment, or one very like it, is not carried, then in a couple of years' time it will be the English who are saying: "I am not an English nationalist, but …"?
Lord HUGHES: Yes, and this was a point which was referred to by the noble Viscount, Lord Thurso. He said that he was supporting this Amendment because he thought that it would be a step on the road to a federal solution. I happen to believe, along with the Liberals and unlike most of my political colleagues, that eventually the solution will be a federal one. If this helps to bring the English into the frame of mind where they would like to see control of their own affairs, leaving Westminster only for the totally United Kingdom, then it would suit me down to the ground.
Lord WILSON of LANGSIDE: I know that the noble Earl is anxious to bring the debate to a close, but the persuasive eloquence of the noble Lord, Lord Hughes,
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impels me to rise to correct him on one matter of historical fact which I shall leave with the Committee. He said that the feelings in Scotland concerning dissatisfaction with the workings of the Union had not lessened with the passage of the years. That is not strictly accurate. When the terms of the Treaty of Union were announced they caused a major upsurge of concern in Scotland. There were riots in Glasgow, Edinburgh and Dumfries. A mere 10 years later there was an incident in 1715; there was another incident in 1719; there was a little trouble in 1745, and so it has gone on over the years: the ebb and flow. It is not true to say that over the years there has been increasing dissatisfaction with the working of the Union in Scotland.
Lord HUGHES: My noble and learned friend has referred to what I said. Although, like him, I am not very well-thatched on the top of my head, when I was talking about my experience in politics in Scotland I did not intend to convey that I had been around since 1715! I am talking about what has been taking place during the last 40 years. During those 40 years this feeling has grown year in, year out; it has not been an ebb and flow; it has been growing all the time. The increase in the number of Scottish National seats was merely a reflection of that.
The Earl of PERTH: I shall be brief. I voted for Amendment No. 327, but I am less happy about voting for this Amendment if it is pressed. The noble Earl, Lord Selkirk, said that we had to face the fact that even if this Bill is passed, there is already a division and that, therefore, it is nothing different, but merely brings matters to reality if in the Westminster Parliament the division is also made a reality.
However, I do not think that that is altogether right. Those at Westminster who are Members of the Westminster Parliament should all have the same rights and powers. To suggest that because there is a Scottish Assembly you have already cut away the powers in some degree, is not true of those who are Members of the Westminster Parliament. They all have exactly the same rights in the Westminster Parliament. They cannot talk about certain matters in

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Scotland, but one and all would be able to talk about them in so far as the Westminster Parliamentarians can talk at all.
The Earl of ONSLOW: What is being said is that they can talk about them in England but not in Scotland, and this is what is getting under the collars of the English.
The Earl of PERTH: That is as may be. I am merely making a point in relation to something that the noble Earl, Lord Selkirk, said. The noble Lord, Lord Monson, said that he recognised that a potential sacrifice had already been made in Amendment No. 327, but he felt that not only ought we to have a belt but also braces. I am a braces man and I have found them quite sufficient for my purposes at all times; I continue to hope that my trousers will stay up. I am satisfied with just one thing; namely, Amendment No. 327. I entirely agree with what the noble Viscount, Lord Thurso, said; if we go through with this Amendment it divides things even more. To that extent I hope that the noble Earl will not press his Amendment.
Lord MACKIE of BENSHIE: As everyone else is getting into the tight, I should like to make one or two remarks before the noble Earl, Lord Ferrers, gets up. First, we have been over the ground so often, not with regard to the detail—the purpose of the Amendment—but because of the fears expressed from the heart by the noble Earl, Lord Onslow, and from the head by the noble Lord, Lord Raglan. They have put a point of view which arises from not having thought about the problem. They have had a problem sprung upon them which has been with them for many years, but they simply have not known about it. It is extraordinary that the noble Lord, Lord Raglan, should think that one can simply ignore the problem and it will go away. With respect, this is a paraphrase of what he said.
Lord RAGLAN: I have been living with this problem all my life. I have been surrounded, at a distance, by Welsh Nationalists and they all speak very much like the noble Lord.
Lord MACKIE of BENSHIE: I take the point. The noble Lord has been
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living with the problem but he has not understood it. This is what has happened, because you cannot have one-third of the Scottish people voting for a Party which is illogical in the situation, and think that nothing is wrong. Of course there is a great deal wrong. There is a great deal that is illogical in our present system. When you have a Party in power in Great Britain which is not in power in Scotland, then the Scottish Grand Committee is packed with members of Parliament of the other country in order to make up the balance.
Lord CAMPBELL of CROY: May I just correct the noble Lord? This is a fallacy. If he will look up the Standing Orders he will see that there are no votes of substance and there is no packing, and it is entirely a separate question. He is just repeating a fallacy.
Lord MACKIE of BENSHIE: I am sorry if I am repeating a fallacy, but I have seen in the past Members from England put on to the Scottish Grand Committee and regarding it as a penance of some sort. But certainly they were on the Committee and talking and voting, perhaps not on points of substance, but certainly they made up the membership of that Committee when the Party balance was wrong.
Lord CAMPBELL of CROY: I must put this right. Under the Standing Orders of the other place the Scottish Grand Committee must contain, as well as all 71 Scottish Members, not less than 10 non-Scottish Members and not more than 15. They have to be appointed. The noble Lord, Lord Peart, who has been Leader in another place, will know this. There is no vote that is possible in the Scottish Grand Committee except on such things as whether a subject has been considered or not.
Lord MACKIE of BENSHIE: I do not entirely accept the noble Lord's correction.
Lord CAMPBELL of CROY: Well, look it up.
Lord MACKIE of BENSHIE: But it is a fact that in many matters pertaining to Scotland, the Scottish opinion may be entirely different from the opinion of the

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House as a whole and the Scots have had to accept this. There are illogicalities of every sort in the system as we have it at present. The system of devolution that we now are proposing is not entirely logical. I think that this must be seen—and is seen in different terms from different points of view—in this Committee. But that we have got to try it I have no doubt whatsoever.
The noble Earl's Amendment is a reasonable attempt to highlight the problem. I agree with my noble friend that it is not an Amendment that could possibly be carried at the present time because there are so many other anomalies. For example, education is devolved to Scotland, but of course the universities stay outside the control of the Scottish Assembly, and one would really have to accept that where power is split then the Scottish Members of Parliament in Westminster must be able to have their say.
While I accept that the Amendment is, in a way, completely logical and that it certainly should be brought to light in the present state of devolution, when so little is devolved and so incompletely, then I think we have to accept the fact that the Scottish Members of Parliament must really act in exactly the same way as the Northern Ireland Members of Parliament have acted for many years. But it also points to the fact that the only logical solution to this problem is a form of federalism—I am glad that the debate in this House is showing this up—and that we must progress towards federalism; and we shall do so, with experience.
Lord STRATHCLYDE: I feel compelled to speak by the powerful voice of my noble friend—I call him noble friend not with caution but because it is a fact—Lord Hughes, who I understand informed the Committee that there had been a growing feeling in Scotland that decisions were taken in London. Evidently his experience is far different from mine, and I think I served in the Scottish Office longer than he did. During the seven years I was there I was never aware of the fact that decisions were taken not in Edinburgh but in London. As James Stuart, Secretary of State for Scotland in those days, always said, if the Secretary of State could not get what he wanted
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out of the Cabinet he had no right to be Secretary of State, and he was absolutely right.
I never knew of a decision taken in Westminster that was not in line with what we wanted in Scotland, and if Lord Hughes can give chapter and verse to support what he said, I shall be very much surprised. The decisions were taken, in his day and mine, by the Secretary of State; they went before the legislation committee of the Cabinet, in the way every other Minister must put forward his proposals, but the decisions were taken by us in St. Andrew's House in Edinburgh, not in Whitehall.
Lord HUGHES: I was invited by my noble friend—I return the compliment—to give an example and I will do so briefly. He will remember the occasion when your Lordships' House carried, against the Government, an alteration in the reorganisation of local government in Scotland breaking up the Strathclyde Region into four. It went back to the Commons and was carried by English votes.
Lord DRUMALBYN: I want briefly to give my experience, and I think my noble friend Lord Strathclyde will bear this out. The obvious subjects about which we are talking are health, education, social welfare, housing, local government, pollution, eroding and flooding, the countryside, roads, fire services and so on. On the main ones, in 18 years in the House of Commons I never spoke on any English subject in that range, certainly not on health, housing or local government. If one looks at the subjects with which Scottish MPs will have to deal here at Westminster if the Amendment is carried, one finds that they are very important ones indeed; defence, taxation, foreign affairs, trade and industry, including the distribution of industry, social security, agriculture and fisheries—other than salmon—international transport, trade union and employer associations, company law and safety standards. If they cannot keep them occupied, I shall be very surprised indeed.
The Scottish Members will be doing what they will have been sent to Westminster to do, and that is to look after Scottish and British interests in those very important matters. But they will

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not in any case, in my submission, be taking much interest in the subjects I started by mentioning—that is, those which are the devolved subjects in England—other than to obey the Whip, and they will be only too happy not to have to obey the Whips on those subjects.
Earl FERRERS: This Amendment of my noble friend Lord Selkirk goes right to the centre of the problem and I am not sure that my noble friend Lord Drumalbyn did not point to it when he said that the Scots would not vote on any English issue unless it was at the behest of the Whips. I believe that the right or ability of Scottish MPs, after Scotland has an Assembly of its own, to vote on English matters is absolutely fundamental to the equity of the Bill. Time and again we have faced this problem and every time the Government have ducked it; we look forward to hearing what the noble and learned Lord will say tonight on the subject.
However, if 71 Scottish Members of Parliament go to Westminster at present, and are entitled to vote on all matters and look after all affairs of Scotland, and if there is then devolved to the Assembly all responsibility of a domestic nature (such as housing, health and social services, and education), and so the right of Scottish MP's to decide issues on those matters which affect Scotland is removed, how can the right of Scottish Members of Parliament to decide these same issues which relate to English matters possibly be retained?
It seems to me to be a huge and indefensible inequity, to which, as has been said on an earlier Amendment, the English have for some extraordinary reason not yet woken up. It will create antagonism and it will generate English nationalism, which at the moment does not exist, when the English realise that their domestic political future is being determined by Scottish Members of Parliament in a manner contrary to what their own English representatives have indicated by their vote.
I do not think that this is an absurd idea; I think it is a practical reality. Let us take an example. Let us suppose that there was a Labour Government, and that the Secretary of State for Education and Science said that all grammar schools,
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direct grant schools and public schools were to be abolished, and that henceforth comprehensive education was to be the only education available throughout the country. Education is a matter which is devolved to the Assembly. There might well, in a debate in another place, be a Conservative majority of English MPs who would not want such a régime, but there would be a three-line whip. I fail to believe that any noble Lord would think that the Scottish Members of Parliament would resist a three-line whip, and would not vote on a matter which commanded a strong Party whip on both sides just because it happens to be an English matter. I simply do riot believe that that would happen. Of course they would vote. There might be a majority of Members of Parliament ill favour of that measure, although there might well have been in the same vote a majority of English Members of Parliament against it.
In this instance, the Scots Members would have foisted onto England that which the English did not want, and that which the English Members of Parliament had indicated they did not want. The Scottish Members of Parliament would have voted on a matter which affected England, when the English Members of Parliament were denied the right to vote on the same matter when it affected Scotland, and upon which the Scottish Members of Parliament were also denied the right to vote.
I believe that this is a recipe for real disaster and for real conflict between the nations. The noble Lord, Lord Hughes, said that he was worried when people said that this was the price that Scotland had to pay. This is the trouble with the Bill. As I have said before, it does not cultivate the harmonies; it exaggerates the discord.
One comes back to the inevitable conclusion that, however plausible the arguments are on the surface, in the end the Bill, because of these types of measures, will do no good. The reason is quite simple; namely, that the Government have tried to mix a federal system and a unitary system. The noble Viscount, Lord Thurso, and the noble Lord, Lord Mackie of Benshie, said that they were glad that this was a step towards federalism. But what the Government are doing is trying to give a federal

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system to Scotland, a federal system to Wales and a unitary system to England. It is that which will not work.
It may be that the Government will say—and I apologise if I take the words out of the noble and learned Lord's mouth—that the Scottish Members will not interfere with English legislation. But I do not believe that we can rely upon that in a constitutional Act of Parliament. It will put the Scottish and Welsh Members in an intolerable situation. They will not be able to vote on Scottish domestic affairs because they will have been devolved. They will not be able to vote on Welsh domestic affairs because they will have been devolved; and they will not be able to vote on English domestic affairs because that is not their business. So, what are they going to vote on? They can vote on the Budget, of course, and on all the other things which are of a reserved nature. But they will almost he disfranchised from the guts of political life, which are the domestic affairs—
Lord DAVIES of LEEK: We shall still have our rugby.
Earl FERRERS: I am quite sure that regardless of what Scottish or Welsh Members are allowed to vote upon, it will not stop the noble Lord, Lord Davies of Leek, from speaking and voting on a multifarious number of topics—and very well will that be received, too. I think, therefore, that my noble friend Lord Selkirk was quite right to put this Amendment down, but it does have difficulties; and so bizarre is this Bill that it is very difficult to amend the blessed thing without running into the very difficulties which have exercised your Lordships this evening.
Of course, the Amendment seems logical enough, and I utterly sympathise with its purpose, but the trouble is that it creates two classes of Members of Parliament, some who can vote on some things and others who can vote on all things. I think it was the noble Lord, Lord Raglan, who said that it is a cardinal principle that Members of Parliament are equal and have an equal right and vote over all matters. But even if one sympathises with my noble friend Lord Selkirk in
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his Amendment, I do not believe that if it were pressed it would be accepted by another place, because it will distinguish between Members and will divide Members. This is the last thing, I am quite certain, another place would want, and it is the last thing that I am sure my noble friends would wish to suggest to another place.
Lord RAGLAN: The noble Earl says that it will distinguish between Members, but this Bill already does so, and he has already said that it does. He has already said that it makes the Scottish MPs (and, when the Wales Bill comes through, the Welsh MPs) of a different category from the English MPs, because many subjects will have been devolved to Assemblymen and they will no longer have any say over those matters.
Earl FERRERS: I quite agree, and I have a lot of sympathy with the noble Lord, Lord Raglan. But what I was going to say was that I sympathise with the purpose of this Bill but I believe it is terribly important that we should try to find some Amendment which would be acceptable, not only to your Lordships but to another place. I think it is very difficult to do, but I believe it can be done; and I would hope that if my noble friend were not to press this Amendment tonight we might be able to come up with a suitable Amendment at the Report stage which might combine the principles of what he intends to do with practical acceptance by both your Lordships and, one hopes, another place. So I would hope that my noble friend would not in fact press it this evening.
Lord McCLUSKEY: I shall try to follow the example of the noble Earl, Lord Selkirk, and be brief, and I hope that on this occasion I might perhaps get to the end of what I have to say without the interruptions which my speeches usually occasion. I have heard this Bill described by many adjectives, but this is the first time it has been described as "blessed", and I am indebted to the official spokesman—
Earl FERRERS: I hesitate to interrupt the noble and learned Lord within three words of the beginning of what he has to say, but if he is going to quote me I know that he would wish to quote me correctly.

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I did not say "blessed"; I said "bizarre"—and that is not the same thing, even in the noble and learned Lord's language.
The LORD CHANCELLOR: "Blessed" came through loud and clear.
Lord McCLUSKEY: No doubt the record will show, as indeed the Chief Whip is telling the noble Earl, that he said "blessed". Turning aside from these matters, I agree entirely with the noble Earl that there is a fundamental reason why one should not support this Amendment. The idea which the new clause asserts is one which has been looked at many times in the past, and particularly in connection with the Irish Home Rule Bills. Indeed, as the noble Earl pointed out, the Kilbrandon Commission, in paragraph 812, contains a passage about this in which it is said that the "in and out principle", as it was there described, was regarded as impracticable. I would believe that to be so, and I believe it to be unworkable and not in keeping with the practice and procedures of the House of Commons. So in that, at least, I am in agreement with the noble Earl—that this is a had Amendment for that reason.
But, practicability apart, in the Government's view the proposals in the Bill provide no cogent reason for excluding Scottish Members from full involvement in the business of Parliament. I would suggest that this is connected—it is certainly not unconnected—with Amendment No. 327; that Parliament will remain sovereign, still able to legislate on everything, including devolved matters, anywhere in the United Kingdom, and for the United Kingdom as a whole, irrespective of the devolution of legislative competence in relation to certain matters to the subordinate Assembly.
Even in the devolved fields, in addition to its inherent power to legislate, Parliament will directly control the use of the Government's reserve powers, for example, the general powers in Clauses 35 to 37. Even in matters not formally or directly touching Scotland but falling under the head of matters in this Amendment, legislation for England and Wales—that is, nearly 90 per cent. of the people—is almost bound to have repercussions for the remaining 10 per cent. in a way which does not apply to anything like the
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same degree in the reverse direction. There is nothing in all this to require any change in Scotland's voice in the other place where English Members will continue to predominate. The Government do not say that these issues should never be re-examined but that this Bill is an inappropriate vehicle and this Amendment a still more inappropriate method.
There are one or two matters that I would like to pick up. The reason why one should not change it in this Bill is that at the present time Scottish Members and Welsh Members vote on English questions. The English are not going to be worse off because of the provisions of the Bill. Certainly a change is made: they will be deprived, to all intents and purposes, of the right and opportunity to vote on the matters devolved when they affect Scotland and only Scotland. That is the only change that the Bill makes in this regard. I have already indicated that the decisions about English matters, because they affect so many in the population, are bound to have an effect in Scotland. I must emphasise that, for it is a very important aspect of this whole debate.
On a much more general matter I find myself in total agreement with the noble Viscount, Lord Thurso, that this Amendment is wholly inconsistent with the continued unity of the United Kingdom. It may be that the anomaly drawn attention to by the Amendment is one to which there is no perfect answer; but what could be more inconsistent than that Members of Parliament for one part of the United Kingdom cannot play an equal role in the ordinary work of the United Kingdom Parliament? The remedy here is worse than the disease, substantially worse. I would agree with the noble Lord, Lord Hughes, that here (as in Amendment No. 327) we are in the incredible position that the House of Lords is threatening the Scots with all kinds of consequences if they proceed to want devolution. This is hardly the way to go about countering the threat against the unity of the United Kingdom—a threat posed not South of the Border but, as I said earlier, North of the Border.
In my submission this is a matter properly for the other place. It cannot he said never to have been raised in the

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other place. I think that the honourable Member for West Lothian constantly raised that matter there and the other place took its decisions on Second Reading and on Third Reading in the full knowledge of the matter which he raised constantly and which attracted the name of his constituency. In my submission this is a bad way of going about it. It is a threat to the United Kingdom, and I would invite the noble Earl not to press this Amendment.
Earl FERRERS: I am sure I am mentally numb over some things but I should be grateful if the noble and learned Lord could draw me along with him a little more slowly than he has. How can he say that this does not affect the United Kingdom at all, when certain parts have been devolved to Scotland and yet, as the Bill stands, the Scottish Members of Parliament are going to determine what happens in England in a way that they cannot do in Scotland? I do not understand it.
Lord McCLUSKEY: Let me explain. What I am saying is that, at the moment, 71 Scottish Members and 31 Welsh Members come and vote in the United Kingdom Parliament. You can now have a situation where, in England, there is a majority of Conservative Members but in the United Kingdom Parliament there is a majority of Labour Members. That is regarded as tolerable; it exists at the present time. The Bill does not change that. It does not make the situation any worse, as it were, for the English Conservatives than it is at the present time.
Several noble Lords: Oh!
Lord McCLUSKEY: I was interrupted by a little mirth there. I will try to pick up the thread again. Surely, that is plain.
The other point is this: it seems to be imagined that the English will be up in arms if a situation develops in the future when there is a majority of Labour Members who come from Scotland and tip the balance in the United Kingdom. As my noble friend Lord Hughes pointed out, this kind of situation has been lived with in Scotland—and indeed in Wales—for many years, where the possibility
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exists that although Scotland and Wales return a majority of Labour Members, in fact, because of the influence of England, they get themselves a Conservative Government at Westminster. They have had to thole it—to use the perfectly good Scottish word. Why should it cause such a tremendous revolution in England if they have to thole it once or twice?
Earl FERRERS: Can the noble Lord explain this? In the example which I gave, for instance over education, which is a devolved subject, the Assembly deals with that and says what kind of education it is going to have in Scotland. In the same way, the United Kingdom at Westminster says what education is going to be like in England. But over that matter the Scottish MPs can vote regarding the type of education that the English are going to have, even though that may be contrary to what the English want.
Lord McCLUSKEY: I have never disputed that. They can do that now.
The Earl of SELKIRK: The noble and learned Lord, Lord McCluskey, made a very predictable speech. I tried to make it up before he started, and it was quite a good speech; but he really did not go to the fundamental point. I do not want to pander to Scotland. There is this extraordinary fear which people have of Scottish nationalism; it is totally unjustified. The noble Lord, Lord Hughes, talked about discontent. If he goes to any part of the country he will find great discontent at the Government. I am not saying this particularly as something anti-Socialist. All over the country people are becoming more and more conscious about politics; and they are becoming more and more conscious that it could be done better. It is not only in Scotland. Scotland transmutes it into a sense of nationalism, but this is going on all the time.
I do not agree with the fact that there is no division; there is a sharp division. Members will be told frankly that they cannot vote on certain subjects. I do not think that this will have the slightest repercussion in Scotland. I think that it will make them realise to some extent that they have to concede something. To be perfectly frank, Scotland is not following this debate at all. If you read

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the Scotsman every day you do not have the foggiest notion of what is happening here. I do not blame them for that—but you would not have any idea.
I must say that I found the noble Viscount, Lord Thurso, making some extraordinary remarks. I suppose that if you are a Liberal you can do so. He said that this cuts chunks of legislative power out of the United Kingdom. It is a lovely idea, but that has absolutely nothing to do with the Amendment or the Bill. But never mind about that. I want to make two points and I want to put this to my noble friend Lord Ferrers. If I withdraw this Amendment, will he undertake to put an Amendment down at the next stage which gives full discussion to the other place on this issue, and which makes a demand on Scotland to show that they have to pay something for having their Assembly? Can he assure me that he can put an Amendment down with a cut in it that does both those things?
The LORD PRIVY SEAL (Lord Peart): Hear, hear!
Earl FERRERS: The noble Lord, Lord Peart, said "Hear, hear". I am delighted that he should do that; it gives me great courage. What I can assure my noble friend is that I will undertake to put an Amendment down at the next stage which will enable this, if it is passed, to be discussed and considered by another place. That is the appropriate place in which to discuss the matter. I hope that that will satisfy the noble Earl.
The Earl of SELKIRK: I do not want to press this tonight. It is much more important that noble Lords are considering the Amendment. I am prepared to consider putting an Amendment down, or the noble Earl putting an Amendment down, which will achieve these objects. I am not trying to jostle the Government. I am not keen in dividing the Committee if I can possibly help it. I want to get the Bill improved, as I have tried to do from the beginning. If the noble Earl gives that undertaking, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 67 [Transfer of property]:
11.10 p.m.
Viscount COLVILLE of CULROSS Viscount COLVILLE of CULROSS moved Amendment No. 211:
Page 33, line 11, leave out subsection (3).
The noble Viscount said: I wonder, after those heady draughts, who would really wish to descend to the transfer of property?—but there is a noble Lord opposite who is prepared to do so. The point is a short one. I entirely understand that in Clause 67 there will be the requirement to transfer a great deal of property, no doubt of a fairly miscellaneous nature, which is required to be transferred in connection with the exercise of functions concerned with devolved matters. What I do not follow at the moment are the comprehensive provisions of subsection (3) of Clause 67.
The noble Lord, Lord Kirkhill, I am sure, will be able to explain this, but what I find different as between this provision and the equivalent provision not that long since passed in the Local Government (Scotland) Act 1973, in Section 222, is yet again the override powers that are provided in this subsection (3). Whereas, of course, it must be right that there should be the ability to transfer property, is it right that one can override any restrictions that anybody may have put upon the property in the first place? These may he statutory or they may he a matter of private negotiation. They could easily have been the terms on which some property was transferred to a public authority in the first place; yet these terms are to be disregarded and overridden without, so far as I can make out, any opportunity for anybody to protest or do anything about it. It is really this aspect of the issue which goes beyond what precedent would seem to indicate, and which I should like the noble Lord, if he would be so kind, to explain. I beg to move.
Lord KIRKHILL: If I can be of help to the Committee, I think it would be best if I explained the intention behind Clause 67. When the Scottish Executive take over responsibility for devolved matters, it is right that they should also take over property used in connection with those matters—property now vested in my right honourable friends, the Secretary of State for the Environment and the Secretary of State for Scotland. Indeed, it would

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be a little odd if they did not, for the Executive would then be beholden to the Government for their offices and furniture at a time when they were responsible, under this Bill, for a wide range of policy and executive functions.
As noble Lords will recognise, such property transfers are a perfectly normal feature of legislation setting up new public sector bodies. For example, property was transferred by the Minister for Public Building and Works to the Post Office Corporation under the Post Office Act 1969. The property dealt with by Clause 67 will be of a diverse character—office blocks occupied by civil servants working for the Executive on devolved matters, the Assembly accommodation itself, including the Royal High School, garages, stores, caretakers' houses—even ancient monuments, as was mentioned earlier, owned by the Secretary of State—hospitals, and so on. The common feature of this collection is that the properties are all used in connection with devolved matters and are now owned or leased by the Secretary of State. Much of the property will be in Crown hands and, as I am sure many noble Lords will know, in Scotland that means that there may be restrictions on the use or disposal, arising from the system of tenure that exists there. Other properties will have been leased by the Secretary of State, and quite a common feature of leases is a restriction imposed by the landlord, giving him the right of veto over proposals to assign, transfer or sub-let the property to another person.
Quite obviously, of course, if Clause 67 lacked subsection (3) it would be possible for a landlord, or a feudal superior in Scotland, to thwart the intention of this legislation by refusing to agree to assignation or sub-letting; and subsection (3) simply sets aside such restrictions in the particular circumstances of a transfer of property on devolution. I want to assure your Lordships that no general encroachment on landlords' rights is intended by this subsection which, as the noble Viscount will note, is narrowly defined. Since subsection (5) of Clause 67 transfers liabilities, including that of paying rent, it is difficult to see what loss a landlord could sustain by the operation of subsection (3). Indeed, it would be fair for me to say that landlords might find the
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Executive to be a model tenant. At any rate, that is the underlying thinking behind the clause and, in particular, subsection (3) thereof.
Viscount COLVILLE of CULROSS: I am obliged to the noble Lord for that explanation. It is funny, however, that when such incidents of tenure would, no doubt, have occurred in the case of local government property, they did not appear to be dealt with in the provision in the Local Government (Scotland) Act. I should have thought that local authorities, equally, had office blocks, schools, historic buildings and other such places, which would have been subject to these feudal rights, in whatever state they are in Scotland at the moment. However, it seems to me that the main point is that the noble Lord is able to say that, by virtue of subsection (5), there really will he no confiscation of any proprietary rights of any value. It is this that really matters more than anything else. Since he is able to assure us that that is so, I imagine that the Committee would wish the matter to be left there. If so, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 67 agreed to.
Clauses 68 to 70 agreed to.
Clause 71 [Complaints of maladministration]:
The DEPUTY CHAIRMAN of COMMITTEES (Lord Amherst of Hackney): I should warn the Committee that if Amendment No. 289 is agreed to, I cannot call Amendment No. 212.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 289:
Page 34, line 34, leave out subsection (2) and insert—
("(2) The provisions of sections 20(3) and (11), 21(6), 56 and 74 of this Act shall not apply in relation to the Parliamentary Commissioner Act 1967, but an Order in Council under this section may apply, with such additions, exceptions and modifications as appear to Her Majesty to be necessary or expedient, any of the provisions of that Act.")
The noble Baroness said: This Amendment is consequential on Amendment No. 266, which added the Parliamentary Commissioner Act to Part III of Schedule 10, thereby ensuring that the Scottish

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Assembly will be able to legislate for the investigation of allegations of maladministration by a Scottish Secretary in relation to devolved matters. Clearly, the Assembly will not be in a position to legislate about maladministration from the moment Scottish Secretaries take over their responsibilities, so Clause 71 provides for interim arrangements to be made pending the Assembly making its own arrangements. These interim arrangements will be made in an Order in Council applying, with such additions, exceptions and modifications as necessary, any of the provisions of the Parliamentary Commissioner Act 1967.
The addition of the 1967 Act to the list in Schedule 10 meant that that Act as applied to the Scottish Assembly would attract the general conversion provisions in Clauses 20, 21, 56 and 74 of the Bill. This is unnecessary, because in the interim or short-term, the arrangements for investigating maladministration will be spelt out in the Order in Council, which will itself make the necessary conversions to the 1967 Act; and in the long-term the Assembly can make its own legislation and the conversion provisions become irrelevant. Thus the new subsection (2) disapplies those general conversion provisions in relation to the 1967 Act. Otherwise the new subsection is similar to the existing subsection (2).
The noble Viscount, Lord Colville of Culross, had put down Amendment No. 212 to subsection (2) to delete the word "additions", and he will presumably want to make the same change to the Amendment which we have now put forward. There may be technical reasons in the way of that tonight, but we are prepared to accept his Amendment. If it is not possible to do so tonight, we will undertake to make such an amendment at Report stage. I beg to move.
Viscount COLVILLE of CULROSS: This happy news, coming at this time of the night, only leads me to depart into some realm of fantasy. There is, I think, a point of substance here, and I am very glad that the noble Baroness has been able to meet me on this. There has just arrived in this House from another place a Bill called the Local Government Act 1974 (Amendment) Bill, which is not to do with the Parliamentary Commissioner for Administration so much as with the
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Local Commissioner for Administration. But it makes the point that there is being made by Westminster Act of Parliament a change in the powers, which I anticipate adds, perhaps, one tooth to the powers that the Local Commissioner has.
These matters are very jealously looked at. If we are to have an Order in Council which makes additions for Scotland by Order in Council which are not the equivalent of additions made to the powers of the Parliamentary Commissioner South of the Border, there will be ill feeling. There are sufficient restrictions upon what the Parliamentary Commissioner can do anyway (and the greater restriction that sometimes nobody pays the slightest attention to what he says) for there to be a good deal of political mileage in this kind of thing. If, therefore, the Government are prepared at the next stage of the Bill to take "additions" out of their Amendment—this is why I asked the noble Baroness not to deal with this matter on the earlier paving Amendment—and if the noble Baroness is prepared to tell us that, with the removal of that word and any consequential alterations, the matter will then be held in the way in which I should have hoped, I shall be entirely satisfied. Indeed, I am extremely grateful to the Government for having met this point.
Baroness STEDMAN: I can give those assurances to the noble Viscount.
On Question, Amendment agreed to.
Clause 71, as amended, agreed to.
Clause 72 [Confirmation by House of Commons of resolutions passed by it but not passed by House of Lords]:
On Question, Whether Clause 72 shall stand part of the Bill?
Earl FERRERS: This Question—to leave out Clause 72—is consequential upon a decision which your Lordships took earlier in the Committee stage with regard to the rights of your Lordships' House over voting on secondary legislation which comes under this Bill. I beg to move.
On Question, Clause 72 negatived.
Clause 73 [Reckoning of time for certain purposes]:
11.22 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 390:
Page 35, line 19, leave out ("37 or 72") and insert ("or 37").
The noble and learned Lord said: This Government Amendment reflects your Lordships' decision to remove from the policy override Clauses 35, 36 and 37 the power of the House of Commons to confirm a Resolution which they have passed and allow the Secretary of State to go ahead with override action, in spite of the House of Lords not having passed a Resolution to the same effect. The Amendment achieves its effect by simply removing the reference to Clause 72 which, of course, has now been removed from the Bill.
The Government believe that the clause itself is still essential. If Parliament is going to lay down time limits within which action can be taken in Parliament, it is no more than common sense to relate those time limits to sitting days and not to calendar days. Otherwise, in an extreme case, the time limit could expire before anyone has had a chance to take whatever action is in point. The override Clauses 35, 36 and 37 empower the Secretary of State to take action which requires Parliamentary approval within 28 days. Clause 73 prevents time from running while Parliament is dissolved, or prorogued or adjourned for more than four days. I beg to move.
Lord CAMPBELL of CROY: I recognise that the Government have put this down as a consequential Amendment following a decision which was taken by your Lordships' Committee. In addition to the explanation which the noble and learned Lord has given, it is in the nature of editing the Bill. However, as the question of the whole of Clause 73 arises (the noble and learned Lord has referred to it), and there is an Amendment standing in the name of my noble friends to delete Clause 73, I think that this might be a convenient moment for me to put a question to the noble and learned Lord about it.
Clause 73 deals with periods of time. My understanding is that if Clause 73 were to be taken out of the Bill it would mean that periods of time which did not relate to the House of Lords' situation
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would also be taken out of the Bill. For that reason, therefore, it is necessary to retain Clause 73; it covers periods of time which are not connected with the Amendment which we passed earlier in this Committee. Naturally, the Amendment to leave out Clause 73 was put down as well in order that the Government could indicate that the Bill was drafted in that manner.
Lord McCLUSKEY: I believe I have so indicated.
On Question, Amendment agreed to.
Clause 73, as amended, agreed to.
Clauses 74 and 75 agreed to.
Clause 76 [Expenses]:
Earl FERRERS Earl FERRERS moved Amendment No. 213:
Page 35, line 36, leave out from first ("Act") to end of line 37.
The noble Earl said: This is a probing Amendment. Clause 76 reads:
"There shall be paid out of moneys provided by Parliament any administrative expenses incurred by a Minister of the Crown under this Act "—
that is understandable. It continues:
"and any increase attributable to this Act in the sums so payable under any other Act."
I do not understand what it means, and I should be grateful if the noble Lord, Lord Kirkhill, could explain it. I beg to move.
Lord KIRKHILL: I shall certainly attempt to do what the noble Earl has asked of me. Clause 76 is a common form clause which is included in Bills introduced in another place in order to avoid the need to italicise every provision which has financial implications. Where a Bill contains numerous provisions which provide for expenditure as does this Bill, it would be wasteful to set large parts of the Bill in italics when first introduced. To do that would mean a great deal of resetting once the stage at which italics are necessary has passed. So, instead of numerous italicised passages, a single expenses clause on the lines of Clause 76 is included and that clause is the only part of the Bill which is italicised.
Clause 76 is a procedural device, and now that the Bill has left the other place it has served its purpose. An expenses

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clause of this kind is always regarded as spent when legislation is consolidated. It has no effect of substance. As and when money is required for various purposes of the Bill, that money will have to be voted in the usual way. I hope that explanation is of some assistance.
Earl FERRERS: In fact, it does not give me very much assistance. The noble Lord merely explained why it might have been in italics and was not in italics. He really did not explain what it would have meant had it been in italics, other than the fact that it was presumably a financial provision, which I quite understood in the first place. What I did not understand was the meaning where it says—
"any increase attributable to this Act in the sums so payable under any other Act".
It may be that this is not an important point, but I did not quite understand what it meant, and I am afraid I still do not understand.
Lord KIRKHILL: I am advised that it is a procedural device. I am advised that its emphasis is now spent because the Bill has left the other place. I am further advised that it is common and usual practice.
Earl FERRERS: I am sure the noble Lord's advice is excellent, but it still does not help my understanding of it. However, at this juncture I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 76 agreed to.
Clause 77 [Interpretation]:
11.30 p.m.
The Earl of SELKIRK The Earl of SELKIRK moved Amendment No. 376:
Page 35, line 40, at end insert—
(" "Chairmen" means the Chairman of Committees of the House of Lords and the Chairman of Ways and Means in the House of Commons.")
The noble Earl said: I shall not be very long. As I wandered through this Bill for the first time I came upon the word "chairman". I know that if I had been a very intelligent man, and I happened to have the full list of Statutes for the last 40 years around my sitting-room,
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I could easily have found out what the answer was. The answer, of course, is the chairman of Ways and Means; and the chairman in this House. It seems to me a matter of simple convenience for anyone reading this Statute that those words should be put in the interpretation clause. They are perfectly correct. They add nothing to the Bill; they detract nothing from the Bill, but they make it just a little simpler for anyone reading the Bill for the first time. I beg to move.
Lord McCLUSKEY: When the noble Earl suggested that such a definition might be put in I indicated that the Government did not share that view and I hoped that he would be satisfied with the explanation given. He is obviously not so satisfied, but it is the firm view of the Government and of Parliamentary Counsel, who have specifically looked at the matter again, that the definition is already incorporated in the Bill by Clause 28(4) and nothing further is needed. Indeed, the proposed Amendment would simply complicate the Bill, because to put into Clause 77 material needed solely—and I emphasise that, solely—for Clause 28 would not help the reader. The Bill as it stands imposes no hardship on the reader. To follow Clause 28 in detail he must in any event turn to the 1936 Act, because in substance what Clause 28 does is to add new provisions to that Act. Indeed, Clause 28 is not comprehensible on its own.
Clause 28(4) mops up in general terms all expressions—and I quote:
"to which a meaning is assigned by the Act of 1936".
The Act, in its own definition clause, contains very few definitions: the critical expressions are defined in the substantive provisions as they go along. So Clause 28(4) takes no chances. And one could not define "chairmen" without laboriously checking the whole of Clause 28 against the Act of 1936 to see what else would merit express words. The draftsman has been consulted specifically about this and he concurs in the views which I have expressed.
The Earl of SELKIRK: With very great respect, the draftsman must live in a totally unreal world. Anyone reading this provision comes to the word "chairmen" and it means absolutely

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nothing until one has the Act of 1936. Normally one does not have those Acts readily available. I am only putting this forward as a convenience. I will not press the Government, but I must really say that I expect a higher standard for the general public; they should have some idea of what it is about. The moment I realised what was intended by the word "chairmen" the words fell into place straight away. I know something about the 1936 Act, but I could never have found out unless I had the Act before me. I think that the noble and learned Lord's draftsmen are living in a totally unreal world and have no respect for ordinary people like myself and others. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Baroness LLEWELYN-DAVIES of HASTOE: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

KING'S COLLEGE LONDON BILL
Examiners Certificate that no further Standing Order is applicable: Ordered to lie on the Table.
HOUSING (FINANCIAL PROVISIONS) (SCOTLAND) BILL
Returned from the Commons with the Amendments agreed to.
  CROMWELL GREEN: REINSTATEMENT
  CROMWELL GREEN: REINSTATEMENT
  SCOTTISH CONSTITUENCY ELECTORS
  SCOTTISH CONSTITUENCY ELECTORS
  ENGLISH AND WELSH CONSTITUENCY ELECTORS
  ENGLISH AND WELSH CONSTITUENCY ELECTORS
  ELIZABETH GARRETT ANDERSON HOSPITAL
  ELIZABETH GARRETT ANDERSON HOSPITAL