Sitting of 20 March 1979

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

    Defence Sales Organisation
    Mr. Cryerasked the Secretary of State for Defence if he will make a statement on the Defence Sales Organisation.
    The Minister of State, Ministry of Defence (Dr. John Gilbert): The Defence Sales Organisation continues to provide support, assistance and advice to British industry and the Royal ordnance factories on the promotion of overseas sales of defence equipment and associated services.
    Mr. Cryer: Will my right hon. Friend confirm that the Defence Sales Organisation will not be used to sell discarded Iranian surplus Chieftain tanks to China? Does he acknowledge that Labour Party policy, which involves a switch from war production to peaceful production, should be implemented by producing a plan for that peaceful transition, in conjunction with the Department of Industry? Does he accept that recent statements by the Pope, for example, heartily endorse Labour Party policies? Can my right hon. Friend make a start by announcing the phased withdrawal of the Defence Sales Organisation?
    Dr. Gilbert: As to the first part of my hon. Friend's question, we have, as far as I know, received no request from China for tanks to be sold to them, so that point does not arise. As regards my hon. Friend's more general point, namely, the conversion of defence industries to peaceful production, no one would be happier than Defence Ministers if there were no need to produce military equipment on the present scale. Unfortunately, questions of this sort depend very much
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    on the progress of detente, and for the time being we need such defence production capability as we have in order to equip Her Majesty's Forces.
    Sir Ian Gilmour: Does the Minister of State agree that this does not entirely depend on the progress of detente? Should he not point out to his exceedingly ill-informed hon. Friend the Member for Keighley (Mr. Cryer) that, under this Government, the number of unemployed is already 1,400,000? Therefore, to stop defence production would merely add to unemployment.
    Dr. Gilbert: In the past I have given instruction to the right hon. Gentleman's then deputy to the effect that defence production was engaged in for the defence of this country and not as an employment-generating function. I regret to have to repeat that instruction to him.
    Mr. Grocott: Does my right hon. Friend agree that it would appear very strange to the neutral observer if Britain were supplying defence equipment to countries which we helped through the aid programmes of the Ministry of Overseas Development? Will my right hon. Friend liaise with his right hon. Friend to ensure that we do not find ourselves in the profoundly cynical position of following a policy of giving aid to the poorest countries and at the same time of supplying them with sophisticated military equipment?
    Dr. Gilbert: I see nothing particularly inconsistent in those two activities. As I have said at this Dispatch Box on more than one occasion, I deplore the fact that the less developed countries find it necessary to spend such a large part of their scarce resources on defence equipment. I am sure that my hon. Friend and I are totally at one on that. However, the fact remains that they require this equipment, and when they wish to purchase it from us from time to time it produces jobs for our factories rather than the factories of other countries.
    Mr. Banks: Concerning the contract for Iran, why is the Minister so reticent about providing us with details of the contracts at the Royal Ordnance Factory, Leeds, which now look like being lost? Does he recognise the importance of the jobs of the people working there and the need for continuity of production? Will he

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    consider what budget extensions may be necessary to allow the British Army to re-equip with a modern tank in the 1980s?
    Dr. Gilbert: I assure the hon. Gentleman that we are seized of the serious implications for the Royal Ordnance Factory, Leeds, of the ending of project 4030 for Iran. My right hon. Friend and I have already had discussions with the trade unions involved at national level, and I understand that local discussions are also taking place. I have also taken the initiative with ministerial colleagues in other Departments in attempting to find other work to go to the Royal Ordnance Factory, Leeds. I wholly share the hon. Gentleman's view that it is necessary for us to preserve a tank capability at Leeds in order to equip the British Army in the 1980s with what I believe will be one of the finest tanks in the world.

    Northern Ireland
    Mr. Biggs-Davisonasked the Secretary of State for Defence whether he will make a statement on the work of the Armed Forces in support of the civil power in Northern Ireland.
    The Under-Secretary of State for Defence for the Army (Mr. Robert C. Brown): The Armed Forces' operations in support of the Royal Ulster Constabulary continue to meet with success. The security forces have the ability to respond promptly and firmly to changes in the terrorist threat and their operations are contributing to the return to normality in the Province. A recent success was the joint RUC-Army operation in which more than 40 explosive devices were recovered from a house in Belfast.
    Mr. Biggs-Davison: Does not the mortar attack on Newtownhamilton suggest that, although there has been an improvement in police co-operation across the border, there is need for improved liaison between the security forces of the Republic and the kingdom generally? Can the Minister give any information about the type and origin of the mortars used?
    Mr. Brown: Naturally, the Army seeks to ensure the safety of its bases at all times. Operations are mounted to this end, but it would not be in the interests of security to go into more detail at this stage. I am satisfied that we are doing all
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    that we reasonably can to protect our bases from terrorist attack. I am sure that the House will share by revulsion at this attack, as well as my sympathy with those involved and their relatives. Cross-border co-operation at the present time is better than it has ever been.
    Mr. Powell: Will the Minister, in conjunction with his right hon. Friend the Secretary of State for Northern Ireland, do all in his power to rebut unfounded smears and allegations against the Armed Forces in Northern Ireland, whether those are made inside or outside this House?
    Mr. Brown: Yes. Some of the more or less slanderous allegations that have been made against the security forces in recent times are most unfortunate.
    Mr. Goodhart: I join the right hon. Member for Down, South (Mr. Powell) in hoping that the smears against the Armed Forces will now stop, but is not my hon. Friend the Member for Epping Forest (Mr. Biggs-Davison) right in suggesting that co-operation between our Army in Northern Ireland and the regular forces of the Republic is at a very low state indeed? Is there not room for substantial ministerial action to put this right? Is there any prospect of increased co-operation in the months to come?
    Mr. Brown: As I have said, close links have been established between the police forces on both sides of the border to enable all elements of the security forces to act in concert. This works well. I understand that army-to-army contact is unacceptable to the Irish authorities. In the first place, the roles of the armies are not the same. However, in general, cross-border security co-operation has improved very greatly.

    Airfields (Defence Systems)
    Mr. Rhodes Jamesasked the Secretary of State for Defence whether he is satisfied with the capacity of Her Majesty's forces to defend Royal Air Force airfields against air attack; and whether he proposes additions to the ground-to-air missile defence systems as described in the latest statement on the Defence Estimates.
    The Under-Secretary of State for Defence for the Royal Air Force (Mr. James Wellbeloved): Our fighter and missile defences present a strong deterrent to

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    hostile aircraft targetted against RAF airfields. The"Statement on Defence Estimates 1979"sets out a number of improvements that are being made to the RAF's ground-to-air missile defence capability.
    Mr. Rhodes James: I thank the Minister for that reply. Is he aware that there remains considerable concern in certain quarters about the capability of defending our airfields by ground-to-air missiles? Is he further aware that the essential point of our defence expenditure is to maintain the credibility of Western defence and that the moment that credibility is challenged or questioned the preservation of the fragile peace that we have becomes at hazard?
    Mr. Wellbeloved: We welcome support from Conservative Members, whenever it takes place, for the substantial improvements that the Government have made in our air defence capability.
    Mr. Ernest G. Perry: Will my hon. Friend bear in mind that 40 years ago this month the Nazis invaded Czechoslovakia and that our air defences then were far worse than ever before? Today, together with our allies, they are better than what they were then. Will he bear in mind that in opposition the Tories are always spendthrifts, but in power, parsimonious?
    Mr. Wellbeloved: I am well aware of the truth of the latter part of my hon. Friend's comments. Both before the Second World War and since—for instance in 1957—the Conservative Party dismantled and discarded our air defence capability. As I have repeatedly told the House, it is this Administration who have put it back on a proper footing, although a great deal remains to be done if we are to be in a position to meet the increasing Soviet threat.

    Nuclear Capability
    Mr. Rifkindasked the Secretary of State for Defence when he expects to be able to announce his decision as to a replacement for the United Kingdom nuclear deterrent after the present deterrent has ended its useful life.
    Mr. GeorgeRodgers asked the Secretary of State for Defence if he will make a statement defining the role of the
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    United Kingdom independent nuclear weapon and indicating whether it is intended to retain this capacity.
    The Secretary of State for Defence (Mr. Frederick Mulley): The United Kingdom's nuclear capability must be seen in the context of NATO's strategic and theatre nuclear forces, the central role of which is to deter aggression. This independent contribution also strengthens collective deterrence by providing a second centre of decision-making within NATO, thereby increasing the uncertainties faced by an aggressor.
    The Government have made it clear to the House on numerous occasions that the Polaris submarines will continue to form an effective contribution to NATO's deterrent strategy into the 1990s. It is, therefore, premature to come to a decision at this stage as to a possible successor. If in due course it should be decided to proceed with a successor to the Polaris force, the time scale would depend upon the option chosen.
    Mr. Rifkind: Does the Secretary of State accept that the useful life of Britain's nuclear deterrent is unlikely to be more than another 14 years? As it is likely that at least 13 years will be required to develop any successor system, is it not extraordinary that there was no mention of this subject in the defence White Paper? Are the Government deliberately trying to stifle debate on this subject because of the opposition they expect from their hon. Friends?
    Mr. Mulley: On the contrary, the Government welcome discussion on this and on many other aspects of defence policy. I do not accept the hon. Gentleman's timetable. The first question to decide is"whether ". I just recall the fact that the first Polaris submarine was on station within six years of the signing of the agreement.
    Mr. Rodgers: Is my right hon. Friend aware that there is growing and widespread opinion in this country that an independent nuclear deterrent in the possession of the United Kingdom is not only morally indefensible but absurdly expensive? Will he give an assurance that, in line with the Labour Party manifesto commitment, we intend to abandon this absurdity, which is simply a prestige symbol and is extremely hazardous to this nation?
    Mr. Mulley: I think that my hon. Friend is wrong in saying that in the Labour Party manifesto there was any reference to our abandoning the existing Polaris force. On the contrary, we said that it would be maintained as an effective force. The question whether there should be a successor is, as I have said, one for the future.
    Mr. Cormack: Will the Secretary of State give a categorical assurance that he will wake up to the realities of the situation? Will he pledge the Government to ensuring that we shall have a replacement weapon? Reverting to the point made by his hon. Friend the Member for Chorley (Mr. Rodgers), will he remember that it is not much more than 10 years since the Russians invaded Czechoslovakia?
    Mr. Mulley: I do not see the immediate connection between the hon. Gentleman's first and last points. Obviously, the question is one for the future and not one for me to settle this afternoon.
    Mr. Crawshaw: My right hon. Friend has been reminded of 1938. He will remember that that was a time when some of my colleagues' predecessors were shouting for arms against Germany and denying the country the means whereby they were obtained. Will he bear in mind that, while not going completely mad on the subject of atomic weapons, we must have suitable weapons, so that if we were left on our own we could provide a deterrent against aggressors?
    Mr. Mulley: The Government's policy remains in full support of the NATO Alliance, in which its deterrent posture is based on a triad of conventional, theatre and strategic nuclear weapons.
    Sir Ian Gilmour: In view of the sensible remarks made by the right hon. Gentleman in his original answer about the value and importance of our strategic nuclear deterrent, what possible argument can there be for not saying that there should now be a replacement for Polaris? Why does not the Minister stand up to his anti-Western Friends below the Gangway?
    Mr. Frank Allaun: Anti-war Friends.
    Mr. Mulley: I think that the right hon. Gentleman looks under his bed every
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    night for members of the Tribune group. The idea that there is a great argument on this side of the House is erroneous. There are, of course, arguments about priorities in defence, which is right and proper. Most of the arguments of a serious character conducted in this country come from within the Labour movement. The existing force will remain effective into the 1990s. Therefore, any option if it were to be taken now would be premature. I cannot foresee the course of events, though I hope very much that SALT II will be ratified and that it will be followed by further multilateral arms control arrangements. No one can foresee the situation some years from now.

    Iran (Arms Contracts)
    Mr. Alan Clarkasked the Secretary of State for Defence what is the present state of the United Kingdom's arms contracts with Iran; and whether he will make a statement.
    Mr. Mulley: The previous Iranian Government informed our ambassador on 6 February that the supply of Shir tanks to Iran and action on certain other defence contracts should be terminated and discontinued. These contracts are therefore being brought to an end and the Iranians are being informed accordingly. We have started to discuss with the new Administration in Iran what action they want us to take as regards other defence contracts.
    Mr. Clark: Will the Secretary of State at least tell the House what back-up plans he has for allowing the British Services to benefit from this unexpected windfall, particularly since he and his right hon. Friends so frequently used the term"pre-financed"in their earlier descriptions of these contracts? This can mean only that the equipment will now come in at a bargain price if we choose to take it ourselves.
    Mr. Mulley: On the question of pre-financing, the contracts involved progress payments. There can be no question of our not having to account for the moneys received and the tanks already supplied. It is not a question of a large number of tanks which have been paid for, and there is no question of their being used for the British Army in that context. The Chieftain tank is still an effective weapon.

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    Unless the Army is to re-equip totally with a new tank—one designed for different circumstances from those in Germany, where we need to deploy our own tank force—it is better to have the MBT 80 which we are planning, rather than to try to bring the Shir tanks in at an earlier stage. We are examining these aspects.
    Mr. Terry Walker: Will my right hon. Friend consider the factories which have hitherto relied on Iranian contracts, such as the BAC dynamics group factory at Filton? Can he say whether, if any contracts are available, they will be awarded to those factories to offset any redundancies which result from the cancellation of Iranian orders?
    Mr. Mulley: We are in touch with all the firms involved in these contracts. Where possible, as my right hon. Friend said in answer to an earlier question, in consultation with other Departments we are seeking to provide alternative work.
    Sir Ian Gilmour: Is it true that the Ministry of Defence placed a number of contracts on behalf of the previous Iranian Government with defence firms in this country, without achieving cover in the form of an order from the Iranian Government of the day?
    Mr. Mulley: No, not to my knowledge. In each case there have been proper contractual arrangements.

    Oman
    Mr. Martenasked the Secretary of State for Defence what are the British defence obligations to Oman.
    Mr. Mulley: There are no legal obligations as such, but we second personnel to serve with the Sultan's Armed Forces, and we train Omani personnel in the United Kingdom.
    Mr. Marten: In view of the current situation in the Gulf, are the Government prepared, so far as they can be, to respond to requests for help from Oman?
    Mr. MulleyWe shall look with great sympathty on such requests as we may receive. We have, however, to await requests and deal with them when they arrive.
    Mr. Grocott: Is my right hon. Friend assured that the quality of the advice which the Government are receiving on
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    the stability of the regime in Oman and the degree of its popular support is of a higher order than that which we recently received on the regime in Iran?
    Mr. Mulley: These questions are primarily for my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs. However, I have no reason to doubt that we receive proper advice. It is then for Ministers to deal with that advice.
    Mr. Blaker: In recent years, has not Oman been the subject of sustained and unprovoked aggression from South Yemen, encouraged and assisted by the Soviet Union? Has the Secretary of State any reason to imagine that such aggression will not be repeated, especially if the co-operation of Britain with Oman were to cease?
    Mr. Mulley: We have no plans to change the present arrangements which, I understand, the Government in Oman wish to continue.
    Mr. Newens: Are British forces in Oman there to defend democracy and democratic values? Will my right hon. Friend assure the House that he is convinced that such values exist there?
    Mr. Mulley: The British personnel in Oman, as I said in my initial answer, are seconded. They are not serving in their capacity as members of the British forces. Their role is exclusively to train Omani personnel so that they can gradually take over these responsibilities themselves.

    Dartmoor (Storage of Dangerous Substances)
    Mr. Steenasked the Secretary of State for Defence if he will make a statement about the proposed plan by his Department to store lethal, poisonous and noxious substances on Dartmoor.
    Mr. Robert C. Brown: We plan to provide a protected compound at Okehampton camp, similar to others which are already in use elsewhere, to facilitate training in a nuclear and chemical environment. Small quantities of toxic materials would be stored in the compound under conditions which would ensure that there was no risk to the Service men or to the public.
    Mr. Steen: I am a member of the Dartmoor Preservation Society. Why is the

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    Minister so intent on extending the military presence into one of the country's unique national parks? How does he square his view with the Government's policy, which is to preserve and protect the national parks at all costs against any incursion?
    Mr. Brown: The hon. Gentleman has got the wrong end of the stick. We are not extending our activities in to the national park. We are doing nothing that has not been done for many years.
    Mr. Jay: Cannot the Government find a safer and more remote area in which to store these materials than one which is frequented by thousands of visitors throughout the summer?
    Mr. Brown: I give my right hon. Friend an absolute assurance that there is no danger at all from the storage of these substances. They are also stored in other areas. The fact that this is a national park does not alter the situation. It is a military training area.

    Royal Navy (Defence Capability)
    Mr. Trotterasked the Secretary of State for Defence whether he is satisfied that after the withdrawal of HMS"Ark Royal ", the Royal Navy remains able to deal with the potential threat posed by the very large new Soviet warships such as the"Kiev"and"Minsk"which are armed with aircraft and long-range missiles.
    The Under-Secretary of State for Defence for the Royal Navy (Mr. A. E. P. Duffy): Yes, Sir. I am satisfied that, with the support of our NATO allies, we can meet the potential threat.
    Mr. Trotter: Does the Minister agree that these new Soviet aircraft carriers, which are twice as large as any ship in the Royal Navy, present a formidable threat to our sea lines of communication? Can he tell the House whether the"Kiev"and the"Minsk"operate in areas of strategic importance to our shipping?
    Mr. Duffy: The"Kiev"is at present located north of the Shetlands.
    Mr. Rost: What is it doing there?
    Mr. Duffy: The"Minsk"is off the coast of West Africa. With the introduction into service of these ships the Soviet
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    Navy will undoubtedly continue to improve its anti-submarine and anti-surface shipping capability. However, the threat that they pose can be countered by a concerted response from land-based aircraft, together with Royal Navy missile-armed warships and SSNs and, in due course, the Sea Harrier. The Royal Navy, however, will not have to deal in isolation with a potential Soviet threat. It will be able to rely on the support of NATO.
    Mr. Cronin: Does my hon. Friend agree that HMS "Ark Royal"represented too many eggs in one basket and that the much smaller Soviet ships such as"Kiev"and"Minsk"are amply counter-balanced by the anti-submarine cruisers?
    Mr. Duffy: I am glad to be able to inform my hon. Friend that HMS"Invincible"will be engaged in sea trials this spring and that we shall embark the Sea Harrier for further trials next year.
    Rear-Admiral Morgan-Giles: What assessment has the Minister made of why the Russians are building these large aircraft carriers?
    Mr. Duffy: In order to obtain a response to a question on a different policy area the hon. and gallant Gentleman must table a different question.

    Military Medal
    Mr. Farrasked the Secretary of State for Defence what is the number of living holders of the Military Medal who received that award prior to 2 September 1939 and also the number of those living who received the same honour subsequent to 2 September 1939.
    Mr. Robert C. Brown: Approximately 116,000 Military Medals were awarded in the First World War and about 17,000 in the Second World War. I am afraid that I have no means of knowing how many recipients of the medal are still alive.
    Mr. Farr: Will the Minister correct the disgraceful anomaly by which those who won the medal after the outbreak of the last war received a financial reward whereas those who gained the distinction before the outbreak of the last war received no such recognition? Will he examine this and put it right, as it will cost little?
    Mr. Brown: No. The financial benefits associated with the Military Medal were introduced in 1945. The Government of the day decided that the awards could not be back-dated beyond 1939 because it would have been impossible to trace all those who were entitled to payment. That decision has been upheld by successive Governments when the matter has been reconsidered.

    Central Treaty Organisation
    Mr. Newensasked the Secretary of State for Defence if he will make a statement on the British military contribution to the Central Treaty Organisation in the light of recent developments in the Gulf; and whether he is proposing to review this contribution.
    Mr. Mulley: Member countries do not declare forces to CENTO, but have participated in a programme of military exercises and conferences. In view of the decision of Turkey, Iran and Pakistan to withdraw from CENTO the organisation must be considered to be at an end. The exercises which had already been arranged for the remainder of the year will not, therefore, take place.
    Mr. Newens: Does not the rapidity of the collapse of CENTO demonstrate the stupidity of basing our military alliance policies on undemocratic regimes which are completely rejected by many of their peoples when they have an opportunity to assert their rights? Is not there a lesson for us to learn, which we should apply to the rest of the Gulf area?
    Mr. Mulley: CENTO served a useful purpose in co-ordinating policies in this area for a number of years, but I agree that it would now be profitless to seek to perpetuate such an alliance.
    Mr. Amery: Will the Secretary of State recognise what incontinent folly it was for previous Labour Governments to decide to withdraw from Aden and the Gulf? Is he aware that the United States is at last awaking from its post-Vietnamese torpor and is proposing to send some presence to the area? Will the right hon. Gentleman ensure that we, as America's ally are alongside the United States, even if only on a small scale?
    Mr. Mulley: Because of our size and resources, I do not accept that it was
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    wrong for Britain to withdraw from the posture of a world Power. That was the rationale in successive defence reviews which concentrated our effort on the defence of this country and on support of the NATO Alliance. It would be wrong to think that we could become a world Power of the kind that the right hon. Member has in mind.

    Hong Kong
    Mr. Hooleyasked the Secretary of State for Defence what is the approximate cost of the new defence headquarters in Hong Kong; and how much of this cost falls on the British taxpayer.
    Mr. Gwilym Robertsasked the Secretary of State for Defence what study he has made of the role and effectiveness of the £7 million forces' headquarters recently opened in Hong Kong; what figures are available for the total defence expenditure on buildings of this type; and if he will make a statement.
    Dr. Gilbert: As part of the 1975 Hong Kong defence costs agreement, the Ministry of Defence agreed to release the Victoria barracks site to the Hong Kong Government on the understanding that they would provide a new headquarters at no cost to Her Majesty's Government. The cost of the building, which also includes living and recreational facilities, was $HK82 million. There are no plans for similar buildings for the forces elsewhere.
    Mr. Hooley: What is the point of maintaining a military garrison in Hong Kong anyway? The place is indefensible against a land attack, and, in the light of the policies of the present Chinese Government, there appears to be no reason to fear such an attack.
    Dr. Gilbert: In addition to the roles implied for the garrison by my hon. Friend, it also has to deal with illegal immigrants and internal security. The garrison performs extremely valuable roles in those respects.
    Mr. Gwilym Roberts: Does my right hon. Friend agree that when our forces are desperately short of money for men and weaponry it is well-nigh criminal to waste it on prestige blocks of this type, which are presumably full of cocktail cabinets and gold-plated toilets for the officers?
    Dr. Gilbert: My hon. Friend cannot have heard my answer to my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley). The block was provided at no cost to the British Government. The full cost falls upon the Hong Kong Government's budget.
    Sir Anthony Royle: Will the Minister explain to his hon. Friend that Hong Kong is a British colony and that therefore we have responsibility for the internal security and defence of that territory?
    Dr. Gilbert: I thought that I had already made that clear.

    Frigates (Amazon Class)
    Mr. Pattieasked the Secretary of State for Defence how many of the Amazon class frigates were fully operational at 1 March 1979.
    Mr. Duffy: Four, Sir.
    Mr. Pattie: Is the Minister aware that eight Amazon class frigates have been constructed in the last four years? The Minister said that only four of those are operational because of a serious shortage of spares and a 20 per cent. increase in the refit time. Is he aware that captains are taking their ships to sea with some of their equipment not working, rather than risk further delays? What is he going to do to stop that deplorable situation?
    Mr. Duffy: The position is not quite as described by the hon. Member. On the date selected for the question four Amazon class frigates were operational. Today, six are operational. Of the four that were not operational on the day selected for the question,"Avenger"was still undertaking operational sea training after refit and"Ambuscade"was in dock because of a defective gearbox. It was repaired on 2 March and became operational on 5 March." Alacrity"was in dock undergoing maintenance. It is due to return to the operational fleet in April 1979." Amazon"was in refit and is due to be completed in May and to return to the operational fleet in July after basic operational sea training.
    My experience in the last three years is that wherever Amazon class vessels undertake overseas visits they are the object of admiration.
    Mr. Crawshaw: Can my hon. Friend say anything about a possible successor to the Amazon class?
    Mr. Duffy: The type-21 class—which is the Amazon class—was introduced as a general purpose frigate prior to the introduction of the type-22 class, which is intended primarily for anti-submarine warfare. I am glad to be able to inform my hon. Friend that the type-22 class is coming on stream. Two are undergoing sea trials. In its primary role the type-22 will have a more sophisticated ASW sensor and a wider range of weapon systems than the type-21.

    Polaris Missile (Test Firing)
    Mr. Robin F. Cookasked the Secretary of State for Defence if he will make a statement on the test firing in February of a Polaris missile.
    Mr. Mulley: On 20 February, HMS"Repulse"successfully completed a test firing of a Polaris missile at the Atlantic missile test range whilst submerged some 30 miles off shore. This was a routine firing to test HMS"Repulse"weapons system after her long refit at Rosyth and was in accordance with the long-established practice that, after such refits, our Polaris submarines carry out part of their work-up in the Cape Canaveral area.
    Mr. Cook: Has project"Antelope"now been concluded? Did that project, with its test firing and nuclear tests, play any part in the replacement options to which my right hon. Friend referred earlier? Is my right hon. Friend aware of the danger that if he encourages his staff to go ahead exploring those options he will find that they have taken the replacement decision for him?
    Mr. Mulley: I am not sure what was involved in project"Antelope ", which I believe was a code name used a long time ago, but I assure my hon. Friend that this was a routine firing after a refit. It is right that the weapons system should be tested after a refit. None of those test firings involved nuclear devices.
    Mr. Churchill: Bearing in mind the Secretary of State's admission, in a parliamentary reply to me at the end of last week, that in the course of the past 18 months about 300 strategic warheads have been deployed by the Soviet Union against Western Europe in the form of over 100 SS-20 mobile intermediate range ballistic missiles, with a destructive

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    potential equal to 15,000 Hiroshima bombs, does he believe that the capacity of this country to deploy a single Polaris submarine is adequate in the circumstances of this massive Soviet build-up?
    Mr. Mulley: I have tried to explain to the hon. Gentleman on many occasions that we are members of an Alliance. The whole question of the defence of this country, as of all the members of the NATO Alliance, depends on the collective efforts of the alliance. It is totally wrong and misleading of the hon. Gentleman, on the one hand, constantly to state the armed strength of the Warsaw Pact, and, on the other, the national strength of the United Kingdom, as though any possibility of aggression in the future would involve the United Kingdom alone against the Soviet Union.

    Queen's Flight
    Mr. Townsendasked the Secretary of State for Defence what is the age of the aircraft of the Queen's Flight; and if the Government now plan to replace them with modern jet aircraft.
    Mr. Wellbeloved: The Andovers of the Queen's Flight entered service in 1964 and the Wessex in 1969. There are no current plans to re-equip the flight with jet aircraft.
    Mr. Townsend: Is it right that our Head of State and her family have to fly in 14-year-old turbo-props, when her Ministers fly in modern jet aircraft? Will the Minister get a grip and come forward with sensible plans to re-equip this prestigious Flight?
    Mr. Wellbeloved: The hon. Gentleman is factually incorrect. Ministers use the Queen's Flight when it is available, and Her Majesty uses jet aircraft of the Royal Air Force, notably the VC 10. Many years of good and useful service remain to be taken from the Andovers of the Queen's Flight.
    Mr. Tapsell: Is the hon. Gentleman aware that when these aircraft arrive overseas they are universally regarded with affectionate amusement and that they do grave damage to the reputation of British technology? Would it not be in the commercial interests of this country for members of the Royal Family to fly in modern jet aircraft?
    Mr. Wellbeloved: The cost of the Queen's Flight falls upon the defence Vote. It costs the defence Vote £1·8 million. With the pressures on air defence and many other matters, it is right and proper that the defence Vote is concentrated upon the defence of the country. To the best of my knowledge, the Royal Family are satisfied with the arangements made by the Royal Air Force. In any long-range flights undertaken by Her Majesty, VC 10s are available and provide a satisfactory and technologically perfect service.

    NATO
    Mr. Frank Allaunasked the Secretary of State for Defence when he last met the secretary general of the North Atlantic Treaty Organisation; and what matters were discussed at the meeting.
    Mr. Mulley: I met Dr. Luns for lunch when he visited the United Kingdom on 21 February. We discussed informally a number of issues of current interest to the alliance.
    Mr. Allaun: Was not Dr. Luns a member of the Dutch Nazi Party from 1933 to 1936? Should he not be asked to resign, even though he purports that his brother signed him on without his knowledge? Is that not—
    Mr. Churchill: On a point of order, Mr. Speaker—
    Mr. Speaker: Order. I shall take the point of order after questions, if the hon. Gentleman does not mind.
    Mr. Churchill: On a point of order—
    Mr. Speaker: Order. This is unnecessary. We take points of order, if possible, after questions.
    Mr. Churchill: Is it in order—
    Mr. Speaker: Order. The same thing happened last week on the Government side of the House. An hon. Member insisted on putting his point of order.
    Mr. Churchill: I am much obliged, Mr. Speaker. Is it in order for an hon. Member, under the cloak of parliamentary privilege, to make unfounded smear allegations against the secretary general of the NATO Alliance, to which we belong?
    Mr. Speaker: Hon. Members take responsibility for their own statements.
    Mr. Allaun: Thank you, Mr. Speaker. Is it not an impertinence—[HON. MEMBERS:"Yes."] I for such a man to come to Britain, as he does continually, and tell us that we must increase our expenditure annually and that we must have a new generation of nuclear deterrents? As for what the hon. Member for Stretford (Mr. Churchill) says, what I have said has been admitted in the press.
    Mr. Mulley: I have seen in the press the references to which my hon. Friend refers. I understand that these allegations have been made from time to time and that Dr. Luns has repudiated any active part in these organisations. I do not see the relevance of this question to Dr. Luns' recent visit.

    TUC
    Ql. Mr. Terry Walkerasked the Prime Minister when he plans next to meet the Trades Union Congress.
    The Prime Minister (Mr. James Callaghan): I meet representatives of the TUC from time to time at the National Economic Development Council and on other occasions. Further meetings will be arranged as necessary.
    Mr. Walker: When my right hon. Friend next meets the TUC, will he discuss the importance of the Government's trade deal with the Chinese? Will he seek to allay the fears of the TUC about the supply of Harrier jets to China which, we understand, is an integral part of the deal. Will he say when the deal is to be finalised?
    The Prime Minister: I shall be happy to discuss this matter with representatives of the TUC if they so wish. As I understand it, negotiations are continuing on many matters, including railway equipment, steel mills, and other areas, as a result of the visit by my right hon. Friend the Secretary of State for Industry. If agreements on those important orders are concluded—I expect them to be—I expect that negotiations and the prospects for the Harrier will look very fair.
    Mrs. Thatcher: The Prime Minister will doubtless wish to discuss with the
    1300
    TUC the rising rate of inflation. How does he explain the fact that even before this year's pay increases have been able to work through into prices, the rate of inflation, on the Chancellor's chosen basis, has already risen to 13·3 per cent?
    The Prime Minister: I would regard that as a piece of Tory disinformation. The right hon. Lady is bearing me out. As wages work through into the rate of inflation, which they have done since last July and the start of the new wage year, in August, the rate of inflation is likely to increase. I am sure that the right hon. Lady will be happy to know that it will not go back to the levels that existed when she was last in office.
    Wage settlements during the last couple of months seem to be settling down at a reasonable level. Certainly they are much less than looked likely after the Ford and the lorry drivers' settlements. As they seem to be settling down, we can expect that although the rate of inflation will go up it will be in the region, I hope, of about 10 per cent., or thereabouts. The right hon. Lady asks whether I shall discuss this matter with the TUC. I assure her that we are already doing so, with the object of reducing inflation over the next three years to under 5 per cent. That is absolutely necessary.
    Mrs. Thatcher: May I make two quick points? The figure of 13·3 per cent. is a piece of Treasury information that was given in a written answer yesterday. As for the inflation rate for the next three years, will the right hon. Gentleman stop making pledges on my behalf?
    The Prime Minister: As the right hon. Lady knows—but would not care to quote—the official retail price index published last Friday revealed the figure of 9·6 per cent. I wonder why she does not quote that figure instead of the response to a carefully planted question designed to produce a certain answer. The right hon. Lady may propose, but I suggest that the electorate disposes.

    PRIME MINISTER (ENGAGEMENTS)
    Mr. Loydenasked the Prime Minister if he will list his engagements for Tuesday 20 March.
    The Prime Minister: In addition to my duties in this House I shall be holding meetings with ministerial colleagues and others. This evening I hope to have an Audience of Her Majesty The Queen.
    Mr. Loyden: Will my right hon. Friend give some thought today to the various meetings that he and other Ministers have had on unemployment, especially in the regions? Does he accept that Mersey-side workers—[Interruption.]—contrary to the views expressed by the Opposition Front Bench, are demanding more and not less Government intervention to deal with the problems that face Merseyside? Is he aware that in the private sector 14,000 jobs have been lost and that Government intervention is required to deal with regional unemployment?
    The Prime Minister: The situation on Merseyside is rather different from that of the North-West as a whole. The Northwest is doing a remarkable job in diversifying its industrial structure. Merseyside is a challenge to everyone. It does no service to anybody to decry the position on Merseyside. The figures and studies show that productivity on Merseyside is not very different from that in the rest of the country. We should not give countenance to the damaging myths that are spread about the whole of Merseyside although the area does have special problems.
    In taking up the challenge, especially in relation to public expenditure, I remind my hon. Friend that, in addition to the jobs that have been lost, about 44,000 jobs have been created or maintained by means of the Industry Act 1972, including valuable jobs produced by the GEC—Fairchild microelectronic industry that is being set up on Merseyside, the Schreiber furniture plant, Shell chemicals, fertilisers and the new Co-operative bank. All these organisations are bringing life to Merseyside, and that must be set against the industries that have gone.
    Mr. Donald Stewart: Will the Prime Minister consider the story that is floating that the Government may attempt to deal with the Scotland Act by referring it to a Select Committee? Is he aware that any attempt to anaesthetise the issue in that way will be totally unacceptable to my hon. Friends and myself?
    The Prime Minister: I do not bother myself with all the stories that float around on these matters. I suggest that the right hon. Gentleman waits until I make my statement.
    Mr. Donald Stewart: When?
    The Prime Minister: In response to requests from other parties, I propose to make it on Thursday. If I were to correct every misleading story that I read in the press, I should never do anything else.
    Mr. Mates: Will the Prime Minister find time today to talk to his right hon. Friend the Chancellor of the Exchequer about the effect that the civil servants' strike is having on some citizens? Is he aware, for example, that two old-age pensioner constituents of mine are unable to draw their premium bonds to meet bills which they entered into before the strike started? Is he aware that another pensioner is unable to cash her national savings to take a holiday for which she has saved for two years? Is not this appropriation of people's money by Government inefficiency the last straw? What will he do about it?
    The Prime Minister: I have always regarded the strike as totally unnecessary, and I have said so. Those who go on strike do not receive pay while they are not performing their duties. That is the Government's responsibility. I understand that there has been a meeting today between the Lord Privy Seal and the Civil Service National Whitley Council and that negotiations will be resumed on Monday, when I hope that they may come to a conclusion. I say again that the new rates are not due to come into force until 1 April.
    Mr. Norman Atkinson: As regards unemployment and trade generally, is my right hon. Friend aware that the labour content of our imports far exceeds the labour content of our exports? Although we may now be in surplus financially, we have a labour deficit. Therefore, will he institute an inquiry to ascertain how best we may bring about a labour balance in our overseas trade?
    The Prime Minister: For the last quarter of 1978 our balance of payments was in substantial balance. I have no doubt that it will build up again in 1979. As

    1303
    for the labour content, by which I assume my hon. Friend means the amount of labour that goes into each unit volume of production, I am not aware of his figures. The figures are well worth studying. I am glad to say that Britain's share of world trade increased in 1977. We more than held our own. Despite a less rapid increase in the level of world trade, I believe that the same will be found to be true of 1978.
    Later—
    Mr. Madden: On a point of order, Mr. Speaker. You will remember that on Question No. 2 my hon. Friend the Member for Liverpool, Garston (Mr. Loyden) attempted to draw the attention of the House to the serious unemployment situation on Merseyside. He did so against a barrage of laughter and giggling from the Opposition Benches. Amidst that laughter a number of Government supporters heard a Member of the Opposition, when my hon. Friend referred to the workers on Merseyside, say that there were no workers on Merseyside. Will you, Mr. Speaker, reassure listeners to the debate, if no one else, that that slur on the working people of Merseyside came from a member of the Opposition?
    Mr. Speaker: Order. I did not hear the remark.
    Mr. Cryer: On a point of order, Mr. Speaker. You will recall that my hon. Friend the Member for Salford, East (Mr. Allaun), when putting a question, was interrupted by the hon. Member for Stretford (Mr. Churchill) on a point of order. Very reasonably, you have always requested Members of Parliament to put points of order at the end of Question Time. The intervention was made in an attempt to suppress a piece of perfectly fair comment, which, fortunately, is free in the House and should be allowed without interference. Will you draw the attention of extremists such as the hon. Gentleman to the fact that Members of Parliament have a right to put a question, that points or order are normally taken at the end of Question Time, and that this is still a free Parliament, without extremism and suppression from the Right-wing minority in the Tory Party?
    Mr. Speaker: Order. Only last week a Government supporter declined to accede
    1304
    to my request to put his point of order at the end of Question Time. I am pleased to say that the House responds overwhelmingly when I ask hon. Members to leave a point of order until after Question Time. That did not happen today and it did not happen last week. I hope that it will happen in future.
    Mr. Frank Allaun: Further to that point of order, Mr. Speaker. I do not object to the remarks of my hon. Friend, in which he drew attention to the point that I made, but would it be right for hon. Members who want to raise a point of order merely to rise and indicate to you that at the end of Question Time they intend to do so? May I say that I am prepared to repeat what I have said—
    Mr. Speaker: Order.
    Mr. Allaun:—outside the House of Commons.
    Mr. Speaker: I rose to intervene before the hon. Gentleman had finished, as I thought he wanted to repeat his remark inside the House and not outside. I apologise.
    Mr. Michael Marshallasked the Prime Minister if he will list his official engagements for 20 March.
    The Prime Minister: I refer the hon. Gentleman to the reply which I have just given to my hon. Friend the Member for Liverpool, Garston (Mr. Loyden).
    Mr. Marshall: Whether the inflation figure be 9·6 per cent. or 13·3 per cent., does the Prime Minister accept that the figure is too high and is rising? Does he also accept that working through the pipeline is the effect of the road hauliers' dispute, during which lost orders and increased costs generally will increase the inflationary spiral? Are not the Government largely responsible as it was they who took off sanctions in that instance?
    The Prime Minister: Now I know how history is made.
    These are not my figures. I have referred to the official index. The figure of 9·6 per cent. comes from the official index that is used consistently by all parties on all occasions, and it has never been challenged. The hon. Gentleman knows the Government's policy on inflation. I much regret that the country did not follow the Government's advice that

    1305
    was offered last autumn, when we said that if everybody were willing to accept a 5 per cent. increase in earnings there would be no increase in inflation. Indeed, inflation would be going down now if that advice had been accepted.
    Mr. David Steel: The Prime Minister referred to the Civil Service pay dispute. Is he aware that the bulk of the Civil Service in Scotland is proposing to withdraw its labour tomorrow? Is he also aware that he referred to an area of misunderstanding when he mentioned 1 April as being the starting date of the new pay round? Is it clear in the minds of civil servants, or have the Government made a statement to make it clear, that the result of the comparability study will take effect from 1 April and not from some future date?
    The Prime Minister: I shall ask my noble Friend the Lord Privy Seal to consider that matter. However, there are still 10 days left in which to negotiate a settlement if the civil servants wish to do so. I understand that they are claiming, with some justification, that during the past two or three years their levels of pay have fallen behind the total emoluments received in private industry and that therefore they have a claim for a substantial amount. That must be worked out over the next 10 days. All I can hope is that if that is proved to be the case, and if there is a staged improvement, everybody else will not use it as another excuse to climb on the ratchet, to go up the escalator once more—and all the other similes that I can think of—which will lead to an increased inflation.
    Mr. Grocott: Will the Prime Minister find time today to turn his mind from devolution and economic matters and consider what contribution the Government can make to the International Year of the Child? Will he bear in mind that repeatedly on Fridays in the House my Bill to end the caning of handicapped children has been blocked by Tory Members? Does he agree that this is a disgrace? Will he undertake, on behalf of the Government, to introduce legislation to end this abhorrent practice as soon as possible?
    The Prime Minister: I could not give any undertaking to my hon. Friend on this matter. Private Members' time is basically for private Members.
    There has been considerable Government activity on the general question of the International Year of the Child, with a great deal of voluntary help. I am glad to say that many activities are being conducted in the country. I am glad to say also that there is a great desire to help children in other countries who are less fortunate than our own.

    QUESTIONS TO MINISTERS
    Mr. Lee: On a point of order, Mr. Speaker. I gave your office notice of this matter. I think that you have had notice of a matter that I intended to raise some time ago. It was simply that a few days ago I sought to table a question to the Chancellor of the Exchequer asking what the tax incidence was appertaining to the Westminster estate. I was told by your office, no doubt in good faith, that questions on individual tax liability were not permitted. I think that that ruling stems from a time before the House, in its wisdom, decided—I voted against—for the first time to divulge to the EEC authorities and Ministers the tax liability of individual taxpayers. That occurred on a VAT resolution last year. It seems to me in those circumstances that there can no longer be the old objection that there once was to putting questions on such matters. I also raised the concomitant question. I asked the Chancellor whether he would introduce legislation to nationalise—
    Mr. Speaker: Order. The hon. Gentleman knows that I have already ruled privately with him on this question and that it is quite wrong to repeat in the House the question that I disallowed.

    STATUTORY INSTRUMENTS, &c.
    Ordered,
    That the draft Grants to Redundant Churches Fund Order 1979 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr Foot.]

TRADE UNIONS (SECRET BALLOTS)
3.36 p.m.
Mr. Raymond Whitney: I beg to move,
That leave be given to bring in a Bill to facilitate the organisation of secret ballots in connection with trades union activities.
Every attempt by members of the Opposition to introduce proposals that are likely to lead to moderate and sensible reforms in trade union practices calls forth an entirely predictable and uniformly hostile reaction from Government supporters. Indeed, sadly, I have reason to believe that there will be another manifestation of that Pavlovian reaction this afternoon. We may well hear a lecture on management studies from an hon. Gentleman who claims to speak in the name of the workers and who will put up yet another smokescreen about the dangers of confrontation with the unions and the inappropriateness of legislation on trade union activities. That point seemed to have singularly little appeal to the Government and their supporters a few years ago when they rammed through the trade union laws that have done so much harm to the country.
In fact, every day the smokescreen becomes easier to see through, although sadly there was an example only last week when even such a normally percipient observer as the Lobby correspondent of the Daily Telegraph was himself confused by the smokescreen in his appraisal of the proposal of my hon. Friend the Member for Workington (Mr. Page), who suggested that trade union members paying their political levy should have the right to decide which party should benefit from that levy.
My proposal is more moderate still. It is no more than to give to trade union members the right, should they so choose, to introduce a greater degree of democracy into trade union procedures. After these agonising months of industrial chaos—chaos that still continues—it is the very least that the people demand of Parliament.
As the effects of Government legislation and policies have worked their way into the system, the public have begun to see clearly the economic and political power
1308
that is exercised at national level by trade union leaders—although, sadly, their power over their own membership is often found to be wanting. They have witnessed the trade union leaders' destruction of the Prime Minister's 5 per cent. pay policy. They have seen the Government fail to extract from the TUC anything more than the tepid platitudes of last month's concordat, even in an election year. They are coming to know more and more about the massive funds that are controlled by the trade union leaders and the powers that they exercise as paymasters of the Labour Party.
The public regard with increasing cynicism the procedures of the Labour Party conferences at which Labour Members, who, very rightly in the case of Rhodesia, demand one man, one vote, seem obliged to accept one man, 1 million votes when they are sitting in Blackpool or Brighton, where those votes are wielded by individual trade union leaders. Those leaders are very important, not only to their trade union members but to all of us. It is therefore vital that they should be representative of their membership.
Believing, as I do, in the innate good sense of the British people, I am convinced that the more representative the trade union leadership is, the better it will be. We must therefore be ready, as the Bill proposes, to offer any sensible help we can to improve the level of democratic practices in the trade unions, whether it is to offer facilities for postal ballots, to encourage employers to co-operate in the organisation of secret voting, or in any other way.
Undoubtedly, some progress has been made. We have the example of the Amalgamated Union of Engineering Workers. After the introduction of a postal balloting system there was a dramatic increase in the percentage poll for union elections. That union now benefits from what is widely regarded as a sensible and moderate leadership. [Interruption.] I hope very much that such an accolade from the Conservative Benches will not cause any embarrassment to that leadership. Very much more needs to be done—[Interruption.]
Mr. Speaker: Order.
Mr. Whitney: Some Labour Members are obviously not accustomed to trade union bargaining procedures. Too many

1309
trade union leaders are appointed to positions of considerable power, often for life, by mechanisms that fall very far short of any reasonable democratic practice. I call in aid the darling of the trade unions, the arbitrator in chief, Professor Hugh Clegg, who, in his own study of the General and Municipal Workers Union, entitled"General Union ", pointed out that
" A regular attendance of 100 in a branch of 3,000 would be considered good. It can be seen, then, that elections are determined by a small minority."
The general secretary of the GMWU and acting chairman of the Trades Union Congress, Mr. David Basnett, claims that he was elected to his job—and, as I understand it, elected to it for the rest of his working life—by 208,000 out of 832,000 votes, but it is clear that his actual support was a very great deal less than even the 25 per cent. that he claims. The GMWU is one of those unions that use the block vote system, under which those who turn up to vote at the elections also use the votes of those who do not. What sort of democracy is that?
I mention Mr. Basnett only by way of example. I do not intend to single him out, important though his position is—
Mr. Ernest G. Perry Mr. Ernest G. Perry (Battersea, South): But the hon. Gentleman has singled out Mr. Basnett.
Mr. Whitney:—because I have no doubt that his story—[Interruption.]—could be repeated.
Mr. Perry rose—
Mr. Speaker: Order. Hon. Members know that interruptions from a sedentary position are quite out of order.
Mr. Perry: On a point of order, Mr. Speaker. I apologise to you most profusely, but I did say that the hon. Gentleman had singled out the general secretary of my union, David Basnett. That was all I said. He has singled him out.
Mr. Speaker: Order. I know that the hon. Member for Battersea, South (Mr. Perry) feels strongly on the question. That is why I addressed my remarks to hon. Members in general rather than to the hon. Member in particular.
Mr. Whitney: I have no intention of making a special case of Mr. Basnett. I wish to use his story as an example of many, as we know that that story, or worse, can be repeated at many points and in many posts throughout the trade union movement.
The case for secret ballots over strike decisions is perhaps less clearcut, but it is nevertheless strong. In order not to delay the House further—[Interruption]—I will cite only two pieces of evidence in support of my argument. They are pieces of evidence which, I can assert with confidence, will be regarded as impeccable and as unchallengeable by the Labour Members who are giving me such a courteous hearing.
I refer, first, to the concordat negotiated last month between the Government and the Trades Union Congress, which made a strong recommendation that union rules should provide for strike ballots to be held. Secondly, in this House the Prime Minister has agreed that a show of hands
" is not a satisfactory way of conducting affairs ".—[Official Report, 7 November 1978; Vol. 957, col. 684.]
Mr. Speaker: Order. Will the hon. Member now come to a conclusion?
Mr. Whitney: I submit that I have made clear to you, Mr. Speaker, that the challenge that we have to our industrial system can be defeated only by increased democracy. The Bill seeks to give the ordinary union membership the opportunity to assert that democracy. I trust, therefore, that the Bill will have the support of the House.
3.47 p.m.
Mr. Tom Litterick rose—
Mr. Speaker: Is the hon. Member seeking to oppose the Bill?
Mr. Litterick: I am, indeed, Mr. Speaker.
This is the eleventh, the sixteenth or about the twenty-eighth attempt by some extremely ignorant Conservative Members to talk about trade unions and the trade union movement of Great Britain in a hostile and critical way. It is not at all untoward that Members of Parliament should talk about great British institutions in a critical way, but it is a pity, and a

1311
waste of the time of the House, when a Member asks all these hon. Members to listen to him and displays the most abysmal ignorance of his subject.
The hon. Gentleman might at least have done a few minutes' homework. He should know by now that prejudice by itself is not enough. The House knows well when an hon. Member is just blowing his trumpet and has no substance to his argument. The hon. Member has demonstrated this very vividly during the last 15 or 16 minutes of his Ten-Minute Bill speech. It was very difficult to discover exactly what he was getting at. His motion says something about
" The organisation of secret ballots in connection with trades union activities."
It is not very informative.
The hon. Member's speech was even less informative. He bumbled along from one subject to another. He thought that it might be a good idea to have a vote on this, on that and on something else, but he did not stop for a moment to examine the implications of what he was saying.
The hon. Gentleman conceded, towards the end of his speech, that the case for having compulsory ballots in a potential strike might not be clearcut. [Interruption.] If he is saying that it is clearcut, he should be reminded that it was tried by the last Conservative Prime Minister, and it did not work. It was catastrophic.
As to the rest of what the hon. Gentleman might have been saying if he had been a bit more lucid, I suggest that he should have done his homework by looking at trade union rules. He would have discovered that most British trade unions are election-ridden. He mentioned the Associated Union of Engineering Workers. In a calendar year that union never has a moment when it is not involved in some sort of election.
Having mentioned the AUEW the hon. Gentleman, no doubt inadvertently, slipped in one of his value judgments, one of the criteria by which he would judge what was good and what was unsatisfactory union procedure, which is presumptuous and arrogant. He said that he approved of the last AUEW elections because a moderate and sensible leadership
1312
had been chosen. The House heard him say that. That is most interesting, coming from the Tory Benches. That moderate sensible leadership has put in a 40 per cent. wage claim. The hon. Gentleman should urgently have a chat with his Chief Whip, if not the Leader of the Opposition, about what is moderate and sensible.
The hon. Gentleman seeks to make judgments about the internal affairs of unions on the basis of his ignorance. He forgets that there are other great institutions that do not have elections. He does not mention them, and I shall not, either. He knows what I am talking about. He was not being even-handed; he was simply setting out on yet another attack on unions.
The ballots that he talks of exist. Almost every union in the country—and its electoral procedures—was investigated for the Donovan report. The report stated that
" Elections in the trade union movement are generally conducted with an almost excessive punctiliousness and by any sensible criterion the extent of malpractice is negligible."
I do not know whether the hon. Gentleman or his hon. Friends would accept the Donovan report as a reasonably authoritative judgment, but the country did. If the hon. Gentleman does not, that is his misfortune.
The hon. Member should also bear in mind another comment from the Donovan Commission, on ballots for strikes, namely, that
" It is difficult to resist the conclusion that most of the comments made about this position reflect the belief that the only sensible way to vote in the context of an industrial dispute is to vote against the strike action."
Tory Members frequently and impetuously demonstrate that they do not approve of strikes, but their plea for secret ballots will not alter the strike situation. Their frequent assertion of hostility to free strike action by free workers is shared with the central committee of the Russian Communist Party. For that reason alone, we will vote the hon. Member's Bill down.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and Nomination of Select Committees at Commencement of Public Business):—
The House divided: Ayes 194, Noes 189.

Division No. 100]

AYES

[3.55 p.m.

Adley. Robert

Hamilton, Michael (Salisbury)

Page, Rt Hon R. Graham (Crosby)

Atkins, Rt Hon H. (Spelthorne)

Hampson, Dr Keith

Page, Richard (Workington)

Atkinson, David (B'mouth, East)

Hannam, John

Pardoe, John

Awdry, Daniel

Harrison, Col Sir Harwood (Eye)

Parkinson, Cecil

Bain, Mrs Margaret

Hastings, Stephen

Pattie, Geoffrey

Baker, Kenneth

Hayhoe, Barney

Penhaligon, David

Banks, Robert

Higgins, Terence L.

Peyton, Rt Hon John

Bell, Ronald

Holland, Philip

Price, David (Eastleigh)

Benyon, W.

Hordern, Peter

Prior, Rt Hon James

Berry, Hon Anthony

Howe, Rt Hon Sir Geoffrey

Pym, Rt Hon Francis

Biffen, John

Howell, Ralph (North Norfolk)

Raison, Timothy

Biggs-Davison, John

Hutchison, Michael Clark

Rathbone, Tim

Blaker, Peter

Irving, Charles (Cheltenham)

Rees, Peter (Dover & Deal)

Boscawen, Hon Robert

James, David

Rees-Davies, W. R.

Bowden, A. (Brighton, Kemptown)

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

Reid, George

Boyson, Dr Rhodes (Brent)

Johnson Smith, G. (E Grinstead)

Renton, Rt Hon Sir D. (Hunts)

Braine, Sir Bernard

Jopling, Michael

Rhodes James, R.

Brittan, Leon

Joseph, Rt Hon Sir Keith

Rhys Williams, Sir Brandon

Brooke, Hon Peter

Kershaw, Anthony

Ridley, Hon Nicholas

Brotherton, Michael

Kilfedder, James

Rifkind, Malcolm

Brown, Sir Edward (Bath)

King, Tom (Bridgwater)

Roberts, Michael (Cardiff NW)

Buchanan-Smith, Alick

Kitson, Sir Timothy

Rossi, Hugh (Hornsey)

Buck, Antony

Knight, Mrs Jill

Rost, Peter (SE Derbyshire)

Bulmer, Esmond

Lamont, Norman

St. John-Stevas, Norman

Butler, Adam (Bosworth)

Latham, Michael (Melton)

Shaw, Giles (Pudsey)

Carlisle, Mark

Lawson, Nigel

Shelton, William (Streatham)

Churchill, W. S.

Le Marchant, Spencer

Shepherd, Colin

Clark, Alan (Plymouth, Sutton)

Lester, Jim (Beeston)

Shersby, Michael

Clark, William (Croydon S)

Lewis, Kenneth (Rutland)

Silvester, Fred

Clegg, Walter

Lloyd, Ian

Sims, Roger

Cope, John

Luce, Richard

Sinclair, Sir George

Cormack, Patrick

MacCormick, lain

Skeet, T. H. H.

Costain, A. P.

Macfarlane, Neil

Smith, Dudley (Warwick)

Crawford, Douglas

MacGregor, John

Smith, Timothy John (Ashfield)

Crouch, David

MacKay, Andrew (Stechford)

Spicer, Michael (S Worcester)

Dean, Paul (N Somerset)

Macmillan, Rt Hon M. (Farnham)

Sproat, lain

Douglas-Hamilton, Lord James

Marshall, Michael (Arundel)

Stanbrook, Ivor

Drayson, Burnaby

Marten, Neil

Stanley, John

Dunlop, John

Mates, Michael

Steel, Rt Hon David

Durant, Tony

Mather, Carol

Steen, Anthony (Wavertree)

Dykes, Hugh

Mawby, Ray

Stewart, Rt Hon Donald

Edwards, Nicholas (Pembroke)

Maxwell-Hyslop, Robin

Stewart, Ian (Hitchin)

Elliott, Sir William

Mayhew, Patrick

Stradling Thomas, J.

Eyre, Reginald

Meyer, Sir Anthony

Tapsell, Peter

Fairbairn, Nicholas

Miller, Hal (Bromsgrove)

Taylor, Teddy (Cathcart)

Fairgrieve, Russell

Mills, Peter

Temple-Morris, Peter

Fell, Anthony

Mitchell, David (Basingstoke)

Thatcher, Rt Hon Margaret

Fisher, Sir Nigel

Moate, Roger

Thompson, George

Fletcher, Alex (Edinburgh N)

Monro, Hector

Townsend, Cyril D.

Fletcher-Cooke, Charles

Montgomery, Fergus

Waddington, David

Fowler, Norman (Sutton C'f'd)

Moore, John (Croydon C)

Wainwright, Richard (Colne V)

Fraser, Rt Hon H. (Stafford & St)

More, Jasper (Ludlow)

Wakeham, John

Fry, Peter

Morgan, Geraint

Walker-Smith, Rt Hon Sir Derek

Gardiner, George (Reigate)

Morgan-Giles, Rear-Admiral

Wall, Patrick

Gilmour, Rt Hon Sir Ian (Chesham)

Morris, Michael (Northampton S)

Walters, Dennis

Gilmour, Sir John (East Fife)

Morrison, Hon Charles (Devizes)

Weatherill, Bernard

Glyn, Dr Alan

Morrison, Hon Peter (Chester)

Welsh, Andrew

Goodhart, Philip

Mudd, David

Whitelaw, Rt Hon William

Goodhew, Victor

Neave, Airey

Wiggin, Jerry

Goodlad, Alastair

Nelson, Anthony

Wilson, Gordon (Dundee E)

Gow, Ian (Eastbourne)

Neubert, Michael

Young, Sir G. (Ealing, Acton)

Gower, Sir Raymond (Barry)

Newton, Tony

Younger, Hon George

Grant, Anthony (Harrow C)

Nott, John

Gray, Hamish

Onslow, Cranley

TELLERS FOR THE AYES:

Grimond, Rt Hon J.

Oppenheim, Mrs Sally

Mr. Raymond Whitney and

Grist, Ian

Page, John (Harrow West)

Mr. Toby Jessel.

NOES

Abse, Leo

Bennett, Andrew (Stockport N)

Brown, Robert C. (Newcastle W)

Allaun, Frank

Bidwell, Sydney

Buchan, Norman

Archer, Rt Hon Peter

Bishop, Rt Hon Edward

Butler, Mrs Joyce (Wood Green)

Armstrong, Ernest

Blenkinsop, Arthur

Callaghan, Jim (Middleton & P)

Ashley, Jack

Booth, Rt Hon Albert

Canavan, Dennis

Atkins, Ronald (Preston N)

Boothroyd, Miss Betty

Carmichael, Neil

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

Bottomley, Rt Hon Arthur

Carter-Jones, Lewis

Bagier, Gordon A. T.

Boyden, James (Bish Auck)

Cartwright, John

Barnett, Guy (Greenwich)

Bradley, Tom

Castle, Rt Hon Barbara

Bates, Alf

Bray, Dr Jeremy

Clemitson, Ivor

Benn, Rt Hon Anthony Wedgwood

Brown, Hugh D. (Provan)

Cocks, Rt Hon Michael (Bristol S)

Cohen, Stanley

Hughes, Roy (Newport)

Rees, Rt Hon Merlyn (Leeds S)

Coleman, Donald

Hunter, Adam

Roberts, Albert (Normanton)

Conlan, Bernard

Irving, Rt Hon S. (Dartford)

Roberts, Gwilym (Cannock)

Cook, Robin F. (Edin C)

Jackson, Miss Margaret (Lincoln)

Rodgers, George (Chorley)

Cowans, Harry

Jay, Rt Hon Douglas

Rooker, J. W.

Cox, Thomas (Tooting)

Jenkins, Hugh (Putney)

Ross, Rt Hon W. (Kilmarnock)

Craigen, Jim (Maryhill)

John, Brynmor

Rowlands, Ted

Crowther, Stan (Rotherham)

Johnson, James (Hull West)

Sedgemore, Brian

Cryer, Bob

Johnson, Walter (Derby S)

Selby, Harry

Cunningham, G. (Islington S)

Jones, Barry (East Flint)

Sever, John

Cunningham, Dr J. (Whiteh)

Jones, Dan (Burnley)

Shaw, Arnold (llford South)

Davidson, Arthur

Kaufman, Rt Hon Gerald

Sheldon, Rt Hon Robert

Davies, Bryan (Enfield N)

Lambie, David

Shore, Rt Hon Peter

Davies, Rt Hon Denzll

Lamond, James

Short, Mrs Renée (Wolv NE)

Davis, Clinton (Hackney C)

Lee, John

Silverman, Julius

Deakins, Eric

Lestor, Miss Joan (Eton & Slough)

Skinner, Dennis

Dean, Joseph (Leeds West)

Lewis, Ron (Carlisle)

Smith, Rt Hon John (N Lanarkshire)

Dempsey, James

Litterick, Tom

Snape, Peter

Dewar, Donald

Lofthouse, Geoffrey

Spearing, Nigel

Dormand, J. D.

Luard, Evan

Spriggs, Leslie

Dunn, James A.

McCartney, Hugh

Stallard, A. W.

Dunwoody, Mrs Gwyneth

McDonald, Dr Oonagh

Stewart, Rt Hon M. (Fulham)

Eadie, Alex

McElhone, Frank

Stoddart, David

Ellis, John (Brigg & Scun)

McKay, Allen (Penistone)

Stott, Roger

English, Michael

Maclennan, Robert

Strang, Gavin

Ennals, Rt Hon David

Madden, Max

Summerskill, Hon Dr Shirley

Evans, Fred (Caerphilly)

Mallalieu, J. P. W.

Taylor, Mrs Ann (Bolton W)

Evans, loan (Aberdare)

Marshall, Dr Edmund (Goole)

Thomas, Ron (Bristol NW)

Evans, John (Newton)

Marshall, Jim (Leicester S)

Tilley, John

Ewing, Harry (Stirling)

Maynard, Miss Joan

Tinn, James

Fernyhough, Rt Hon E.

Meacher, Michael

Tomlinson, John

Flannery, Martin

Mikardo, Ian

Urwin, Rt Hon T. W.

Fletcher, Ted (Darlington)

Millan, Rt Hon Bruce

Varley, Rt Hon Eric G.

Foot, Rt Hon Michael

Morris, Rt Hon Charles R.

Wainwright, Edwin (Dearne V)

Forrester, John

Morris, Rt Hon J. (Aberavon)

Walker, Harold (Doncaster)

Freeson, Rt Hon Reginald

Moyle, Rt Hon Roland

Walker, Terry (Kingswood)

Garrett, John (Norwich S)

Mulley, Rt Hon Frederick

Ward, Michael

Garrett, W. E. (Wallsend)

Murray, Rt Hon Ronald King

Watkins, David

George, Bruce

Newens, Stanley

Wellbeloved, James

Gould, Bryan

Noble, Mike

White, Frank R. (Bury)

Graham, Ted

Oakes, Gordon

White, James (Pollok)

Grant, George (Morpeth)

O'Halloran, Michael

Willey, Rt Hon Frederick

Grocott, Bruce

Orme, Rt Hon Stanley

Williams, Rt Hon Alan (Swansea W)

Hamilton, James (Bothwell)

Ovenden, John

Williams, Alan Lee (Hornch'ch)

Hardy, Peter

Park, George

Williams, Rt Hon Shirley (Hertford)

Harrison, Rt Hon Walter

Parker, John

Williams, Sir Thomas (Warrington)

Hart, Rt Hon Judith

Parry, Robert

Woodall, Alec

Hayman, Mrs Helena

Pavitt, Laurie

Wrigglesworth, Ian

Heifer, Eric S.

Pendry, Tom

Young, David (Bolton E)

Hooley, Frank

Perry, Ernest

Horam, John

Prescott, John

TELLERS FOR THE NOES:

Hoyle, Doug (Nelson)

Price, William (Rugby)

Mr. Eddie Loyden and

Hughes, Rt Hon C. (Anglesey)

Radice, Giles

Dr. M. S. Miller.

Hughes, Robert (Aberdeen N)

Question accordingly agreed to.

Bill ordered to be brought in by Mr. Raymond Whitney, Mr. Nicholas Ridley and Mr. Toby Jessel.

TRADES UNIONS (SECRET BALLOTS)

Mr. Raymond Whitney accordingly presented a Bill to facilitate the organisation of secret ballots in connection with trades union activities: And the same was read the First time; and ordered to be read a Second time upon Friday 6 April and to be printed. [Bill 115.]

ORDERS OF THE DAY

  ADMINISTRATION OF JUSTICE (EMERGENCY PROVISIONS) (SCOTLAND) BILL
  Order for Second Reading read.
  4.5 p.m.
  The Secretary of State for Scotland (Mr. Bruce Millan): I beg to move, That the Bill be now read a Second time.
  The need for this Bill has come about because most of the executive and clerical staff in the Court of Session, the High Court of Justiciary and the sheriff courts of Scotland have withdrawn their labour. They have done so not because of a dispute in the courts but as part of selective action called throughout the Civil Service by two Civil Service trade unions. As I said during the debate last Tuesday, strikes that start six weeks before the settlement date and where there is a process of negotiations going on cannot be justified.
  I am particularly concerned that the action has centred so much on the courts, which are used and are intended to be used by all members of society as the forum where justice is sought. Its denial to others by those who claim to be seeking justice for themselves is unacceptable and is to be deplored. I had hoped that the unions and their members would call off their action, and, as I explained to the House last Tuesday, my right hon. Friend the Secretary of State for Employment and I had met senior representatives of the unions concerned that day to try to persuade them to call off their strike action. This they were not prepared to do. The strike therefore continues.
  As the debate in the House last week showed, responsible opinion is agreed that the situation is intolerable and that legislation is required to ameliorate the position as much as possible.
  The courts have not stopped entirely, however, and the judiciary, in some cases with the help of staff not on strike, have been doing what they can. I am very grateful to those judges and staff concerned for what they have done to carry on emergency business. Some courts are able to do more than others because more staff are available and some 12 of the smaller
  1318
  sheriff courts are working more or less normally. Even with the will of the judiciary to take on what is possible, nothing like the general run of work can be carried on where the majority of staff are absent.
  My right hon. and learned Friend the Lord Advocate and I have examined the problems that have arisen. We have been helped by the many points raised by the Lord President of the Court of Session, honourable Members and others. Our aim has been to meet as simply and as expeditiously as possible certain needs that have been identified. In deciding what legislation is needed we have tried to keep the balance between, on the one hand, the needs of the community in relation to law and order and, on the other, the rights of the individual. I believe that we have done this while at the same time endeavouring—and succeeding—to keep the Bill as short and simple as possible.
  Like most emergency legislation the Bill is of a temporary nature, and I emphasise again that it will not restore the courts to normality. Only a return to work by the staff will do that. Nor will the Bill deal with each and every problem that the strike has caused. Let there be no mistake—a strike of this kind leaves casualties, and no one regrets this more than I.
  The aim of the Bill is, first, to extend certain legal time limits, and in so doing reassure those who have, for example, claims for damages for personal injuries which cannot be raised because of the strike; secondly, to deal with the question of the 110-days rule; thirdly, to enable crimes to continue to be prosecuted; fourthly, to allow the courts to extend the range of business they can undertake, where this is possible; and fifthly, to cope with a particular problem affecting the Keeper of the Registers of Scotland.
  Some of these matters can be examined in greater detail in Committee. As we are attempting to carry out the operation in one day it will help the House if I explain briefly, but in some detail, the main provisions of the Bill, clause by clause.
  Clause 1 provides that the Bill will cease to be in force one month after the date prescribed in an order made by me. The period from 23 February, when

  1319
  the strike started, until the date in the order, will be known as the emergency period. The provisions of the Bill will have effect during that period. The date that I shall prescribe is likely to be some time after the end of the strike—I emphasise that—to enable the courts to resume normal working order. At the moment, I am not able to say how long that will be. It will depend on how long the strike continues. There will be a short time after the end of the strike before I prescribe the date. I shall, of course, consult the Lord President of the Court of Session and the sheriffs principal before deciding on the date.
  Much concern has been expressed that rights may be lost in relation to legal proceedings, because they cannot be exercised during the present industrial action. Clause 2 will extend legal time limits and ensure that no person will, by reason of the industrial action, lose any right to do anything in relation to legal proceedings. The most important right of this sort on the civil side that will be preserved is—as I have already mentioned—the right to raise an action for damages for personal injuries within the three-year period. The clause will enable such an action to be raised within one month of the end of the emergency, where the three-year period expired during the period of the emergency. That time limit should take care of that matter.
  Mr. Malcolm Rifkind: The Secretary of State indicated that there may be a period of time after the courts have begun functioning again but before the end of the expiry period. Will he indicate whether persons who otherwise would have been time-barred will be able to initiate action during that grey period? He has just stated that their only right will be to initiate action one month after the end of the expiry period.
  Mr. Millan: I take note of the hon. Gentleman's point. I hope that there is not a technical deficiency in the drafting—I shall look at it during the course of the day. There is not intended to be a period during which the emergency legislation does not bite, if that is what is worrying the hon. Gentleman. It is intended that the right will be there until the end of the emergency period and for a short time afterwards. It would be anomalous if there were a grey period
  1320
  in between that was not caught. We shall deal with the matter in Committee, but I believe that it has been covered.
  The extension of time limits will also apply to criminal proceedings and it will ensure that where the time within which criminal proceedings must be taken expires during the emergency period the proceedings may be raised within one month from the end of the emergency period. Certain other procedural periods of time laid down in rules of court will be extended, as will the right of appeal against the decision of a licensing board. Other rights will also be preserved and these will be specified in Committee.
  Turning to clause 3, I have already said that we have tried to keep the balance between the public interest and the rights of the individual. I assured the House last Tuesday that no one charged with a serious criminal offence is to be allowed to escape prosecution because of the emergency. Therefore, clause 3 suspends the running of the 110-day period. In computing the period of 110 days, no account shall be taken of any period during which an accused person is in prison which occurs during the emergency period. I told the House last Tuesday that any person who is judged to be a danger to the public is being detained. We shall continue to detain such persons. In other cases—subject to the normal decision of the court which has the ultimate decision in these matters—persons have been released when they are not considered to be a danger to the public. All persons, of whatever category, will be brought to trial.
  I am conscious of the civil liberties issues involved here. One does not wish to keep people in gaol any longer than is necessary. I assure the House that the extension of the 110-day rule will be watched carefully by my right hon. and learned Friend the Lord Advocate and myself.
  Mr. James Molyneaux: I apologise for intervening in a predominantly Scottish debate. Will the Secretary of State be good enough to give an assurance that he will look carefully—I ask no more than that—at a specific bail application where there are genuine compassionate circumstances, with a view to alleviating real hardship?
  Mr. Millan: We have already provided that bail applications are being heard. I

  1321
  cannot consider the merits of a particular case, but I think it is important that cases should be heard. If the hon. Gentleman will give my right hon. and learned Friend the Lord Advocate details of the case that he has in mind, I am sure that my right hon. and learned Friend will be happy to look into the matter.
  Clause 4 makes provision to make clear that criminal proceedings may continue during the emergency by citing the accused and witnesses. Criminal cases will not fall because they are not called in court on the diet fixed for them during the emergency period.
  Clause 5 enables a court, in the absence of normal staff, to extend the range of business that it can do, where that is possible. A judge—that includes a sheriff—may do any work which could be done by a clerk of court, sheriff clerk or other officer of court. In any particular case, a judge may also authorise any person to do anything in relation to the legal proceedings which could be done by the clerk of the court, the sheriff clerk or another officer of court. The provision has given rise to much comment and, unfortunately, some misunderstanding. Therefore, I wish to deal with it more fully.
  In the first place, it seems sensible to have a power that would allow suitable other persons—where these were available—to assist judges in carrying out their duties. At the moment, such a degree of flexibility is necessary to ensure the most effective use of staff available. In the event of the strike continuing for a substantial period, then—much though I would regret the necessity to do so—I do not rule out the possibiilty that offers of outside help, which have already been made, would have to be accepted. That will be necessary if the public interest requires that the range of business being carried out by the courts must be extended.
  I should like to make clear that I should regard it as my duty, as the Minister with a general responsibility for the operation of the courts, to say when such a step might be taken. I do not expect the judges, individually or collectively, to take a decision of this nature. After all, it is a question of policy and the judges are not anxious to make that sort of decision.
  1322
  Once the decision had been taken by me, it would be for each court to decide whether, in its own particular circumstances, such action was necessary and possible. Therefore, I hope that this statement makes the position clear and removes any suggestion that the judges have been given a"strike breakers' charter ". It is a matter of policy, and it is for me.
  Mr. Robin F. Cook: I am grateful to my right hon. Friend. What he has said will go some way to relieve the anxieties that some of us have felt. I am sure that he is aware that we shall want to return to the matter on the clause stand part debate. We are discussing the most controversial part of the Bill, which has occasioned the most anxiety on the part of the staff who are involved. Has the Secretary of State received word that the meeting of sheriffs in Glasgow yesterday came to the unanimous conclusion that they would not wish to have the power to appoint any person in place of the clerks of the court, on the ground that it would jeopardise the permanent relationship with their own staff?
  Mr. Millan: I have already made clear that these are matters for me and not for judges or sheriffs. They do not wish to take those decisions. The policy decision would be for me, and I should take responsibility for it.
  Similarly, there is no question of the judges or sheriffs being expected to recruit temporary staff. I wish to dispel any notion of that kind. If, in the event of a lengthy dispute, a court were to decide that its range of business could be extended—provided certain staff were available—my Department, the Scottish Courts Administration, would, as before, accept responsibility for the manning and remuneration of the necessary staff. The responsibility is mine, and if the occasion were to arise I should be willing to shoulder that responsibility.
  Mr. Rifkind: The Secretary of State is aware that the Bill allows the judges, on their own decision, to ask other persons to assist them in the running of the court. If it is the Government's view—and decision—that the right should be exercised only with the concurrence and consent of the Secretary of State, that provision should be in the Bill.
  Mr. Millan: A specific amendment has been tabled on that matter. We shall discuss that when we come to it. There is a good reason for drafting the Bill in this way. If the policy decision were made, it would not then be a matter for the Secretary of State to give individual authorisation to individual persons in individual courts; it would be a matter for the judges. I wish to make clear that the policy decision would be made by me and not by the judges. As my hon. Friend the Member for Edinburgh, Central (Mr. Cook) said, the judges do not want to be put in the position of making such a decision.
  I should like to repeat what I said earlier about the clause, because it is important. The provisions cannot provide, any more than can the Bill itself, for the courts to return to full business. That can happen only when the staff go back to work.
  The purpose of subsection (2) is to enable the court to accept as valid a copy of an original document that has been lodged in court and provides that any such copy should be taken to be a true copy unless the contrary is proved. That provision applies to any document lodged in court, whether it is part of the process of the court or a document lodged as a production in order to be proved in evidence. The documents may not be readily accessible because they have been locked up by those on strike, but copies are normally held by the parties and the provisions in subsection (2) allow a court to accept such a copy in lieu of the original document.
  Mr. Alick Buchanan-Smith: Will the right hon. Gentleman give way?
  Mr. Millan: Yes, but I hope that hon. Members will remember that we are to have a Committee stage later.
  Mr. Buchanan-Smith: I am grateful to the right hon. Gentleman. It would be helpful to my hon. Friends if we knew what was in the Secretary of State's mind. As my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) said, the right hon. Gentleman is providing for a policy decision, and I do not see how that can be done unless legislative provision is made for it. Does the right hon. Gentleman intend to accept amendment
  1324
  No. 2, or something like it? If not, how does he intend to proceed?
  Mr. Millan: I have already given a brief explanation and I shall be glad to expand on it when we reach the amendment. It is not necessary to write into the Bill a policy decision made by the Secretary of State.
  I shall explain clause 6 in a little detail because it deals with a separate, rather technical, issue but it is a matter of considerable importance to many people. The purpose of the clause is to permit the registration of deeds by the Keeper of the Registers of Scotland where that is being effectively prevented because deeds are not able to be stamped due to the industrial action being taken in the stamp office in Edinburgh.
  Under section 17 of the Stamp Act 1891, any person who has the duty of recording any deed is liable to a fine of £10 if he records any deed that has not been duly stamped. That provision has the effect of preventing the Keeper of the Registers of Scotland recording any deed that is not duly stamped. That has meant, among other things, that purchasers of heritable property valued at £15,000 or more have been unable to record a title to their property and so to acquire a real right to it. That, in turn, has meant that financial institutions have been unwilling to lend in security of such property if the borrower does not have a recorded title.
  It is estimated that in normal circumstances about 900 property writs a week require to be stamped before being recorded. It is serious that the normal arrangements are not operating, and there are possibilities of considerable personal hardship being involved.
  The first part of clause 6 therefore provides that section 17 of the 1891 Act shall not have effect in relation to the Keeper of the Registers of Scotland while the Bill is in force. That provision will enable the Keeper to record deeds that are not duly stamped in the registers for which he is responsible.
  However, in itself, the provision might not be sufficient to attract the usual consequences of recording or registering such deeds and, in particular, might not confer a real right upon an unstamped deed in the Register of Sasines. That is because the Stamp Act 1891 provides that, unless

  1325
  a deed is duly stamped, if should not be given in evidence in civil proceedings or
  " be available for any purpose whatever ".
  Accordingly, the second half of clause 6 provides that, notwithstanding the provisions of section 14 of the 1891 Act, when such a deed is recorded or registered it will be available for any purposes, provided that it is duly stamped within a certain time, namely, within three months from the date of its recording or registering or such longer time as the Commissioners of Inland Revenue may allow. The provision has, of course, been agreed by the commissioners and by my right hon. Friend the Minister of State at the Treasury.
  I hope that my explanation will have been helpful to the House. My right hon. and learned Friend the Lord Advocate and I will be glad to try to answer questions in Committee, but I have given fairly detailed information about the provisions and I hope that that has been helpful, not only for the Second Reading debate but for our consideration of the later stages of the Bill.
  I regret that it is necessary to introduce the legislation. It has a limited purpose and will not restore the courts to their full vigour.
  Mr. Dennis Skinner: It is a sad commentary on our affairs that the Government, who came to power when the miners were on strike and we were playing our role of peacemaker, are now, at the tether end of the Parliament, bringing in a blacklegging Bill.
  The Government have it in their power to settle the matter readily by meeting the trade unions concerned with a view to coming to arrangements over the Pay Research Unit. Instead of doing that, they have introduced a Bill which will allow blacklegs to be brought in—at a heavy price, one would assume—to take the place of those who are on strike.
  I want the Secretary of State to tell me specifically what sort of wages the lawyers who will be involved will be paid for doing the jobs that are usually done by the workers, some of whom are low paid, in the courts.
  Mr. Millan: It is a sad commentary that the Bill should be necessary, but it
  1326
  is necessary. There was a meeting earlier today with the unions concerned, and negotiations are continuing, which means that the strike is quite unnecessary.
  Mr. Skinner: How much will the lawyers be paid?
  Mr. Millan: I was saying that the Bill has a limited purpose and will not restore the courts to their full vigour. However, it will help to deal with certain problems and I hope that it will enable the range of business at present undertaken to be extended. On that basis, I commend it to the House.
  4.28 p.m.
  Mr. Nicholas Fairbairn: The Opposition welcome the Bill with intense regret and deep foreboding. I hope that the House will allow me to deal with some of the general principles raised with such clarity by the hon. Member for Bolsover (Mr. Skinner.) in his intervention during the Secretary of State's speech, and which hon. Members on both sides of the House, whatever their loyalties to political parties, organisations or groupings, had better get clear if they wish to remain members of a democratic society.
  We welcome the Bill and the moderate terms in which the Secretary of State introduced it. We commend the right hon. Gentleman's modesty, though not his tardiness. It was evident on day one of the strike—and let us call it a strike and not by any presumptive and euphonious term such as"industrial action "—that criminal and civil rights of private citizens and citizens in the generality, forming part of our State and community, would be lost and that therefore a Bill to protect those lights was essential.
  It is our regret that, out of fear of strike-breaking or some other anxiety, the Government did not do their duty and protect those rights ab initio. They have a duty as the Government to protect the rights of the citizen, and it is not good that they should be protected in reverse. Furthermore, when such rights are in peril it is the duty of the Government to protect them before they prescribe, and I have a suspicion that but for last week's debate, which came out of the Opposition Supply day, this Bill would never have been brought in even yet. The rights of those who lose them, or risk losing them—and let us be absolutely clear that

  1327
  those who might be detained in prison without trial might even be pickets—are important rights and are no better and no worse whoever may be the person that loses them.
  Mr. Donald Dewar: I am sure the hon. and learned Gentleman would agree with me that if new clause 4 were passed it would be impossible for pickets ever to be imprisoned because it would be entirely illegal for people ever to picket and they would therefore not be able to do so. May I press the hon. and learned Gentleman to say whether he endorses the view of his hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) that strikes should be entirely illegal in areas of the public sector of this kind?
  Mr. Fairbairn: Yes, and I shall have something to say about that which I hope will not fall on deaf ears, nor will even be lost in principle on the hon. Member for Bolsover, whose loyalty—[Interruption.] I will say it in time, if I may. If the hon. Gentleman wishes to leave the Chamber, he can do so. I have no intention of ordering or altering the order of my remarks to suit him just because he belongs to a trade union. I hope that the order and the morals of the remarks I have to make will not be lost on the hon. Member for Bolsover, whose loyalty to certain groupings is liable to blind him to understanding his duty to others.
  I think it is important when considering this matter that we appreciate that we are in fact suspending the rights of certain citizens. If I may answer the interjection of the hon. Member for Glasgow, Garscadden (Mr. Dewar), as he will see during the course of my remarks, I take the view that we owe a moral duty to our neighbour. There are at any rate some people in the community whose jobs are so important and whose duty is so great that they have a fiduciary duty to carry out their obligations to their neighbour, whomsoever he may be, regardless of whether they belong to one or other organisation. I hope that no hon. Member, whether he be Christian or agnostic, would depart from that precept, which seems to me to be necessary and inevitable in a society of any kind. I start from that point.
  Mr. Dewar: I am curious therefore about why there is not a new clause on
  1328
  the Amendment Paper to embody this remarkable principle.
  Mr. Fairbairn: That is a silly and childish intervention. We are discussing serious matters of principle for all British people, whether they be Communists, Socialists, miners, trade unionists, lawyers, Ministers of the Crown or even unemployed solicitors representing Glasgow, Garscadden.
  But let us be in no doubt as to what this Bill does. It is essentially the first step towards dictatorship. It is the first step in suspension of the rights of the citizen, made necessary by the refusal of some citizens to carry out a moral obligation to their neighbour. Let us not forget that this is the first winter of consensus. It is not the great winter of confrontation; it is not the winter of dissent. This is the winter of the consensus introduced in July by the Prime Minister. It is our first winter of Socialist consensus, and we have to have an emergency Bill—and I understand why the hon. Member for Bolsover objects to it, because he would object to anything which stood in the path of a herd in search of water if the nerd had a trade union card stamped on their bottoms.
  Mr. Skinner: What I was attempting to explain, as I usually try to do, perhaps awkwardly at times, is that in this case, as in many others, there is a group of workers who feel that they ought to be getting a little bit more money than some other people think they should. In this case, it is the people in the courts and, on the other side, the people in the Government, backed seemingly by the Opposition in view of their welcome for this Bill. I want justice for all and I know that in some circumstances the courts can provide it, even in Scotland, I suppose. So I am not in favour of this anarchical situation which the hon. and learned Gentleman seems to describe. All I am saying is that we have no need for this Bill, no need to take these first steps towards dictatorship, provided the Government will agree with the unions that they will accept the Pay Research Unit's conclusions. Then we can all go home and forget about this. That is my view. It is as simple as that.
  Mr. Fairbairn: The simplicity of the views of the hon. Member for Bolsover has always attracted me. It is similar to the simplicity of the highwayman's view

  1329
  —" There is no necessity for anybody to get hurt. I happen to have the gun and you happen to have the money." The hon. Member's view is"I know all of you have got some money. I know that the Secretary of State has some money in his boots. I know that the Lord Advocate has certain hidden assets. I know that the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) has funds. I am just a simple highwayman who wants more money, and if you hand over your money, and if the Pay Research Unit will decide whether the Secretary of State or the Lord Advocate should contribute most, there is no need for this row."
  That is the moral and the law of the hon. Member for Bolsover. Anybody can say that one never needs to fight anybody if the weaker party always gives in to the robber. That is not difficult. I could solve the world's problems very easily. There would not have been a war in this century if France had agreed that Germany should invade it; and there would not have been a war if Poland had been willing to join the Greater Reich. Indeed, there would not have been a murder in a concentration camp if the Jews had had the decency to commit suicide.
  Mr. John Ovenden: The hon. and learned Gentleman will recall that last week my hon. Friend the Member for Edinburgh, Central (Mr. Cook), on a question about the Opposition's attitude to pay research, asked whether the Opposition supported the full implementation of the Pay Research Unit's report of 1 April of this year. The hon. and learned Member said that he was sorry that he could not help him on that point. Presumably the hon. and learned Member now can assist us. He is telling us that the Opposition do not accept the implementation of the Pay Research Unit's report. That is the gist of his remarks. Will he confirm it so that he can put us out of our agony?
  Mr. Fairbairn: That is not the gist of my remarks. I do not want to try the patience of the hon. Gentleman, but I shall come later to the matter of the Pay Research Unit.
  Let us be clear that we are removing certain rights and are detaining people in
  1330
  prison, albeit prospectively dangerous people, without limit of time. As that is a civil right, Labour Members, if it involved a flying picket, would be making a great fuss. But because on this occasion the stamp of trade unionism is on the other foot, the defenders of civil rights seem silent.
  Mr. Skinner: The trade unions are not bringing in the Bill.
  Mr. Fairbairn: Of course the trade unions are not bringing in the Bill. The highwayman would not bring in a Bill to say that it was wrong for anybody to resist him.
  Until recently we regarded ourselves as a Christian society. Whether or not all of us are Christians or practising Christians, we supposed that in our society we had a duty—one hopes a loving duty—to our neighbour, as is echoed in the fraternal claim of the brotherhood of man made by the Labour Party. We are enjoined to love our neighbour as ourself and to do to him what we would wish him to do to us. Indeed, it is fundamental to society that each man forgoes certain rights and indulges in self-restraint and self-discipline in order to have the greater benefits provided by society.
  Let us be clear that this Bill in part protects those rights, but in part suspends them. That is what we are doing, and this is but the beginning of a process that will become necessary every year if the concepts of the hon. Member for Bolsover were ever to take a dominant place. Self-restraint is operated as a willing price for the benefits of society.
  There are two alternatives. The first is to have an authoritarian State in which no citizen can resist the strength and power of the State and in which each must do as he is told at the whim of the State, subject to the punishment of the State—organised normally if it is successful by an anonymous system of"clyping ", as we say in Scotland, or secret police in Bolsover.
  Mr. Skinner: We do not have them there.
  Mr. Fairbairn: I dare say that the secret police might be recruited one day in Bolsover, and I can think of candidates if they have to be so recruited.
  Mr. Skinner: Not while I am there.
  Mr. Fairbairn: The second form of society is a society which precedes civilised society and in which those who have rights have them because they have the force to obtain and keep them. Because of their power, they are able, either by association with others or because they have certain powers or weapons, to have rights and benefits. That is an anarchic and primitive society. In such a society groups rule by force according to their will and allow their will always to overcome that of weaker people.
  There is a fact of life from which nobody, no matter to what association he may be loyal, can escape. Crowds have a corporate will and power that transcend the conglomerate power of those who compose it. They also usually suspend moral will and normally act in a manner, if acting by force, to which often no member of that crowd would have consented had he been asked individually. A crowd that acts by force is a mob. If one has a society in which crowds act by force, they will suspend their moral conscience in advance of their actions. Where a crowd is using a strike as that force, it has probably obtained the moral absolution of the Labour Party in advance because it is done in the name of a trade union.
  I believe that no act in which one tortures, wounds or destroys the rights of another member of society or one's neighbour or friend can be justified or sanctified because it is carried out in the name of a trade union. It is no more sanctified or justified than if it were carried out in the name of the Faculty of Advocates, the Secretary of State for Scotland, or anybody else.
  The Labour Party will have to come to terms with the fact that, because the words"trade union"are mentioned, group force against other members of society—most of whom probably are members of a trade union—does not become justified. In retrospect, we cannot say that what is done by force by a blue collar worker is good but that what is done by a white collar worker in the same terms is bad.
  Each of us is one another's neighbour and owes a duty to the other. We cannot escape our duty by joining a crowd because that crowd happens to be a trade
  1332
  union recognised in terms of the Trade Union and Labour Relations Act and is a registered union affiliated to the TUC.
  The extent of the logic of my argument, which I put with all gravity, is that even when we consider the role of the Secretary of State for Scotland, whose actions have been admirable in this matter, the extent of crowd rule can be illustrated by saying that when the right hon. Gentleman tries to protect the constitutional rights of the citizen, the highwayman then increases his threats. The highwayman and his friends take the view that if the Secretary of State will not do their will and attempts to resist their plunderings they will bring down the whole house on his head. They will make matters worse for the rest of the community. If the Secretary of State does not give in to them, they will make pensioners unable to obtain their savings and pensions and will wreck society. That is the simple issue that is before us. Those who choose to refuse to do their duty by their neighbour deserve that others should do it on their behalf.
  The Secretary of State—and I regret it—said that this was not a strike-breaking charter. I do not think it is a strikebreaking charter, but if we remove the emotive words"strike-breaking charter"I regret that it is not a piece of legislation which will compel people who have a legal and moral duty to their neighbour to fulfil it.
  How have we come, in our tolerant, democratic and decent society, to a state where anybody, however well paid, exalted, sensible, or responsible, is willing to indulge in—I use the word again—childish behaviour by saying"If you do not give in, I shall make life absolutely intolerable for victims in society until I persuade you, by torturing them, to surrender "?
  That judgment arises partly out of the eternal marriage of the Labour Party to the TUC—or at any rate from the fact that the Labour Party, or one of the Government parties in this country, happens to be the child of the trade unions. That fascination and filial piety is demonstrated no better than by the devoted and implacable devotion of the hon. Member for Bolsover. I admire the principle of devotion, but I do not admire it when it ignores the effect it has on other people.

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  I believe that the main duty rests on two people—the right hon. Member for Huyton (Sir H. Wilson) and the right hon. Member for Cardiff, South-East (Mr. Callaghan). The former dressed up weakness as strength and the latter is weakness in reality. The former dressed up resistance to this kind of behaviour as confrontation, and the latter dressed up surrender to it as consensus. There is the charge, and if we need a third blind monkey who turns his eyes, ears and senses to wrong, it is no doubt the Lord President of the Council.
  Those right hon. Members have brought about a situation where men of all ranks—from Mr. Speaker, if I may say so without disrespect, the Secretary of State, right hon. and hon. Members on the Government Front Bench, and those in the Public Gallery, right down to the most humble person in society—say"If I am sanctified by belonging to a trade union, I have no moral duty to my neighbours and I am entitled to wound them, hurt them and increase that wounding and hurting until I get my way." If I may say so to the hon Member for Gravesend (Mr. Ovenden), the fact that a person may have a justifiable case on a matter of pay can never justify abdication of his moral duty in society.
  In conclusion—
  Mr. Ovenden: The hon. and learned Member complimented me on my patience in listening to him. I did not need complimenting, because it was no hardship. I have a sense of humour and I always enjoy his speeches. However, he promised my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) that he would reply to the point regarding the right of public sector workers to go on strike and to my point about whether the Conservative Party accepted the implementation of pay research in its entirety this year. The hon. and learned Gentleman has now said"In conclusion ", so I take it that he does not intend to reply to either point. Does he think that he has replied?
  Mr. Fairbairn: If the hon. Member for Gravesend is to be present, I suggest that he also indulges in the art of good listening. I said to the hon. Member for Garscadden—neither hon. Member is a good listener, one no doubt because he is
  1334
  a solicitor and the other because he is a trade unionist—that I believe that a fiduciary duty is placed upon a large number of people in many occupations in this country, in a modern State, and they should not have the right to withdraw their labour. If they have that right, I believe that it should be coupled with the loss of equivalent rights such as the rights they have under the Employment Protection Act, the Redundancy Payments Act, the Trade Union and Labour Relations Act, the Equal Pay Act, and the Contracts of Employment Act. I could add more.
  I believe that it is impossible for a society to function if the right to withdraw labour not only exists but is regularly exercised by all groups in society, from top to bottom. The Secretary of State for Scotland was quite right to have said to the Civil Service union concerned"We will listen to your reports, and we will make recommendations and those recommendations will be the subject of an award on 1 April." I am sorry that the weakness of the Government has compelled them to say"Yes, we will give all that these people recommend, but we will phase it ", which means that they will put off the trouble until next year, the year after or the year after that.
  We must be quite clear that in pay negotiations we cannot have absolute rules so that we can say"You made an agreement." I accept that there has been difficulty with the pay pause, but we cannot have absolute rules whereby people say"Before, the system was such, and whatever the rights and wrongs of it, I demand that you return to that system. Regardless of the needs of the nation, or whether it means that the nurses, doctors, civil servants and Members of Parliament get nothing, I want my bit ". That is the other face of the coin of selfishness which, I hope, I have described with some modesty this afternoon—[Interruption.] I did not hear the hon. Member for Bolsover, but I think that he should make that interruption standing up.
  Mr. Skinner: I said that there is plenty of money in this country. If I can elaborate, perhaps we can begin by using the £800 million dished out to the Common Market last year and the £1,100 million that will be dished out this year.
  Mr. Fairbairn: I have no doubt that the fantasy exists in some minds—particularly in the minds of Labour Members—that money, like fresh air, is free and that all we need to do is breathe it in. As with Santa Claus, we just write a letter and he will bring it in his sack. It is all there, if only the rotten old red-dressed Scrooge would hand it over, if only"Santa Government"would hand it over. But let us be clear that before"Santa Government"can hand it over they must go to the household of the hon. Member for Bolsover and take that money away from him, or borrow it from an international banker and charge it to the household of the hon. Member for Bolsover. So let us get away from such fantasies.
  If there is plenty of money in this country, why do not the Government double everybody's pay? Would the hon. Member for Bolsover do that? Let us give everybody £100 million a year. These are unrealistic fantasies, and if the hon. Member for Bolsover believes in them I had not appreciated that he was quite so stupid. At least he has a loyalty to principle which would be a great credit to any child, but when it comes to adult thinking I sometimes have my doubts.
  In our society I believe that the grave-digger has a moral duty, in all circumstances, to bury the mother of the lorry driver when she dies. I believe that the lorry driver has a moral duty to deliver food to the doctor and his family. I believe that the doctor has a moral duty to operate on the civil servant when he is ill. I believe that the civil servant has a moral duty to ensure that payment is made to the mother of the nurse when she needs her national savings. I believe that the nurse has a moral duty—which, God bless her, she is fulfilling and understands—to tend the sick of all those categories when they require attention.
  If we suspend that moral duty, we have no answer. Therefore, in welcoming the Bill with mighty regret, I think that all hon. Members in humility should understand where such conduct leads them. It is no good standing on ceremony and saying"Yes, but it was my right ". It is not our right. It is our duty to our neighbour in society to do our duty, and no claim or award of pay can ever reduce that duty.
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  I think that the Secretary of State said last week—and I would accuse him not of unfairness but of misunderstanding—that I had not appealed to these people to return. Lest there be any doubts, let me do that now. I know many of these people and have worked with them. I could not have believed that they would be willing to throw dust in the eyes of justice just because they have some dispute with the Government. I appeal to them personally—not as a crowd, a union or as the shock troops of the SCPS—to go back to each of their consciences and to do their duty by justice. If we wish to have a democratic society, those who are necessary for its function must do their duty. If we do not, there is one horrid alternative, and that is to answer force by force. That is what the Bill in principle is about. It is suspending the rule of law and answering force by force.
  5.3 p.m.
  Mr. Donald Dewar: I find the appeal to the individual members of the sheriff clerks' departments who are on strike a little incongruous from the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn). After all, he spent the last 35 minutes informing us that they are no better than highwaymen, that they are torturing the innocent in order to batter the Government into unworthy surrender. To use that kind of language, to cast them in that role and then to think that in some sort of way they will listen sympathetically to the hon. and learned Member's appeal, is an essay in optimism—I shall not use the word"childish ", because it has been used too often—and an essay in the futile.
  We have been treated to a remarkable tour d'horizon from the hon. and learned Member. It is his private moral world. While eccentricity on the Back Benches can often be entertaining, when it is translated on to the Front Bench it can become extremely confusing and misleading. For reasons that I shall give in a few minutes, I am still hopelessly confused about the position of the hon. and learned Gentleman and, more importantly, as he spoke from the Front Bench, about his party's position on a number of matters that were raised in interjections, which seemed to me to be matters of fundamental importance in connection with the purpose of this legislation. I am

  1337
  confused about the basis on which the Conservative Party would wish to settle this strike and whether it would accept the findings of the Pay Research Unit and implement them. In addition, despite a veritable torrent of words from the hon. and learned Gentleman, I do not know whether he is in favour of banning and making illegal strikes in the public sector, particularly in the courts, and if so how he defines those areas where those strikes should be illegal.
  We got a blanket statement that there were areas where illegality should apply, but there was no attempt to explain, define or set out the rules. I am not sure whether we were being invited to assume that the Conservative Front Bench wanted to make illegal strikes right across the board. In fact, the hon. and learned Gentleman, carried away by his own command of language, got very near to suggesting that. I hope that those Conservative Members who speak later, especially the Front Bench spokesman, will put a little more definition on some of the more remarkable statements that have been made.
  I do not welcome the Bill. I do not think that anyone could welcome it. But there is a recognition among Labour Members that some of the provisions are necessary. There will be no cavil from me in accepting that. Obviously—and I am glad that my right hon. Friend stressed this point—Labour Members accept that there is no way in which this legislation can get the courts back to normal. No legislation can do that, given the total withdrawal of labour by staff of the sheriff courts and the Court of Session. What the Bill can do is to safeguard certain essential rights. To some extent, it can ameliorate the consequences of the industrial action, which, by definition, is intended to cause inconvenience and is unashamedly doing so.
  The only thing that will remedy the situation is a settlement. As we are in the business of appeals, it is almost futile to think that speeches in this House asking people to call off their industrial action at this stage are likely to be successful. But if my right hon. Friend was right in what he said the other day about back-dating, and if we have a Government assurance that phasing will be completed by April 1980, it seems to me that
  1338
  the difference between the two sides is not such as to justify a continued and lengthy dispute. I very much hope that within the next two or three days there will be an offer on the table which can be the basis of proper negotiation as to the phasing, timing and implementation of the settlement. As a result, I hope that we shall be able to get people back to work very quickly indeed so that the situation which the Bill is designed to remedy will end almost before the legislation comes into effect.
  I confess that I do not see this as a measure of meeting force with force, as was suggested by the hon. and learned Member for Kinross and West Perthshire. It is something more important than that. It is an attempt to preserve individual rights which will be lost for ever if there is no legislation, as a result of which innocent people might be prejudiced in a serious and fundamental way. Having said that, there is no question in my mind that the Bill meets force by force, nor would I support it in the Lobbies if, like the hon. and learned Gentleman, I believed that this was a first step to dictatorship.
  The hon. and learned Gentleman welcomed the Bill, presumably, on the ground that it was a first step to dictatorship. That is perhaps explicable, given his general political viewpoint. But I do not see it for a moment as a first step towards dictatorship, and I do not suppose that anyone connected with its introduction saw it in that way.
  It will obviously do something to remove the anomalies which could prejudice the individual, and on that basis it is necessary. Clause 2 relates to the extension of time limits. During the emergency debate the Conservative spokesman properly made the point that it would be monstrous if somebody who had a good claim—often, because of the intricacies and delays of the law, good claims do not come to the courts because actions are not raised until very late in the triennium—lost an action for reparations which had merit purely and simply because when his professional advisers got to the point of recognising that his position had to be protected, because of the protracted nature of the negotiations, they found that the courts were on strike and it was impossible to raise that action. It is right that the Government should act

  1339
  at this stage to make it clear that they will not allow that to happen. That is one of the principal provisions of clause 2. That is exactly the kind of thing which it is important to meet at this time.
  That is almost beyond controversy. But the most important part of the Bill in terms of argument is clause 5. I confess that I approached it with a somewhat sideways look, because I was a little wary about what was contained in it. I welcome the assurances given by my right hon. Friend that there is no question of sheriffs looking for help or recruiting staff in an attempt to get their courts operating on the very restricted basis on which they could operate—for matters such as full committals, bail appeals, and so on. That is all that is authorised at the present stage.
  I take the point made by my hon. Friend the Member for Edinburgh, Central (Mr. Cook. I gather that the Glasgow sheriffs have indicated that they would not wish that responsibility in any case. That is entirely sensible. But even for that limited number of hearings it is right that the individual sheriff should not be left to recruit. There is a wide spectrum of views and opinions on the shrieval benches of Scotland and no doubt there are some who might be tempted, but I am sure that the vast majority would not wish to have that responsibility.
  I was surprised to hear the Secretary of State say that offers had already been made. I am not clear where the offers came from. I am aware of only one offer. That came from the hon. Member for Edinburgh, Pentlands (Mr. Rifkind), who, with a broad brush, offered the services of the solicitors' profession. I admit that I come from the less refined part of the solicitors' world—I come from Glasgow, not Edinburgh—but my experience is that there is no enthusiasm among solicitors for the mantle which has been thrust upon them by the hon. Member. I should be surprised if there were any offers of that kind from solicitors in my part of the world. I should like to know where the offers which have been refused by the Secretary of State came from.
  I would be sad if a policy decision were taken to move in outside staff. If someone in the sheriff clerk's department is prepared to undertake these duties, or
  1340
  if a sheriff himself can do jobs that would normally be done by other members of the court in order to relieve pressures on the courts, that is fair. But I should be unhappy to see that principle widened, because that would escalate the industrial trouble in a way that could not be justified.
  We have a duty to seek clarification from the Conservative Party about two simple issues. The first is the matter of the Pay Research Unit. I asked the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton), at the end of his closing speech in the emergency debate, whether the Conservative Party was in favour of implementing the Pay Research Unit recommendations now. In a sense that must seem an attractive option to the Opposition because they argue that there should be no strikes in this area. If one is removing the right to strike, there is perhaps a moral pressure upon a Government to implement an independent pay research recommendation without negotiation, without phasing and without any caveats as to the implications for economic management, inflation or public service pay levels.
  The tone of the speech by the hon. and learned Member for Kinross and West Perthshire shows that he is not in favour of that. He made it clear that he saw this strike as a force majeure. He saw it as a bestial example of mob rule—to use his own kind of language—and as organised strength in a bad cause to beat the Government into submission.
  If that is so, it does not sound as if he is in favour of implementing the Pay Research Unit recommendations immediately. He raises these issues and promises an answer, and though my hon. Friends and I may be obtuse we did not hear a clear one. I press the hon. and learned Member, and also the hon. Member for Edinburgh, West, to make clear what the Conservative Party's position is on this issue, because they must have given it thought and must have a general view.
  Mr. Fairbairn: The hon. Member says that I described this strike as the use of force in a bad cause to obtain advantage. Will he tell the House whether he is in favour, in any circumstances, of using force against innocent members of the

  1341
  community for a cause, however good, in order to obtain advantage?
  Mr. Dewar: Yes. I defend the right of a worker to withdraw his labour as a last resort. I said in the emergency debate that I thought there was a case, particularly if back-dating was allowed, for arguing that this strike was premature. I regret that we are in this situation, but I do not accept, as apparently I am being invited to do, the principle that all strikes are essentially wicked because force is used. I believe that there is a right to withdraw labour. What I am not clear about is in what circumstances the Conservatives say that labour should not be withdrawn. We had the impression from the hon. and learned Member that it would be over a wide sphere and a large number of employment areas. He has not, however, made it clear exactly why he would favour the withdrawal of labour being banned in this case.
  I believe that there is a case for negotiation about the phasing-in of the Pay Research Unit recommendations. I think that the guarantees given by the Government are an entirely reasonable basis for continuing negotiations. That is why I should like to see them implemented speedily. I do not think there is anything silly about raising that issue. What is the Conservatives' view about a"no-strike"clause? I should also like to hear from the Conservative Party some clarification of its attitude towards strikes in the public service.
  The hon. and learned Member used violent language. He spoke about strikes torturing innocent people. That was the extreme phrase that he used. It came through clearly that he is opposed to strikes in a general sense. That is fair enough. But I hope that as he is speaking from the Conservative Front Bench and, presumably, for his party, we shall hear from other Opposition Front Bench spokesmen what exactly are the circumstances in which strikes should be made illegal and on what grounds they would be made illegal. That is not an unfair request.
  I take a more liberal view of trade unionists, perhaps because I have been one. The trade union to which I belong, the Law Society of Scotland, is extremely effective and powerful. The only one
  1342
  that I can think of that is perhaps more effective is the Faculty of Advocates. It maintains an exclusive right to audience in the superior courts of Scotland, much to the benefit of those gentlemen who practise within it. There may be a case for that, but it ill behoves the hon. and learned Member, from the security of his trade union/professional association/vested interest, to sneer at those who have to use the right to withdraw their labour in order to improve their position.
  I take a serious view of this strike, because I have made my living in the courts. I do not undervalue the courts. However, I do not think that the melodrama concerning the unique and damaging nature of the strike is justified. Strikes hurt many people. People are hurt when they have to boil their water because of a strike by Waterways Board employees. Firms are hurt when they experience a cash flow squeeze because of a transport drivers' strike in which they are not involved. All these activities are damaging and they underline the reason why strikes should be a last resort and why they should be implemented only when absolutely necessary. I am sure that every trade union official will agree with that.
  This strike is not so unique that the people who are involved in it should be singled out for a statutory ban on the withdrawal of their labour. I have not had an intellectually satisfying explanation from the Conservative Front Bench as to why they should be so singled out.
  Mr. Fairbairn: I am obliged to the hon. Gentleman for giving way. It is always difficult for him to stop in the middle of a sentence because often he uses only one main verb in the course of a speech. He accuses me of using the word"torture"and saying that it is emotive. I believe that if a member of society made the hon. Member's mother stand in the snow and drove the ambulance away when she was suffering from cancer, that might properly be described as torture. I should like to think that even the hon. Member's conscience might be tortured if that happened or if he was the ambulance driver and he drove away.
  I am surprised that, as a lawyer, he has not read the Trade Union and Labour Relations (Amendment) Act 1976 and does not know what a trade union is under that Act. He wrongly describes a

  1343
  professional association, unregistered and unaffiliated to the TUC, as a trade union. Let me remind him that both the Law Society of Scotland and the Faculty of Advocates are associations which protect the interests of the public. The hon. Member knows that he and I have a duty to obey instructions and to carry out the services that we are entitled to carry out, if anybody bids us, as an absolute professional rule. Nothing is entitled to interfere with that right of the citizen, and I would not allow it to do so.
  Mr. Dewar: I am not attacking the Law Society of Scotland or the Faculty of Advocates, but I have a considerable number of reservations about some of their activities, as I have no doubt that the hon. and learned Member for Kinross and West Perthshire has.
  I accept that under the terms of the 1974 legislation they are not trade unions, but they perform effectively and powerfully the same role as trade unions. They have done a better job for their members than many trade unions, mainly because trade unions operate in areas which are less easy to organise.
  The hon. and learned Member asked us to consider the cancer patient who is denied an ambulance. That is a powerful and coherent argument. What about the business which is prejudiced and collapses, causing the loss of jobs, because its cash flow is affected by a strike in which it is not involved? These are prices which we have to pay when men are driven finally to withdraw their labour. The logic of the hon. and learned Member's argument is that strikes should be illegal across the board.
  Mr. Fairbairn: It is not.
  Mr. Dewar: I understand that the Conservative Party does not agree with the hon. and learned Member. The logic of the hon. and learned Member's argument is that strikes should be made illegal. If that is not the position, the Opposition Front Bench should make clear where they draw the line. I want the areas to be defined and the argument to be defended. Simple and clear bites of definition and doctrine are involved. I look forward to the Opposition's reply.
  5.22 p.m.
  Mr. J. Grimond: I expressed my views in the debate
  1344
  last week. It is disgraceful that sheriff clerks should behave as some of them have. They are meant to be professional people. They have a duty to the public. They are taking action for purely selfish reasons.
  This is not a strike against wicked employers. It is a strike to compel the Government to give those involved more for their own benefit. The method that they employ is to disrupt the life of the community. The morals involved are those of the kidnapper who says"I shall kidnap you and unless somebody else pays up I shall kill you." I do not say that this is as bad, but the argument is the same.
  A free society depends upon the bulk of the people acting according to the presupposition of a free society. They cannot call upon the Government to abide by the rules if they do not abide by them themselves. The presupposition is that the rule of law depends upon people accepting the common good and the common application of the law. Once the people cease to do that, there is no end to the ad hoc application of the law in the interests of the groups which happen to have power. The presupposition of a welfare society is that we take some notice of each others' welfare. The action of NUPE, for instance, will ultimately destroy the welfare society.
  I wish to ask one or two questions about the Bill. Perhaps I should have tabled amendments. I have not done so because I do not pretend to understand the intricacies of the law. I am glad that I did not table an amendment. I thought that clause 5 meant that a judge could authorise persons to undertake certain duties. I am told that that is not so but that the Secretary of State is involved. That is an illustration of the difficulties facing the layman. I hope that we shall have a definition of the word"judge ".
  It is important that people should understand the law. Are the Government satisfied that the Scottish people will be sufficiently informed about the Bill? I understand that it may be impossible to inform everybody whose legal position is affected, but I hope that there will be general knowledge throughout Scotland about what is being done.
  Some unfortunate people in my constituency, as in others, are paying fines.

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  I understand that fines are not being accepted. Will the Bill mean that they are accepted?
  School janitors made it impossible for others to carry out their duties because they removed the keys and, in some cases, the records. Is there power in the Bill to enable the courts to continue their work if the sheriff clerks or other officers attempt to obstruct that work?
  Somebody, through no fault of his, may be injured as a result of passing the Bill. Is there any power to recompense such a person? Some people may be put to expense or harmed by the Bill. Will they have any redress? Perhaps these are Committee matters, but I should like light to be shed upon them.
  This is the beginning of an extremely dangerous process. Do not let us be misled by stories that other strikes have been worse. We are indulging in emergency legislation in which we normally indulge only at a time of war. Once we begin on this path and the presuppositions of a free, legal and decent society break down, we shall experience such legislation again and again. Each Bill will be called in aid as a precedent for the next. Each Bill will be more stringent than the last. This is not a petty matter to be brushed aside. It is all too likely that it is the beginning of a process which could do great damage to the country.
  5.28 p.m.
  Mr. Alexander Fletcher: The right hon. Member for Orkney and Shetland (Mr. Grimond) was right to draw our attention to the seriousness of the Bill. I am not a lawyer, but I think that the right hon. Gentleman's reading of clause 5 is correct. Today we shall be considering amendments to give the clause the meaning that we believe it should have.
  The Secretary of State ignored the political background to the dispute, perhaps for understandable reasons, but before the Bill goes into Committee the political considerations should be taken into account. This must be one of the saddest pieces of legislation that we have had to consider in the House. It is not the first time that emergency legislation has been necessary, but never before have we had to act in this way to safeguard the administration of the courts.
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  I respect the Secretary of State's determination to take this action. It cannot have been easy for him to persuade his Cabinet colleagues, particularly as several of them recently joined the picket lines themselves.
  Sad as the Bill is, it is fitting that it should be introduced by the Labour Party—the party which worships at the altar of trade unionism and which now finds that its own trade union monster is completely out of control. The weapon that Labour Members used to get into office five years ago has been turned on themselves, to the detriment of good government and the good name of civilisation in this country, which, until a few years ago, was the envy of the world. Ministers have only themselves to blame for this state of affairs. The only cure is a long period in Opposition in which to reflect on the policies of appeasement which have brought about the near collapse of our system of justice in Scotland. The lesson of the past few years is that strikes will continue as long as they pay off and are worth while. That is why this Bill is so important. It attempts, in a small but significant way, to reverse the value of going on strike.
  The Bill has invited threats of further strike action or escalation of action if it is enacted. These threats have been made in conditions that are already not far short of a general strike in the public sector. So be it. The policy of appeasement has to stop, as the Secretary of State has recognised by introducing this Bill and also in his other dealings with Civil Service disputes at the Scottish Office. I do not know whether the civil servants taking part in these disputes were balloted before the action was taken. I do not know whether they questioned why Scotland should be chosen as a pilot scheme for action in the courts which may spark off a much larger dispute throughout the United Kingdom.
  It is interesting that the public sector should provide this Labour Government with such difficulties. The Health Service is in a state of near shambles. In the Civil Service and the nationalised industries many of these difficulties have occurred in bodies which are the Labour Government's own offspring. My hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn)

  1347
  remarked that these strikers are behaving like children. They are, in fact, the spoilt children of Britain today. They seem to have little care for the hardship they impose on others. They are all anxious to make up for the effects of inflation on their pay packets during the past few years. They write to Members of Parliament asking us to support each and every special case. I believe that every Member of Parliament, certainly every Scottish Member, has received letters from civil servants, university lecturers, laboratory technicians in the Health Service and teachers asking for special attention to be given to their case.
  There was no point in the pay policy of the past few years if everyone now seeks to catch up and believes that the wage award for the next 12 months should compensate for the smaller wage awards made during the past few years. Pay settlements must continue to be moderate, particularly in the public sector. That is why, regrettably, this Bill is necessary. As I think the Secretary of State recognises, there is not sufficient money to make awards that would enable everyone to catch up on his 1974 position.
  I should like to make two further points. I hope that the civil servants on strike will consider their own personal position on the basis that we cannot afford to have shop floor trade union attitudes in the Civil Service. Loyalty to the service should still mean something. It is all very well having trade union solidarity. The empty Labour Benches suggest that there is some trade union solidarity going on elsewhere. Whatever loyalties one has to a trade union, they must take second place, at least in the Civil Service, to a sense of duty and loyalty to that service. Every civil servant should wish to set an example to industry. There can be no excuse for people whose jobs are guaranteed behaving like sheep at the behest of trade union officials. I fear that is what is taking place in this dispute.
  I hope that the Secretary of State and the Lord Advocate, in the circumstances in which this Bill is being debated in all its stages today, will give fair consideration to the detailed amendments which have been put forward by my hon. Friends as well as those tabled by my hon. Friends which obviously deal with some
  1348
  of the Government's omissions in the Bill. Given the spirit of co-operation that we hope exists to deal with this short but important, Bill, I trust that the amendments that have been tabled will be given fair consideration by the Government.
  5.35 p.m.
  Mr. George Thompson: I apologise, Mr. Deputy Speaker, for my voice. Unfortunately, although I am my party's parliamentary spokesman on health, this does not guarantee my immunity from the common cold. The right hon. Member for Orkney and Shetland (Mr. Grimond) and the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) have touched on the need to recognise that we are all members of society, one of another, and that we should bear that in mind whenever we feel ourselves obliged to move towards strikes. I agree with that approach. I thought, however, that the hon. and learned Member for Kinross and West Perthshire was speaking about a moral Utopia in which human nature and original sin had been abolished. I do not know whether this will be part of the Conservative Party's next election manifesto—
  Mr. Gordon Wilson: There will be plenty of sin in the manifesto.
  Mr. Thompson: My hon. Friend is no doubt right. I support the hon. Member for Glasgow, Garscadden (Mr. Dewar) in his call for the Tory Front Bench to say whether the next Conservative Government, if there ever is one, will seek to abolish strikes altogether in order to compel us to recognise that we are members of society, one of another, or whether this will be done only in selected areas. We should be told. The electorate in Scotland will want to know whether the right to strike is to be taken away totally or only in selected areas. If it is to be done in selected areas, we should know which ones. People working in those areas might take umbrage and not turn out to vote Conservative.
  We must bear in mind that this is not a national dispute. It is a United Kingdom dispute. [HON. MEMBERS:"It is a national dispute."] It is a United Kingdom dispute. The situation that we are seeking partially to remedy is only part

  1349
  of a much wider situation. The House must proceed warily in what it does today. It will be no good if, having passed the Bill, the result is an escalation of this conflict and the creation of a deal of bad blood between the courts and court officials for many a long day after the overt dispute is over.
  I had intended to refer to the remarks of the hon. and learned Member for Kinross and West Perthshire when he went out of his way, in the debate last week, to make copious references to mob rule. He did not go as far as to say that the sheriff clerks constituted a mob, but he sailed as close to that as his prudence allowed him. Today he has spoken of highwaymen and torturers. We must ask ourselves: are the sheriff clerks and others in dispute really highwaymen and torturers? Are they behaving like mobs? I have no doubt that phrases like"mob rule ","highwaymen"and"torturers"go down well in heaving Tory bosoms. Do they conduce either to ending this dispute rapidly or to providing the atmosphere for reconciliation after the dispute is over? I think not.
  Vote-catching speeches may be all the rage at the moment. I often see Tory speakers in the House cast their eyes upwards. I had naturally assumed that their eyes were directed to Heaven in prayer, no doubt to obtain the grace of the happy death of the Government, but I have come to the conclusion, most reluctantly, that they move a little to the right of that blessed place to take a quick look at the Press Gallery to see whether the content of their speeches is being noted for their favourite daily newspapers.
  The real and lasting solution to the dispute is not the Bill but a return to work. Are the Government trying as hard as they can to obtain a settlement, or are they leaving the dispute to run on for a while to chasten the unions involved? The Government are well aware that the courts affected are hundreds of miles away from this place. Had the Law Courts in the Strand or the Old Bailey been affected, would the Government have been taking their time in such a lordly way? I rather think that they would not.
  The Bill does not touch upon the vexed issue of back-dating any award, an issue which several hon. Members, including myself, pressed the Lord Advocate to
  1350
  answer last week. Would it not now be appropriate for the Government to come completely clean? They could even, perhaps, resolve the dispute by doing just that.
  I remind the House that during the debate last week the Secretary of State said:
  " There is no question but that the settlement will date from 1 April, even if the settlement is not reached until after 1 April. No doubt my right hon. Friend the Minister of State will correct me if I am wrong, but I have checked on that particular matter."
  He said a little later:
  " In my view, however, if the negotiations go beyond 1 April, there is no reason why the settlement should not be back-dated to 1 April."
  That seems clear, but it appeared today that the Prime Minister is by no means so certain as the Secretary of State. I hope that the Government will respond and that we shall have complete clarity between the Secretary of State, the Prime Minister and the unions involved.
  Last week I mentioned the problem of the backlog. The Bill does nothing to deal with the backlog that is building up as a result of the strike. It is a backlog which, certainly at the Glasgow sheriff court, is being added to an existing backlog. Perhaps the Government cannot tackle the period after the emergency dealt with in the Bill—it deals only with the emergency—but will they take the opportunity today to give a general outline of how they propose to tackle the backlog? I offer one or two tentative suggestions. For example, we could increase the number of sheriffs. We could ask for one or two sheriffs to come out of retirement to assist. Will the Government give us an inkling of how their minds are moving?
  The Bill is not without its difficulties. The House must be tempted to speculate on what is being done to reduce the effect of the strike not by open legislation in the House but by administrative decisions, whether expressed in writing or by word of mouth. For instance, is there any truth in the rumour that the police have been instructed to arrest only major criminals? Will the Government assure us categorically that there is no truth in that rumour? Citizens have a right to know that justice is being administered even-handedly, even in an emergency.

  1351
  I comment briefly on the idea that those other than sheriff clerks should be allowed to carry out some of the work of sheriff clerks, I note that the Bill refers to"any person ". The mind boggles at who might be involved. In last week's debate I said:
  " I wonder whether this "—
  that is, using other than sheriff clerks to perform the functions of sheriff clerks—
  " would not be a recipe for chaos. I should have thought one would require experts trained in the procedures to function as sheriff clerks."—[Official Report, 13 March 1979; Vol. 964, c. 288–329.]
  It is an idea that could be a recipe for chaos in several ways. It could inflame the dispute by appearing to provide for strike-breaking. It could lead to muddle, both during the dispute and after. We do not know what qualifications the volunteer staff would have. The Bill refers to"any person ". The volunteer staff could conceivably muddle files and papers so that what the sheriff clerks left in good order when they entered upon the dispute may be found by them to be in confusion on their return to their desks. If that were to happen, there would surely be a further delay in clearing the backlog.
  I support the Bill, with a certain reluctance. It could conceivably inflame the dispute, although sincerely I hope that it will not do so. However, in the end we must surely consent to a reduction of the rights of some individuals—the sheriff clerks in this instance—to guarantee the rights of those who are involved with the law, either as alleged criminals or as litigants. They, too, have their rights. In many instances they are unprotected except by the law, and they require the protection of the House.
  5.47 p.m.
  Mr. Alick Buchanan-Smith: The hon. Member for Galloway (Mr. Thompson) was less than fair to my hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn). If we had a Utopia, there would not be any necessity for law. It is precisely because my hon. and learned Friend is a realist and understands that we do not have a Utopia that he argues that we must have the proper functioning of our legal system.
  There lies the fallacy of the argument of the hon. Member for Glasgow, Garscadden
  1352
  (Mr. Dewar). The law cannot be regarded as being in the same category as the water supply or transport services. In a free and democratic society the law is fundamental to every citizen. Therefore the Government rightly have a responsibility to maintain the law. That respossibility is above and beyond any other.
  Much as we regret the necessity, the Government are right to introduce the Bill. I am glad to support it. I, like the right hon. Member for Orkney and Shetland (Mr. Grimond), view the introduction of measures such as the Bill, important and justified as they may be, as forming extra and emergency legislation to maintain the law, which, as I have said, is fundamental to our society. The necessity to introduce such measures is a judgment on the way in which we conduct our affairs. It is a process that we must not enter lightly. It is something that we have to question and consider carefully.
  I take up one other remark made by the hon. Member for Galloway. Let us be under no illusion about the distress, problems and difficulties that such disputes cause for ordinary individuals. This morning I received a letter from an ex-constituent whom I have helped in the past. Unfortunately, she is involved in a divorce action. She went to the courts to obtain an order to enable her to have access to her children. Not surprisingly, the court rightly deferred its decision so that various social reports could be obtained. In the circumstances, that was a reasonable and not surprising action to take. However, my constituent now finds that there is no prospect of the second court hearing taking place to consider the social worker's report. That is serious. The mother is trying to obtain access through the courts in a proper way. However, court hearings are suspended because of the action of those who operate the courts.
  The constituent I mentioned does not know her position. She is in great distress of mind, not knowing whether she will obtain access to her children. Regardless of the recommendations of the social workers, no one knows to what the children may be subjected in the interim period. That leads to distress for the mother, who is unable to obtain access to her children, and for the children. That is regrettable.

  1353
  Clause 5 covers the situation where the Secretary of State is prepared, as a matter of policy, to allow a judge to bring in other people to do the work. There is nothing in the Bill that will bring about the alleviation of distress. I beg the Lord Advocate to clarify the situation of such a person in relation to this Bill. Applicants will not be helped unless the Secretary of State is prepared, under clause 5, to authorise a judge to appoint any other person to carry out the work that should have been carried out by those involved in the dispute. I raise the matter in this sense. I hope that those who are party to the dispute will realise, in pure human terms, the distress and agony which they are causing and which is demonstrated by the case of the individual I mentioned.
  I was surprised at what the Secretary of State said about clause 5. It enables a judge to
  " authorise any person to do any such thing in relation to such proceedings."
  When Parliament gives power to a judge, it is there for the judge or the judiciary generally to use. However, the Secretary of State said that that power would not be used unless he made a policy decision that it should be used. I pressed the Secretary of State in my intervention—I hoped that it would save time in Committee—to tell us in what sense his policy decision would be given power under this legislation. Surely the judiciary either does or does not have the power. If power is to be exercised at a later stage at the discretion of the Secretary of State, let that be stated in the Bill so that we may arrive at an opinion on it.
  A fundamental of justice is that the judiciary is independent of the Executive. I am not aware of any other cases where the judiciary is subject to the policy decisions of the Executive. I have heard instances where the Government have been challenged to tell the courts to perform certain actions. However, Ministers have rightly said that they had no right to give a direction to the courts or the judiciary.
  I understand that the Secretary of State does not wish to enter easily into using the powers under clause 5 until he believes it to be necessary. If that is so, let him state in the Bill that the use of this power will be delayed. Let us
  1354
  know the procedures under which that power will be introduced. Clause 5 is totally unsatisfactory. It is not in the best traditions of justice. I hope that the Lord Advocate will explain the matter when he winds up the debate.
  5.55 p.m.
  Mr. Malcolm Rifkind: I have an observation to make about the Labour Party. Today we are discussing an emergency Bill which is needed because this is the first time for 400 years that the courts in Scotland have been closed. Present in the House are the Lord Advocate, two Ministers, the Scottish Whip and the Parliamentary Private Secretary to the Secretary of State. It is disgraceful that there is not one other member of the Labour Party present. Nor is there one other Labour Member of Parliament from a Scottish constituency. I make a special exception of the hon. Member for Glasgow, Garscadden (Mr. Dewar), who has been present for most of the debate and who made an important contribution. It is deplorable that hon. Members—whatever their views—have not seen fit to be present, much less make a contribution, during a debate on an emergency Bill of great importance to Scotland.
  I start by making a request to the Secretary of State. There has been a great deal of confusion about whether any offer to those on strike—or other civil servants—would be back-dated to 1 April if agreement were reached after that date. The Minister stated last week in a previous debate on this matter his understanding that any agreement would be retrospective. He said that there was no urgency to reach agreement by 1 April. That interpretation is disputed by many trade union officials involved in the dispute. There is considerable doubt in Scotland and in the Civil Service unions as to the truth of the matter. The Minister has had one full week in which to find out whether his observation was correct and justified.
  I hope that either the Secretary of State or the Minister who is to reply will say categorically whether any settlement reached will be retrospective to 1 April. I shall be happy to give way if the Secretary of State wishes to make that clear. There has been grave doubt about the matter. The Secretary of

  1355
  State's contributions appear to have only added to the confusion. I see that he does not want to make a statement now. I hope he will ensure that the Lord Advocate or the Minister who replies will say whether the Secretary of State's statement last week was right or wrong. This matter must be known to the Government. It should be known to the Civil Service unions if an early resolution of the problem is to be achieved.
  Everyone must welcome the emergency Bill as making a small contribution towards curing the chaos in the Scottish courts system. It is deplorable that we have had to wait for several weeks of an emergency for this Bill to be introduced. There is nothing in the Bill that could not have been introduced when the dispute began. All its provisions were as relevant then as they are now. All the Bill's provisions would have made a contribution from the moment the strike began in February. We must, and are entitled to, know why the House and the country have had to wait so long for the Government to bring forward this measure. Is the delay due to the fact that the Secretary of State and his Cabinet colleagues were not willing to allow it to come forward? Has there been disagreement within the Government and the Labour Party, or between both? We must assume that there are circumstances now which did not prevail two weeks ago and which have resulted in the legislation now being brought forward.
  We are entitled to suspect that, but for the pressure being brought by the Opposition, this Bill might not, even now, have surfaced and that not even this small and modest contribution towards dealing with the chaos in the Scottish courts would have been attempted.
  The Secretary of State said—I believe him—that the Bill would make a modest contribution towards helping to solve the problem. It is a miserable shame that that contribution was not made two weeks ago when the strike began, as we might now have seen the fruits of the Bill and its benefits to the overall situation.
  The dispute is part of a general Civil Service dispute. It is not simply that the courts are on strike. Many Government officers are taking similar industrial action. The computer at the Scottish Office is not functioning. A significant amount of harm is being done. It was reported that
  1356
  as a result of the industrial action neither teachers' pensions nor benefits to teachers' dependants were being paid. We know of old-age pensioners being denied payment of national savings certificates and premium bonds, apart from other grievances. These actions are taken by trade unionists against fellow trade unionists. We are entitled to comment on the sad way in which the situation has deteriorated in recent months.
  I know of one somewhat amusing consequence of the industrial dispute. The Secretary of State, quite correctly, announced last Friday that officials in the Scottish Office must do certain work that was otherwise normally done by their striking colleagues. A certain Mr. Ken Thomas, a leading Civil Service trade unionist, said that this was a disgraceful suggestion and that if the Government insisted on carrying on in this way his union would consider taking legal action. It clearly had not dawned on Mr. Ken Thomas that it would be somewhat difficult in present circumstances for him to take legal action, because his own trade unionists were preventing anyone from taking any legal action on any issue anywhere in Scotland for the foreseeable future. That illustrates the ludicrous state of our industrial relations.
  We shall obviously have an opportunity in Committee to consider the contents of the Bill, but I agree with my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) that, if the Government wish to supersede the clear terms of the Bill, it is deplorable that they have not put their desire into the Bill. The Bill specifically, and without qualification, gives the judges the right to authorise other persons to carry out certain work. The Secretary of State is right in saying that there is an amendment dealing with that matter, but it is an Opposition amendment, not a Government amendment. Unless the Government intend to accept that amendment—and, if they do, they should have indicated so at an earlier stage—the Secretary of State is saying, in effect, that a fundamental matter of Executive interference with the judiciary is to take place not by Act of Parliament but contrary to the apparent implications of an Act of Parliament. That is not a sound basis for legislation, and I hope that the Secretary of State will reflect on it.

  1357
  The hon. Member for Garscadden referred to those of us who believe that the time has come for certain limitations to be made on industrial action by certain public sector officials. He indicated that, it the court officials were on strike, the position was no worse than when strike action was taken by other groups. I suggest, with respect, that it is quite different. The hon. Gentleman knows that for many years the Army and the police force have not had the right to take industrial action. The reason for that has not been a philosophical distinction made by Parliament, or by successive Governments of all political views, but that it has been appreciated that the job of the Army and of the police is that of law and order. If those whose special responsibility it is to ensure law and order and the fabric of our society are to withdraw their labour, not only are problems and inconvenience caused for the public but the very sinews of the State are endangered and the very cohesion of society is threatened.
  To a real extent, those involved in the administration of the courts are in an identical position. The job of the police cannot be looked at in isolation from the job of the courts. The police and the courts are two sides of the same coin. It is the job of the police, if they apprehend people, to ensure that they are brought to court so that their alleged offences may be dealt with. It cannot be said that it is right for the police to be prevented from striking, because otherwise they would not be able to catch criminals, but that nevertheless it is all right for the courts to stop functioning in such a way that there is no means by which society can deal with the criminals once they have been apprehended by the police.
  Mr. Dewar: I do not want to be put in the position of saying that I think that a strike in the courts is unimportant. I do not think that, because it has serious consequences. But there is an important point of difference between the police and the court strikers. If the police go on strike, there will be crimes committed and those concerned will not be apprehended or detected. There will, indeed, then be a fundamental effect on the fabric of society. Unpleasant though it is, there are already some very long delays in the
  1358
  administration of justice. I deplore the fact that the necessity to withdraw labour will lengthen those delays, but at least justice will be done, even if it is delayed. With the time-bar provisions of the Bill, people will be able to exercise their rights and criminal trials will take place. It is not the same as it would be with a police strike, in which event there would be a once and for all loss of detection and of law enforcement.
  Mr. Rifkind: The hon. Member is wrong, with respect, on two fundamental counts. Charges have already been dropped in some cases specifically because of this strike action. For the most part, these have so far been relatively minor charges, but the courts have been on strike for only a fortnight. What will happen if the strike continues for three months, as the civil servants are threatening? Clearly we might well be in a position in which a large number of other charges will be dropped, not because of any inadequacy of evidence or because the prosecuting authorities now believe that the persons concerned are innocent and entitled to be acquitted, but because the courts are not in a position to carry out their duty. That is the first flaw in the hon. Member's argument.
  The second flaw in the hon. Member's argument is even more grave. This year, for the first time in the 400 years of the courts' existence in Scotland, court officials are on strike. Who is to say that it will not happen next year and the year after that? Who is to say that we are not reaching a stage at which it will be normal not only for car workers, miners and those in manufacturing industry to go on strike but also those involved in the administration of the State and the administration of justice? We seem to be reaching a stage at which it is regarded as perfectly proper for them, as a matter of course, to assume that, whenever they have a grievance against any Government, it is perfectly proper for them to withdraw their labour and thereby bring the courts to a halt.
  Are we to say that we are quite willing to anticipate, for the foreseeable future, every year the courts ceasing to operate for two or three weeks? Is not this an invitation to a system of industrial relations which would bring exactly the same destructive consequences as would arise from allowing industrial action to be taken by the police or the

  1359
  Armed Forces? We are dealing here not simply with public servants but with public servants the nature of whose employment is concerned with the very fabric of the State and without whom the State cannot continue. It is not unreasonable in such circumstances for the community to apply to those persons the same restrictions as it has applied for many years to the police and the Armed Forces.
  As I said in the debate last week, we have seen the nurses, a group with a legitimate grievance, nevertheless refusing to inhibit or destroy the interests of the community in their pursuit of that grievance. I am glad that the Government have responded in a more generous way than they did originally. They have made an offer to the nurses of what is said to be about 13 per cent., a figure far greater than was originally offered. That was not because the nurses went on strike. Indeed, in many ways the Government are far more embarrassed and put in a far more difficult position by employees who refuse to go on strike, because of their sense of public duty, and despite their deep sense of grievance, than they are by the sort of action taken by these civil servants at the present time.
  We have to find a new system of industrial relations, but in the meantime, as long as this industrial action continues the Bill, puny effort though it is, is a modest contribution to ensuring that the very minimum capacity of the courts is allowed to continue for the foreseeable future.
  6.7 p.m.
  Mr. George Younger: There are one or two remarkable features of the debate. The most remarkable is that the hon. Member for Glasgow, Garscadden (Mr. Dewar) and one or two others have totally failed to appreciate the extreme seriousness of the position that we are discussing.
  The right hon. Member for Orkney and Shetland (Mr. Grimond) put his finger firmly on the problem when, speaking from the experience of one who has been in this House for longer than most of us, he pointed out the extremely serious nature of what we are discussing. Here we have the Government—admittedly in their dying days—introducing emergency legislation to suspend a number of our
  1360
  usual liberties under the law, in order to enable or help them to break a strike. That is the purpose of the Bill.
  It is amazing, as my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) pointed out, that this has taken place with virtually no attendance by Labour Back Benchers. Apart from the hon. Member for Gascadden and the hon. Member for Bolsover (Mr. Skinner), who made a very useful contribution to our discussions, no one else has been present on the Labour Back Benches. That in itself is a most important point that should be registered and realised because it says a great deal about why we have got to the point where the Bill is necessary at all.
  The Secretary of State and the Lord Advocate are right, of course, to bring in the Bill. It is absolutely necessary. Let them never have to say that in their hour of need the Opposition refused to support them. It is perhaps not unfair of me to add, Mr. Deputy Speaker, that I can remember many other Oppositions within the last 15 years who would not have dreamt of raising a finger to help a Government in this position. If there had been any faces on the Labour Benches. I would have expected them to be blushing scarlet at that remark, because the irresponsibility of all Labour Members, from the Prime Minister downwards, during previous far less serious industrial disputes in the early 1970s has been thrown back in their faces today, for we have today a Socialist Secretary of State—perhaps I should correct that and say a Secretary of State in a Socialist Government—coming to this House with legislation to help him to break a strike.
  It is not an isolated instance, nor is it accidental, nor, as the hon. Member for Garscadden would like to think, is it a small local difficulty that can be shrugged aside. It is an inevitable consequence of the policies, attitudes and organisation of the Labour Government over the past six or seven years. Day in and day out, week in and week out, they have encouraged militancy. Moderate and sensible Members of the Labour Party have been seen on picket lines supporting various illegal causes. We warned them many times over the past years where this would lead. With the Bill we see one of the milestones that we feared and have been warning against for so long.

  1361
  I well remember when we started on the new and deplorable chapter in our history. It was when the previous Labour Government, led by the right hon. Member for Huyton (Sir H. Wilson), condoned the activities of the rent rebels of Clay Cross and Clydebank. That was done in the face of the law, by using law officers, and it devalued the standards of impartiality of the law. They are aware of that and are embarrassed. Compared to this issue it was trivial, yet that was the first step, and what has followed is inevitable. Worse will follow unless the community as a whole, including the Labour Party, comes to its senses. It must realise that in a civilised society the rule of law, support for the rule of law, and the supremacy and independence of the rule of law and the judiciary must be placed above party interests, Unless that is done we shall look back to this day, which is sufficiently grave, and consider that it was not so bad. There will be worse to come.
  The right hon. Member for Orkney and Shetland rightly struck a note of alarm about what the Secretary of State was doing. Although I support what the Secretary of State is doing, I do not condone the events that have led us to this position.
  At the centre of the problem we must consider why respectable—and reasonable—members of society, such as those who work in our judicial system, the sheriff clerks and their officers and officials, take such action. Those of us who come into contact with them have a great respect for them. Their work is of a high standard. I have always believed that officers of a court were professionally competent and had a high standard of conduct. But these responsible and respectable members of society have been driven to the desperate strait of withdrawing their labour—although that phrase is not appropriate when applied to such workers.
  They have been driven to that, first, by realising that in society ordered by a Labour Government it pays hand over fist to use industrial strength. Those who use it get more money, and those who do not use it do not get more money. Although I believe that it is wrong, they feel that unless they take such action they will not be heard by the Government. I have told all those to whom I have spoken that I wish they would go
  1362
  back to work and that they should never have gone on strike, although I appreciate the feelings that led to that action.
  Secondly, the Government have been leading the country to this position over the past five or six years. They have made it clear that they do not appreciate the feelings of responsible members of society. It is therefore essential for people to look after their own interests and ignore the standards of public service that previously they had taken for granted as part of their careers and of the past history of their jobs. My hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn) rightly drew our attention to the fact that we have not only rights but obligations.
  After years of inflation and difficulty, I wonder how many categories of people genuinely believe that they are undervalued, underpaid and ignored. There are not hundreds but thousands all over the country, and one does not have to look far from here to find them. The message of the Government is that these categories of workers will not be listened to unless they act irresponsibly, and the Government are reaping the harvest of that irresponsibility. They richly deserve every embarrassing moment as the Bill inches its way through the House.
  The Labour Benches have misrepresented, intentionally or unintentionally, the views of almost every speaker from this side of the House. I thoroughly sympathise with the feelings of those who are striking in the courts, but I do not condone their decision to strike. I wish that they would go back to work at once, and my sympathy will be 10 times greater when they do so.
  I am sure that the Government never wished to get into this position. They will not agree with much of what I say, but they should consider carefully our views. In the quietness and solitude of their homes they should consider whether every word is not true. They have brought upon themselves these grave consequences by breaching the sacred principle that in a democratic free society the rule and practice of law, and the judiciary that crowns the rule of law, are sacrosanct and must remain so over sectional interests, personal wishes and party politics. That is the long-term message of this grim day. I hope that the Government will take it to heart.
  6.20 p.m.
  Mr. Iain Sproat: I agree with my hon. Friend the Member for Ayr (Mr. Younger) that this is a grim day. It is indeed. He did well to emphasise that the Government today are reaping what they sowed. They have encouraged militancy at every point from the day when the Leader of the House gave way to the miners five years ago. Every day that has passed since then, they have encouraged people to think that might is right and that if a person causes enough trouble and misery he will get his way.
  None the less, although the Government deserve what they have got, the people of this country do not. We should be sympathising with them. It is with great regret that I support this Bill, but I do support it. In doing so I shall make two points briefly, because I spoke on this matter during the debate last week.
  First, we all know that the civil servants involved, particularly those at the lower end of the scale, have a substantial point in their claim. I am referring not to the sheriff clerks on £10,000 a year but to those who are being paid the almost incredible sum of £1,600 a year. But whether they are justified in their claim, they are certainly not justified in the actions that they are taking to achieve that claim. That is an absolute truth—the claim may be justified but the actions cannot be justified.
  One reason why they cannot be justified is that they are causing too much misery. In fact, the misery they are causing is out of all balance with the difference between what these people are being paid now and what they would be paid. My hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) gave one example of the misery.
  Another reason why the action is out of all proportion to the claim is that the civil servants are putting at risk something which is much too important—the very fabric of law and order. Justice must be above all other interests. It was typical of the hon. Member for Glasgow, Garscadden (Mr. Dewar) that he sought to equate the disruption of justice with the disruption of our lorry transport system. That shows his total misunderstanding of the gravity of the situation that we are debating today.
  My second point is that civilised society cannot exist if the law cannot be enforced.
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  That is what we are seeing now—the law is not being enforced, whether it is a case of a child going to her mother or whether a breach of the road traffic regulations is dropped. One or two shoplifting cases have been dropped, and crimes are being committed which will not even be tried. Unless we can enforce the law, we cannot support civilised society.
  A number of us have been subjected to a bit of misunderstanding on these matters. The hon. Member for Garscadden paid me what he thought was a compliment the other day when he said that I was advancing a surprisingly liberal attitude on a certain matter. I said then that the civil servants involved in the dispute had a perfect right to strike. Personally, I am extremely reluctant to remove the right to strike from anyone. This is one of the ultimate safeguards of the individual vis-a-vis the State, big employers or other groups. I believe that more emphasis should be put on the individual and less on the big groups such as the trade unions, the employers or the State. But, as my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) pointed out, this might be the first of many strikes that we see in the courts, horrifying prospect though that is. If civil servants see that they are getting away with it, they may try it again. Therefore, society must be prepared to take steps to protect itself against that happening.
  It could be argued that a precedent is required. If so, the police do not have the right to strike. Therefore, why is it wrong to take from those who run the courts the right to strike? The Scottish National Party claims that in saying this we are saying that all strikes should be abolished. That is so ridiculous that I would not bother to mention it, but no doubt The Scotsman will put it in big headlines tomorrow, together with photographs of SNP Members who are not even here. Of course that is not what we are saying.
  I hope that the Conservative Party will make it clear in the next manifesto that we think that the right to strike should be exchanged in this instance for a guarantee that the pay of these civil servants is kept up to standard. We are taking away one right and giving another—that of guaranteed payment. That is

  1365
  a fair deal for the civil servants, and society would benefit. We cannot go on as we are at the moment.
  For those reasons, I hope that the House will support the Bill.
  6.27 p.m.
  Mr. Hector Monro: I shall speak for only a few moments in welcoming this Bill. We accept its introduction into the House, however reluctantly, because this is such a serious situation. It is incredible that in 1979 we have to produce emergency regulations to sustain justice in Scotland. However, the Bill only puts justice into limbo. It does not provide it as speedily as it should be provided.
  My hon. Friends were right to highlight the fact that this Government's actions over the past five years are coming home to roost. I have made my position clear on many of the points which I raised in the debate last week. At 6.59 p.m. in that debate the Lord Advocate said that he would reply to those points as quickly as possible. At the time he had only another minute to go, so I have been waiting ever since in keen anticipation of his replies. Some have been answered by the Secretary of State today and I am grateful for that. I hope that the Government will spell out in the winding-up speech a much broader picture for the general public in Scotland so that they can appreciate exactly what will happen when the Bill passes into law and how their problems will be affected.
  I know that Government policy is to play this in as low a key as possible and pretend that nothing is happening, but I hope that we and the press will emphasise that justice is not taking place in our country at present. The Government must explain the situation loudly and clearly to the people of Scotland and allay their fears. They must spell out the position on civil actions. The Secretary of State indicated that everything is now retrospective to 23 February, but he must spell out how this affects those who were on the verge of bringing actions at that time. Are any cases time-barred by the dilatory action of the Government in introducing the Bill?
  I asked the Lord Advocate last week about motoring cases. I am sure that he would have replied if the time had
  1366
  been available. Many people who are to be prosecuted for minor cases have forwarded their licences to the court. On the days that their cases should have been heard, their licences were temporarily suspended for the period of the hearings. The clerks are now on strike and cannot return their licences. What is the validity of the licences from the day on which the cases should have been heard? There are many people in that difficult position who would like to know where they stand.
  I appreciate that the reason why we are having this debate is that jury trials cannot take place. I should like to bring home to the Lord Advocate and the Secretary of State that a number of men who are presently awaiting trial in prisons have to be retained under high security. That places a greatly added burden on our short-staffed prison service, and I hope that the Secretary of State will bear that in mind.
  I asked the Lord Advocate about cases that require speedy justice, for example, football hooligans. An offence on a Saturday requires justice, it possible, on the following Monday or Tuesday Presumably, these cases will go into the pile and it may be six months before they are heard or perhaps they will be dropped If they are heard, it will be after a long delay that the witnesses will have to recall what happened and the speedy administration of justice will not take place.
  Many of my hon. Friends are concerned about clause 2, the timetable and when the strike will be concluded. Where do the Government stand today in relation to negotiations? How near are they to resolving the strike? No hon. Member has condoned the strike—we have all criticised it strongly. We appreciate that it has to come to a conclusion and that it has to be negotiated by the present Government. We have heard statements from Ministers—particularly from the Lord Privy Seal—and from the unions. These statements conflict. Surely the matter can be resolved and explained to the House today. Obviously the Government believe that they are right, but the case of the unions cannot be so blatantly incorrect that it should be thrown out without a fair discussion. I should like the Lord Advocate, when he winds up the debate, to explain where we stand and

  1367
  what will happen next. When will the Lord Privy Seal hold his next meeting? Or will the Secretary of State hold the next meeting?
  The union seems to be saying that it will not accept staged increases of the various types that the Government have put forward over recent months. It is demanding the full increase now. The Government, of course, have made out the case for the other side. Will the Lord Advocate spell out today what measures will be taken for the resolution of the strike and the length of time that the Act will be in force? That is crucial to the debate.
  I join my colleagues in wishing the Bill a speedy passage today. But the Government must not in any way try to reduce their responsibility for the existence of the strike and for their dilatoriness in bringing the Bill before the House.
  6.35 p.m.
  Mr. Gordon Wilson: The processes of justice in Scotland have suffered a coronary attack as a result of the dispute. No hon. Member should be under any misapprehension about that. Considerable distress has been caused by the strike, not just for those accused of crimes, whose legal rights might be at issue, but also for those who are dependent upon the courts' confirmation of resources with which to run their households. Legal actions for debt have also been held up. These are important matters which have had an impact upon the daily lives of our citizens.
  Apart from the provisions of the Bill, it is important that the dispute should be solved as quickly as possible. I should like to refer to the remarks made by the hon. Member for Dumfries (Mr. Monro). Clearly, the backlog of work which will affect the courts will continue long after the dispute is resolved. There have been complaints time and again about delays in certain sheriff courts. Questions are tabled every month about visits to the sheriff court in Glasgow because of the insufficiency of the facilities provided there to deal with the backlog.
  I had hoped that when the Criminal Justice Bill became an Act indictable proceedings would have been concluded within one year. That Bill still has to go through the House and Report stage and it is now under severe scrutiny and
  1368
  attack because of the inability of the authorities to be able to put it into effect if it is enacted in its present form.
  Will the Government re-examine the confusion that has developed about backdating? Much criticism has been made of those who withdrew their labour prior to the date of negotiation—1 April 1979. But if there was no question of backdating a future awards, the negotiations had to start before 1 April. Otherwise, those employed in the sheriff courts and in the quarter sessions would lose backdated increases in pay if the settlement was not achieved until, for example, May or June. A clear statement should be made by the Government that any settlement will be back-dated to 1 April. That might well be conducive to the ending of the dispute.
  Most of the clauses in the Bill contain proposals to lessen the effects of the emergency and can be seen to have some potential effect. But clause 5 raises problems—apart from the embarrassing ones raised earlier that it may involve us in a"blacklegs' charter ", which worried the hon. Member for Bolsover (Mr. Skinner), even if clause 5 permitted judges to employ authorised persons to carry out certain proceedings within the courts, where will the skilled labour be obtained to put it into effect? My experience of sheriff clerks—I have no experience of quarter sessions officials—is that they are very skilful. Their advice about court procedure is called upon day in and day out by solicitors. They have picked up practical knowledge, apart from their theoretical training, about the procedures of courts and how they should be conducted.
  The High Court of Justiciary has also made clear in certain appeals that the procedures adopted in lower courts are particularly important, not just in relation to their adjectival nature but because the accuracy of the minute-taking of the proceedings may be important in relation to an appeal.
  I cannot see any person, whether legally qualified or not, being able to take up the skilled work done in the sheriff courts. The Secretary of State—or the Lord Advocate—owes the House an explanation of what the Government have in mind in connection with the enabling powers conferred by the Bill.

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  I should like to mention in passing one amendment that has not been selected for debate.
  Mr. Deputy Speaker (Sir Myer Galpern): Order. It would not be in order for the hon. Gentleman to do so.
  Mr. Wilson: In that case, I shall have to raise the matter in the clause stand part debate—a course which I had wished to avoid.
  The real problem in relation to clause 5 will be finding professional and skilled people who will be able to give help. My hon. Friend the Member for Galloway (Mr. Thompson) was right when he said that amateurs taking over the work could cause more confusion than if they were not brought in. Bringing in people from outside must be a last resort to deal with cases that a sheriff may identify as emergencies requiring urgent attention.
  It is sad that we have to deal with this sort of legislation, but in relation to certain civic rights—the 110-day rule and the triennial prescription—some action is urgently desirable.
  6.43 p.m.
  Mr. Russell Fairgrieve: I intend to be very brief. I appear to be the last speaker from the Back Benches and hon. Members no doubt wish to get on to the Committee stage.
  It is important to point out that, on this serious day for our country, the main contributions in the debate have come from Scottish Tories. There have been fleeting entrances and speeches by members of the minor parties, but the Government Benches have been notoriously empty and contributions from them have been notoriously scarce in this vital debate.
  The hon. Member for Aberdeen, North (Mr. Hughes), who is muttering from a sedentary position, entered the Chamber for the first time only a minute ago.
  Mr. Robert Hughes: I shall not stay long to listen to the hon. Gentleman.
  Mr. Fairgrieve: What worries me is the difference between the way that my hon. Friends are reacting now and the way that the Labour Party reacted in 1974 in
  1370
  circumstances that were not all that dissimilar from those that we face today. That leads me on to worry about the refusal, or the inability, of the Labour Party to do anything about passing any legislation about the growing and dangerous power of certain trade union elements, such as outlined by the Leader of the Opposition.
  If the Labour Party is ever to govern again after it has lost the next election, some day and somehow it will have to face the monster that it has created.
  Mr. Robert Hughes: Will the hon. Gentleman give way?
  Mr. Fairgrieve: No. The hon. Gentleman has only just come into the Chamber. If he had attended the debate, I would give way to him.
  Mr. Deputy Speaker: Order. I understood that the hon. Member for Aberdeenshire, West (Mr. Fairgrieve) had given way.
  Mr. Fairgrieve: I thought that the hon. Member for Glasgow, Garscadden (Mr. Dewar), who has been here for the whole debate, wanted to intervene.
  Mr. Robert Hughes: The hon. Gentleman needs new glasses.
  Mr. Donald Stewart: Will the hon. Member for Aberdeenshire, West (Mr. Fairgrieve) give way?
  Mr. Fairgrieve: No.
  Mr. Deputy Speaker: Order. The hon. Member for Aberdeenshire, West is determined to continue his short speech.
  Mr. Fairgrieve: Thank you, Mr. Deputy Speaker. The right hon. Member for the Western Isles (Mr. Stewart) entered the Chamber only two minutes ago.
  Mr. Teddy Taylor: Disgraceful.
  Mr. Fairgrieve: I shall continue my speech without interference from part-time attenders.
  Mr. Donald Stewart: On a point of order, Mr. Deputy Speaker. I spent at least one and a half hours in the Chamber earlier.
  Mr. Fairgrieve: All I can say is that that must have something to do with Scotch mist or the fact that they have

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  a different type of clock in the Western Isles. Unlike those from the islands, we do believe in the time-machine.
  If I may conclude my short speech, I repeat that if the Labour Party is ever to govern again after it has lost the next election, I hope that it will support us if we run into this sort of situation or that it will decide how to deal with the monster that it has created. It is with some reluctance and sadness that my party and I will support the Government in this unfortunate legislation.
  Mr. Robert Hughes rose—
  Lord James Douglas-Hamilton rose—
  Mr. Deputy Speaker: Lord James Douglas-Hamilton.
  Mr. Hughes: On a point of order, Mr. Deputy Speaker—
  Mr. Deputy Speaker: Order. I understood that the hon. Member for Aberdeen, North (Mr. Hughes) said in a sedentary intervention that he was not staying long in the Chamber. I call Lord James Douglas-Hamilton.
  Mr. Hughes: On a point of order, Mr. Deputy Speaker. You must have misheard me. I said that I would not stay long to listen to the hon. Member for Aberdeenshire, West (Mr. Fairgrieve). That was because he refused to give way to me. I still hope to catch your eye.
  Mr. Deputy Speaker: An hon. Member said earlier that the House wanted a speedy passage of the Bill. He will have to study the meaning of the word"speedy ". If I call the Opposition spokesman now, I shall call the Lord Advocate afterwards. I had better call the hon. Member for Aberdeen, North, who has not heard the arguments. If he should repeat the arguments that have already been made, I shall have to accuse him of reiteration. I hope that he will try to keep his speech as brief as possible.
  6.47 p.m.
  Mr. Robert Hughes: It had not been my intention to take part in the debate, in the interests of the speedy passage of the Bill.
  Mr. Buchanan-Smith: The hon. Gentleman has not been here during the debate.
  Mr. Hughes: I understood that there was unanimity on the need to get the Bill through. Had the hon. Member for Aberdeenshire, West (Mr. Fairgrieve) not been so provocative in his remarks, I should not have felt compelled to rise.
  It is not good enough for Conservative Members simply to blame the Government for the present series of events. We are desperately looking to the Opposition for a statement about how they would deal with the position. We should be told specifically whether the Conservatives are in favour of the implementation of the work of the Pay Research Unit.
  Mr. Younger: We have been discussing these matters all afternoon.
  Mr. Hughes: There is no point in the Opposition condemning strikes, and those who are on strike, when Conservative Members will not tell us how they would deal with the matter.
  Mr. Rifkind: I have been listening with fascination to the hon. Gentleman. He accuses the Opposition of not making various policy statements, but can he indicate on what basis he has concluded that such policy statements have not been made in the debate?
  Mr. Hughes: We have been trying to get such statements from the Opposition for many months. I am as entitled as any other Member to ask what is the Opposition's policy before their spokesman winds up the debate. I am surprised if Tory Members think that that is undemocratic.
  The Opposition will get nowhere by trying to avoid the questions. Are they in favour of the implementation of the PRU? If they are opposed to strikes in the courts, where else are they prepared to say that strikes should be illegal? What is it that makes them say that the democratic right of individuals—[Interruption.] Why are hon. Gentlemen opposite so upset at being asked to answer simple questions? Do they have something to hide?
  Mr. Buchanan-Smith: The only thing that is upsetting the House is that we have been discussing this matter for some three and a half hours and the hon. Gentleman has not been here. If the Government put up Back Benchers to filibuster, they cannot expect to get their legislation today.
  Mr. Hughes: I assure the hon. Gentleman that I have not been put up here by anybody to filibuster, nor is it my intention to do so. If Conservative Members are as anxious as we are to get the Bill through, it would be far better if they would allow me to make this brief speech without interruption.
  Are the Conservatives saying that in this or any other area they are in favour of making strikes illegal? The fact that people are taking the attitude that in whatever circumstances they operate they will go on strike to get the best possible bargain is a reflection on the kind of information that has been coming from the Benches opposite. They are the people who have been talking about"free collective bargaining ", and if there is free collective bargaining people have the right to use what weapons they have and what influence they have to get the best possible bargain. I do not think that the Opposition should be absolved from responsibility for the damage that they did by removing from the Government the possibility of applying sanctions against firms and industry.
  Mr. Fairbairn: Will the hon. Gentleman say what sanctions he would apply to the Civil Service? Would he cancel its contracts?
  Mr. Hughes: I certainly would not cancel any contracts, because we are in a different situation. Tory Members are saying that the Government should not try to bring any influence to bear on those concerned, but at the same time they want the Government to take direct action. It is curious that the Conservative Party is for ever telling the Labour Party, and certain sections of it in particular, that it is seeking to turn this country into some kind of central mid-European State behind the Iron Curtain. Those are the only countries that have the kind of control of the economic situation that is demanded by the Tory Benches. There is a contradiction there which they cannot and will not resolve.
  It is my belief that the best way to proceed in this matter and on this strike is to get agreement as quickly as possible. The passage of the Bill will not by itself resolve the problem, but it will resolve other matters in the legal system which have to be resolved.
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  The provocative speeches of Conservative Members—[HON. MEMBERS:"No ".] I think that I have touched a raw nerve. They are upset because they have made these speeches time and time again. [HON. MEMBERS:"Withdraw ".] I shall not withdraw my remarks, but I give way to the hon. Gentleman.
  Mr. Teddy Taylor: I assure the hon. Gentleman that we do have a raw nerve on this side of the House, bearing in mind that one of the most important fundamental Bills to come before the House of Commons has been discussed with one Labour Back Bencher present and one Labour Back Bencher speaking. I regard it as an affront to the people of Scotland that on such an important issue we are listening to this last-minute contribution by an hon. Member who walked into the Chamber only five minutes before he spoke.
  Mr. Hughes: I thought that the hon. Gentleman did not want us to speak, so what is he complaining about? I am trying to get answers from hon. Gentlemen opposite, and no amount of dancing around and jumping and hopping from one foot to another will prevent the questions being asked, and they really ought to answer them.
  I hope that when the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) winds up the debate he will tell us specifically how he would deal with the situation, otherwise people will be certain that they are only up to mischief-making, and they will not be any the better regarded in Scotland for that.
  6.55 p.m.
  Lord James Douglas-Hamilton: I listened to the speech of the hon. Member for Aberdeen, North (Mr. Hughes) with astonishment because it appears that he was addressing the Conservative Opposition as though they were the Government. Perhaps this is merely a sign of the times and opposition comes more naturally to the hon. Gentleman than government. I am bound to say, however, that if he had heard my hon. Friend the Member for Ayr (Mr. Younger) speak he would have learnt that at that time there were virtually only five Scottish Labour Members of Parliament in the House of Commons, although there are 41

  1375
  Scottish Labour Members of Parliament; and for most of this debate very few Labour Members have been present. I think that that is a matter for comment.
  As the hon. Member for Galloway (Mr. Thompson) said, this is a United Kingdom dispute, and it is obviously a matter of supreme importance because it is vital to protect the rights and freedoms of every British citizen, as my hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn) has said.
  The Secretary of State stressed in his speech that the courts are a forum in which justice must be sought. Again and again today, throughout the debate, one point has been made by hon. Members—the hon. Member for Bolsover (Mr. Skinner), the hon. Member for Galloway, my hon. Friends the Members for Edinburgh, Pentlands (Mr. Rifkind) and for North Angus and Mearns (Mr. Buchanan-Smith) and the hon. Member for Dundee, East (Mr. Wilson)—in relation to clause 5, namely, whether the authorisation for the clause comes directly from the Secretary of State or whether these powers are being given to the judges so that they may use their discretion.
  I accept what the Secretary of State has said, that the intention is not to have a strike-breaking or blacklegging clause, but I implore him to look very hard indeed at amendment No. 2, because it makes it absolutely clear that the decisions in this matter must come directly from him. It is highly desirable that that amendment should be passed so that there may be no doubt about this matter.
  Mr. Dewar: The hon. Gentleman has talked about clause 5 and amendment No. 2. The effect would be that before outsiders could be brought into the courts there would have to be a policy decision by the Secretary of State as distinct from individual sheriffs. Will the hon. Gentleman say a little about when the Conservative Party thinks that that option should be used? Is he in favour of using it at once?
  Lord James Douglas-Hamilton: The hon. Gentleman is being extremely irresponsible, because he stated earlier that, in his view, many lawyers thought that employing volunteers at this stage was not desirable. I suggest to the hon. Member that many lawyers want the action to come from the Secretary of State, but
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  only when it is absolutely necessary. I am not suggesting for a moment that it is absolutely necessary now, but if this strike goes on indefinitely for up to six months the mood among the legal profession in Scotland may change. I think that all of us on both sides of the House hope that this strike will end.
  The right hon. Member for the Orkney and Shetland (Mr. Grimond) stressed the seriousness of this matter and he in the last debate and my hon. Friend the Member for Pentlands in this debate made it quite clear that there is more sympathy for the nurses' claim and the restraint they have exercised than there is for the clerks.
  The hon. Members for Glasgow, Garscadden (Mr. Dewar) and for Aberdeen, North are so desperately anxious to discover what the Conservative Party policy is that I must tell them straight away that it would be wrong and misleading for us to try to outbid the Government in buying off the strike. We do not see that as our role at all, and my hon. Friends the Members for Ayr, for Edinburgh, North (Mr. Fletcher) and for Aberdeen, South (Mr. Sproat) all said that strikes will continue for as long as the Government are willing, or anybody is willing, to pay to those striking the maximum they are asking for. That is a situation which we deplore. We believe very strongly that there should be speedy negotiation, and we certainly want the general situation reviewed.
  In a number of categories of employment, strike action is against the national interest. My hon. Friend the Member for Pentlands has given the examples of the police and the Army. There is no question of our banning strikes under compulsion. We would seek to obtain the agreement of those in certain positions—for example, those who work in the courts—to surrender their right to strike in exchange for a system of wage payments which would ensure that they would not fall behind and which would be entirely satisfactory from their point of view. This can be done only by negotiation and agreement.
  As for the Pay Research Unit, we strongly support the principle of its continuance, but it would be quite wrong for us to engage in a Dutch auction, in the course of a serious industrial dispute,

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  about the timing of the implementation of its report.
  I have been asked a number of questions, and I wish to ask the Lord Advocate one question. In the last debate I passed on to the Government the offer made by Mr. Bonar, the secretary of the SCPS branch of the Court of Session. In the debate on 13 March, I mentioned that Mr. Bonar had explained that
  " if a guarantee of meaningful negotiations on the Pay Research Unit report was made the national executive councils of the CPSA and SCPS would be called to consider the request of the Secretary of State to call the action off in the Scottish courts."—[Official Report, 13 March 1979; Vol. 964, c. 334.]
  What consideration has been given by the Government to this aspect? Will the Lord Advocate give the House a general progress report on the present position?
  I wish to return more closely to the Bill itself. Clause 2 presumably deals with time-bar and prescription, areas of the law which are dealt with by the Prescription and Limitation (Scotland) Act 1973. These prescriptive periods run from the moment when certain rights become enforceable. The word"enforceable"may cause trouble because, in the first week of the strike, no summonses were signeted and, therefore, no rights were enforceable at that time and they could not be enforced in the courts.
  A question may arise later as to when any prescriptive period starts to run. Does it start when the courts are closed, or when the right could be enforced through the bringing of an action? The Law Society of Scotland has suggested that the time limit should be two months. The Law Society takes the same point as was made by the hon. Member for Dundee, East, namely, that there will be a tremendous backlog of cases. I hope that the Lord Advocate will let the House know what policy will be pursued on that point.
  I must also ask the Lord Advocate about fiscal measures not covered by clause 2. Yesterday I was given a satisfactory answer by the Minister of State, Treasury, who I am glad to see is present. He said:
  " The Board of Inland Revenue will be prepared to extend the time limit as necessary to cover cases where it is satisfied that the distribution could reasonably be expected to have been made by 31 March 1979 if the industrial
  1378
  action had not taken place."—[Official Report, 19 March 1979; Vol. 964, c. 446–7.]
  Will that concession be extended to all other fiscal cases which may be similarly involved?
  Furthermore, capital transfer tax is also causing problems. For example, if a shopkeeper dies and his will cannot be confirmed because the Commissary Office is on strike, it is important that that aspect should be covered. Under the present law CTT must be paid before confirmation is taken. This means that many people have to pay a large sum and cannot get the money because they are unable to sell the shop in question. Therefore, they have to take a vast loan and to pay a great deal of interest. I understand that the Treasury is taking a sympathetic view and is organising repayments. Will the Lord Advocate confirm that?
  Clause 3 is a worrying clause. Its effect is that untried prisoners will be locked up on an indefinite basis as long as the strike continues. These powers are draconian, but unfortunately they are absolutely necessary. It is particularly worrying that the courts have no power to review the position.
  How many persons in Scotland accused of serious crimes in the High Court are acquitted? Is the figure in the past 10 years 20, 30 or 40 per cent.? If the Lord Advocate examines the number of persons charged with murder, rape, incest or any other serious offence he will see that a considerable number have been released. If such people are to be kept indefinitely in prison without trial, it raises a difficult issue. The European convention for the protection of human rights and fundamental freedoms states:
  " Everyone has the right to liberty and security of person. No one shall be deprived of his liberty save in the following cases and in accordance with a procedure prescribed by law ".
  It continues:
  " Everyone arrested or detained…shall be brought promptly before a judge or other officer authorised by law to exercise judicial power and shall be entitled to trial within a reasonable time or to release pending trial."
  That is impossible under the Bill. It seems that there is only a limited number of possibilities. One would be to let accused murderers go free on the streets—which would not be acceptable to any of us. Another would be to allow those

  1379
  who are accused of serious crimes, if they so wished, to elect for trial before a judge sitting without a jury. An amendment has been tabled to that effect. The other possibility is that a person stays in prison for an indefinite period of time pending trial. It may also mean that people who may otherwise have been kept in prison before trial will be released on bail and that more people would be released on bail than would normally be the case. Perhaps the Lord Advocate will say how that clause will work in practice.
  Why is there no mention in clause 4 of the Court of Session? Where a proof may be held during the emergency, an interlocutor will be pronounced allowing proof of trial, and in the practice in the Court of Session this interlocutor contains a warrant to cite witnesses.
  Clause 5 relates to a most sensitive matter with which the Lord Advocate will have to deal, namely, whether he will agree to amendment No. 2. Even if there is only the faintest possibility of volunteers being required in the near future—indeed, there is a strong possibility of this happening in the next few weeks—it is important that the authorisation must come directly from the Government. My hon. Friend the Member for North Angus and Mearns has already stressed the independence of the judiciary. This is a most valued principle and must not be undermined.
  Clause 5(2) deals with copies of documents lodged in court. Does the phrase
  " copy of any document lodged in court "
  mean a copy of any document already lodged in court prior to the strike? After all, it seems that only such documents would be inaccessible. Does the clause envisage that the judge would decide at proof whether the document is admissible and that it would remain admissible subject to proof that it is not a true copy? For example, I refer to a case in which there is a dispute about a document not being genuine. In such a case, where does the onus of proof lie?
  In regard to clause 5(3), why are the words"failure or omission"used? Why not"acting or omission "? Could some acting of a judge invalidate proceedings? Perhaps the Lord Advocate could give the House his view. If assistants are volunteers, will they be paid by the State?
  1380
  If not, will they be protected from civil liability as a result of the consequences of volunteering? For example, if a volunteer who was not an expert were to lose a document, would he be liable under the civil law for damages?
  One area of grave concern that is not covered is that of confirmation. The Law Society of Scotland has made representations on this point. I hope that the Lord Advocate will take these matters into account. The special committee set up by the Law Society states that it is
  " aware of many instances where a widow is either suffering dire financial hardship or is being obliged to pay penal rates of overdraft interest because of the inability of her solicitor to obtain confirmation to her late husband's estate because of the present industrial action…From the point of view of the solicitor the present inability to obtain confirmation also brings to a standstill estate planning."
  Many of these matters are highly technical, but where constituents are involved and make complaints it is worth considering how these clauses will operate in practice.
  In regard to the Stamp Act, will the Lord Advocate say whether he considers a period of three months to be adequate? It may well be that it is too short. Do the provisions of clause 6, in line 37, mean that a deed has to be"duly stamped"with a nil penalty at the most if there is a good reason for delay? Is it the case that the clause does not deal with deeds requiring to be stamped but which will not be recorded? I hope that we shall discuss these matters in much greater detail in a moment.
  This is a worrying Bill because in many respects it is the legal equivalent of martial law. If the strike continues for a prolonged period, it will be necessary to review this legislation. Rushed legislation is not always the best. I ask the Lord Advocate to review these matters in the light of experience in the coming weeks and months.
  7.10 p.m.
  The Lord Advocate (Mr. Ronald King Murray): As my right hon. Friend the Secretary of State made clear—and I think other hon. Members have taken the point—the object of the Bill is not to cure all ills created by the present stoppage in the courts. It is restricted, firstly, to preserving rights which would otherwise be irretrievably lost. Secondly,

  1381
  the Bill is aimed at continuing some functions of the courts to deal with matters of special immediacy and to maintain continuity in the machinery of justice. In other words, it is a fort-holding operation.
  I think it has been recognised by hon. Members who have taken part in the debate that the courts have a unique position as the universal place of recourse for redress of injustice and that that function must be given and allowed to be fulfilled.
  I shall obviously not be able to reply to all the points raised, in the debate—[HON. MEMBERS:"Why not? "]—because it would take me a very long time. It may please hon. Members if I say that I shall pick out the main points that I think I can now answer off the cuff. I do not think that Opposition Members would want a hasty answer to some of the detailed points that have been raised. I do not want to bore hon. Members—even those opposite—and I hope, therefore, that some points that I do not answer will be picked up when we come to debate the clauses. I am sure that that is the appropriate way to deal with the matter.
  I welcome what the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) said about accepting that clause 5 is not intended to be a strikebreaking clause. The hon. Gentleman is quite right to take the view that this confers a power on judges to make the appointments to which the subsection refers. The point is that the authority conferred on judges is for them to exercise at their discretion. That meets the question about qualifications. It is clearly tendered as a power which the judges should have, but it is not a strike-breaking power. The responsibility for the employment of sheriff clerks and clerks of court, as my right hon. Friend made clear, remains with the Secretary of State. That is why a matter of policy in this connection must be a matter for him.
  Mr. Fairbairn rose—
  The Lord Advocate: I shall not give way at this stage.
  Mr. Fairbairn: It is on this point.
  The Lord Advocate: Very well.
  Mr. Fairbairn: As the Lord Advocate appreciates, I am a very simple person. I listened to the Secretary of State and to what the Lord Advocate has just said. As I recall, the Secretary of State said quite clearly—and I can be contradicted if I am wrong—that this power could not be exercised by the judges without the authority and decision of the Secretary of State. As I understood the Lord Advocate, he said that the judges can exercise this power at their discretion. In other words, the Secretary of State is saying that the judges can exercise the power only if he says"I tell you to"or"I permit you to ", and the Lord Advocate says that the judges can do it when they like. He invents the schizophrenic formula that they will use the discretion and the Secretary of State will use the policy. We must be clear what the Government mean.
  The Lord Advocate: I regret giving way to the hon. and learned Gentleman, because the matter is perfectly clear. [HON. MEMBERS:"It is not."] It is perfectly clear. The responsibility for policy decisions is that of my right hon. Friend the Secretary of State, and he made that absolutely clear. He said that he accepted that the responsibility of deciding whether extra personnel should be brought in to do the jobs of those who are not working was a policy decision which rested exclusively with him. It is not a matter for judges to decide.
  Several Hon. Members rose—
  The Lord Advocate: No, I shall not give way. The matter is clear beyond a doubt. After all, we are dealing with a specific amendment which the Opposition have tabled. There seems to me to be very little purpose in dealing now with the substance and merit of an amendment which is tabled relating specifically to this point—
  Mr. Buchanan-Smith: Will the right hon. and learned Gentleman clarify one matter?
  The Lord Advocate: If this is to be a brief intervention I shall give way.
  Mr. Buchanan-Smith: Prior to the Secretary of State giving a policy direction to the judges, what happens if a judge appoints somebody to help him in the interim period?
  The Lord Advocate: That is a power that the Bill clearly confers, and if a judge cares to use it he can do so.
  Let me repeat what I have said, absolutely clearly and without any ambiguity. The responsibility for making any decision of policy rests firmly with the Secretary of State, and he said that. The last word that I can say on the matter at this stage is that it would be wrong for the Government to impose on judges responsibility for a matter of policy which must be the Government's responsibility.
  Mr. Buchanan-Smith rose—
  The Lord Advocate: I do not think that it would serve any useful purpose if I gave way again. I have many specific matters to answer, and I think that I should try to deal with some of them.
  I am not for one moment suggesting that the points that have been put to the Government should not be answered this evening. They certainly will be. I am merely saying that if I attempt to answer all the points I shall be on my feet continuously and we shall have virtually a Committee stage. So far I have attempted to deal only with one point which was mentioned by the hon. Member for Edinburgh, West in his closing remarks.
  Mr. Teddy Taylor: We have been very co-operative on the Bill. We simply want to know the position. The fact is that clause 5, as the right hon. and learned Gentleman said, confers the right on judges to appoint people. On the other hand, he said that the Secretary of State is reserving the right, the political decision, as to when it should start. We must know exactly what the answer is. Is he saying that the Government's policy is that clause 5 should not be operated until the Secretary of State gives the starting orders, but that, on the other hand, the clause confers on judges the right to do so? Does he intend to put a commencement order on it? Does he intend to accept our amendment? We must know whether the Government are proposing a clause which they do not want to be operated until the Secretary of State gives the go-ahead.
  The Lord Advocate: I think that the hon. Gentleman has clarified the matter to some extent. Certainly the Government's position—
  Mr. Buchanan-Smith: It takes the Opposition to do that.
  The Lord Advocate: Then I withdraw that, because, quite frankly, I do not think that these interventions help to clarify the matter at all. The hon. Member for Glasgow, Cathcart (Mr. Taylor) was saying at the end of his intervention that this matter was the subject of a specific amendment. I entirely agree with him. It seems to me that the effect of his intervention was simply to prove that this matter would best be left until we deal with the specific amendment.
  Let me repeat what I have said, because to this extent I think that the hon. Member for Cathcart clarified the position. The Government's view is that the appointment of personnel to carry out the work of those at present withdrawing their labour should not be started until a policy decision has been made. That is the Government's position.
  Mr. Buchanan-Smith: The Bill does not say that.
  The Lord Advocate: Of course it does not say that, because an Act of Parliament does not say what a Government's policy is. Acts of Parliament are legislative powers conferred on people in certain circumstances. For example, nothing needs to be said in an emergency Bill of this kind about ministerial powers.
  Mr. Fairbairn rose—
  The Lord Advocate: I shall not give way any further on this point.
  Mr. Fairbairn rose—
  The Lord Advocate: I am not prepared to give way on this point.
  Mr. Deputy Speaker: Order. I think that the Lord Advocate has made it abundantly clear that he is not prepared to give way.
  Mr. Fairbairn rose—
  Mr. Deputy Speaker: Order. I hope that the hon. and learned Gentleman will respect the indications of the Chair. When an hon. Member who is addressing the House does not give way, that is an end to it.
  Mr. Skinner: That has put him in his place.
  The Lord Advocate: The hon. Member for Edinburgh, West raised a number of other points. The next point that I can properly take up is the time limit of one month which is mentioned in clause 1. clause 1. Perhaps the clearest way to deal with this is to point out that the time limit of one month, which first appears in clause 1(1), is related to the time which is covered by the emergency period.
  The provision at the beginning of clause 1(1) states:
  " This Act shall cease to be in force one month after the date prescribed by the Secretary of State by order made by statutory instrument ".
  Therefore, in regard to what one might call problems of re-entry—getting back to normal after the emergency period after the strike has been settled and so on—the extent of time covered by this is a matter for the Secretary of State to take into account in the statutory instrument which he will issue in due course.
  For example, the strike could end in a week's time, but it may be that the points which the hon. Gentleman had in mind would require the Secretary of State to consider a delay of one month before putting forward a statutory instrument. That would require a further period of one month before the Bill itself would lapse. Therefore, the flexibility which the hon. Gentleman thought was desirable is built into clause 1(1).
  The hon. Gentleman then asked about the fiscal concession about which the Minister of State had told him in reply to a written question. In particular, he asked whether the concession made in regard to the transitional relief time limit would be extended to other fiscal time limits. I understand that the answer is, in general,"Yes"in cases where there are court proceedings and where court proceedings have led to prejudice by virtue of the strike of court personnel; in other words, where there are relevant court proceedings and where there has been some prejudice due to delay.
  Lord James Douglas-Hamilton: Will this concession be considered also for those whose relatives are unfortunate enough to die, who have to pay capital transfer tax but who cannot realise the property because they cannot get it confirmed and therefore cannot sell it and raise the money?
  The Lord Advocate: I think that capital transfer tax is a different matter. The hon. Gentleman specifically asked for repayments of capital transfer tax to people who are unable to get confirmation. That was what he put to me. My information is that Inland Revenue will be issuing a press notice dealing with certain points on capital transfer tax, including the point that the hon. Gentleman has just put to me.
  The hon. Gentleman said that people would be locked up for considerable periods under the provisions of clause 3. That is perfectly true. He asked for the statistics of persons in Scotland who were acquitted. I am afraid that I cannot give them off the cuff, and perhaps that is another matter which could be dealt with when we consider clause 3.
  Clearly, if the strike were to go on for a long period the specific problems that the hon. Gentleman put to me would require to be solved. They are very difficult and acute, and I appreciate that the Conservative Opposition have an alternative solution which they have put forward by way of amendment. The problems, certainly in the short term, are not as difficult as the hon. Gentleman made out. It is a matter of very grave regret, certainly on the Government's part, that anyone has to be kept in custody for a period longer than 110 days during the present emergency.
  However, it is only right to have a sense of proportion and to realise that we in Scotland are fortunate in having such a stringent time limit. There are many other countries, including England, where this period of time would be quite acceptable and where no one would think very much about someone being kept in custody, even on serious charges, for a period very much longer than 110 days. We must have a sense of proportion about this.
  Provided that the strike does not continue for a protracted period, I believe that, in regard to the amount of prejudice, although very real and unfortunate for those who at the end of the day may be acquitted, it would be exaggerating matters to maintain that it was something that would not be accepted on a European scale, especially since we have a much more stringent time limit than many of our European companion States.

  1387
  I should like to try to deal briefly with some of the other matters that were raised. My hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) was right to draw attention to the fact that there appeared to be some contradiction between what was said by the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) and what I had certainly understood official Opposition policy to be in relation to industrial disputes and strikes. The hon. Member for Edinburgh, West has perhaps helped to correct the possibly misleading impression that the hon. and learned Gentleman gave in that regard. Indeed, the hon. Member for Edinburgh, Pentlands (Mr Rifkind) presented the Opposition view in a rather different light. It is difficult to avoid the inference that the hon. and learned Gentleman was seeking to make out that all strikes were illegal because they were the activities of highwaymen, that all combinations of persons to withdraw their labour are criminal conspiracies—
  Mr. Fairbairn: Oh, no!
  The Lord Advocate: —these are indeed legal points—and that trade unions must really be unlawful.
  Mr. Fairbairn indicated dissent.
  The Lord Advocate: Well, I heard what I heard. The hon. and learned Gentleman seemed to imply that trade unions are unlawful because in some sense they are an expression of collective rather than individual opinion. If that is not what he meant, I am happy to accept that, but the contradiction was certainly apparent to some of us. If that is not what he intended to imply, I am happy to accept that and to pass on to some of the other points.
  The right hon. Member for Orkney and Shetland (Mr. Grimond) asked me a question on judges, which I think I have dealt with. In any event, I would rather leave that until we consider the matter in much more detail when we come to the relevant clause. He asked about information in regard to an earlier clause—I think it was clause 4(2). I can reassure him on that matter. There is an Opposition amendment dealing with this matter—No. 10—to which the Government are sympathetic. Nevertheless, we are here dealing with a rather technical aspect of procedure, and it reflects the
  1388
  fact that normally when, for example, summary diets are fixed, arrangements are made by the prosecutor with the court. It is when the diet is obtained that intimation is made to the accused. Therefore, there is really no prejudice to an accused person.
  One is really trying to organise court business in a rational way, and at that stage there would be very little point in intimating to an accused person that he might or might not be tried on a certain day. What he really wants to know is what day has been provisionally fixed for him to appear in court. Therefore, the question of information is perhaps not the one which the right hon. Gentleman thought he was dealing with in relation to this clause.
  The right hon. Gentleman made an important point about the payment of fines. I think that one of the sheriff courts in his constituency—Shetland—is sitting normally and therefore there is no problem in regard to payment of fines. But the courts are not operating normally in Orkney. I believe that the practice which is followed in other courts is being operated there, which is that when fines are imposed the time for payment is put well ahead, in the hope that it will be entirely clear of the present industrial action.
  The other point with which the Government have a lot of sympathy—it was one of the right hon. Gentleman's observations—is that here we are dealing with emergency legislation. Other hon. Members have expressed the same view. It has been correctly stated that the supreme courts of Scotland have not been closed in this fashion since 1532 when they were reorganised in the form of the Court of Session. That is a matter of great regret. But at the same time it must be recognised that there can be no justice without the courts. There can be no way of enforcing one's rights, or remedying injustice, unless some minimum relic of machinery of justice is there. That is the other side of the coin.
  It is a matter of great regret, and one that I deplore very strongly, that at the moment the Scottish courts are virtually at a standstill. On the other hand, the seriousness of that state of affairs surely justifies an unusual provision such as the present emergency Bill. It is calculated to meet an emergency. In that regard it

  1389
  is a modest measure, because, as was pointed out, it cannot put the courts back into full action or anything like it.
  The hon. Member for Galloway (Mr. Thompson) asked for reassurance about major criminals. I can reassure him that there is no question of anyone not being charged with a major crime during the present crisis. Indeed, the only change in procedure in this regard is that when the police charge or arrest someone who commits a crime which perhaps justifies imprisonment or custody, they are giving consideration to releasing such persons and reporting them to the procurator fiscal for citation, which preserves the right to bring a charge at a later date but which at the same time does not involve the problem of having such persons in custody. Arrests are taking place. Certainly fewer people are being detained in custody than there normally would be. I can give the assurance that there is no question of major criminals not being arrested. There is no question of their not being brought to trial.
  Mr. Thompson: Will the Lord Advocate deal with minor crimes? Is it true that minor criminals are not being dealt with by arrest when, in normal circumstances, the police might arrest them?
  The Lord Advocate: That is difficult to answer in the abstract, but obviously one does not seek to arrest and detain people if that can be avoided. Fewer people involved in minor crimes will be detained. I think that the distinction between arrest and detention is important, because one might arrest someone for a minor breach of the peace. He would be taken to the police station and charged. Details would be taken and he would perhaps be warned that he would be cited, and in time he would be. The question of arrest is different from that of custody. We are trying to minimise the number of people kept in custody pending trial.
  Mr. Gordon Wilson: What does the Lord Advocate regard as minor and major offences? For what kind of crime will a person now go free rather than be kept in custody? Has the Lord Advocate given some direction to the police as to what class of criminal might be allowed to go free?
  The Lord Advocate: It would be unwise for me to attempt to distinguish between
  1390
  major and minor crimes. I cannot go beyond what I said in the debate last week, when I pointed out that dealing with certain offences has been abandoned altogether. These are minor traffic offences. They are typical of the minor cases and are, perhaps, not worth pursuing. Above that level, there is a range of traffic cases which, while undoubtedly minor, should not be abandoned. They are, however, the cases to which one does not give the same priority as to common law offences such as housebreaking or assault. Beyond that broad generalisation, one must try to pursue what is thought by most people to be criminal activity. It is difficult to regard road traffic statutory offences as major crimes.
  The hon. Member for Ayr (Mr. Younger) said that he welcomed the Bill, and I am glad of that. He emphasised that this is a serious situation. He appreciated that, deplorable though it might be, the situation merits the kind of limited emergency action that we are taking in the Bill.
  The hon. Member for Dumfries (Mr. Monro) asked many questions which I feel duty bound to try to answer because I failed to answer them on the last occasion. The Bill makes it clear that it deals only with the points that I mentioned earlier. It deals with the two vital steps which preserve rights which otherwise might be lost irretrievably—the continuation of the function of the courts in dealing with matters of special immediacy and the maintenance of the machinery and continuity of justice. It is a modest Bill, and that is all that it claims to do.
  It would be wrong for me to attempt to spell out more fully at this stage what the various clauses mean. We shall deal with them in amendments. It would be wrong to suggest that the Bill is any kind of panacea for the emergency in the Scottish courts.
  The hon. Member mentioned civil actions for damages provided for in clause 2. I believe that he wanted me to define the kind of civil case that the Government had in mind. The kind of case that we have in mind is that of an action for damages for personal injuries where the triennial limitation means that if an action is not started within three years from the date of the wrong complained of, the right of action is lost. The effect of clause 2 is to stop that limitation. In other words,

  1391
  if shortly after the start of the strike on 23 February—let us say 26 February—it was the end of a three-year period for someone who had not yet brought an action to court, clause 2, because it is retrospective, would enable that action to be started despite the fact that two years had elapsed. Perhaps that is the kind of illustration the hon. Member sought.
  The hon. Gentleman asked me today, and last week, about motor vehicle licences. I am informed that there is no legal impediment to drivers who do not have their licences because they are in the court and are not returned to them because of the present industrial action. Such drivers are not prevented from driving. I assume from the way that the question was put to me that this concerns cases where licences have been sent to the court and there has been no further procedure.
  The hon. Gentleman also asked about the strain on prisons. I believe that he was referring to the 110-day custody period. This is a matter of importance, but all I can say at present is that the Government have it in mind. No doubt this matter can be canvassed later.
  I turn to the question of football hooliganism. In Glasgow it is the practice to take football hooliganism cases in the sheriff courts. This is done to bring home to offenders the seriousness of their crime and to ensure that the sentence received is suitable. It is done so that the courts can impose high sentences for bad cases of hooliganism, penalties which could not be imposed by the district courts when lay justices are trying such cases.
  In this crisis it will be possible for the district courts to deal with football hooliganism. In Glasgow, for example, stipendiary magistrates have the same sentencing powers as the sheriff. Football hooliganism cases in Glasgow can be dealt with by the stipendiary in an appropriate way. For the rest, I can say only that in the meantime the matter will have to be dealt with by the district courts which are still sitting. I am sure that I have not answered all the questions put to me.
  Mr. Rifkind: I wish to ask the Lord Advocate about a question which he has not answered and which cannot properly
  1392
  be raised in Committee. He will be aware that hon. Members on both sides of the House have pressed him to clarify, on behalf of the Government, the problem created by the comment of the Secretary of State last week that any settlement that is reached after 1 April will be retrospective to 1 April. There have been requests from both sides of the House for this matter to be clarified. Will the Lord Advocate please state the Government's considered view on this?
  The Lord Advocate: I do not propose to answer that any further than it has already been answered. [HON. MEMBERS:"It has not been answered."] My right hon. Friend has already dealt with this. Hon. Members may not like the way in which he dealt with it, but he has dealt with it.
  Mr. Fairbairn rose—
  The Lord Advocate: No, I shall not give way. The Floor of the House is not the place to conduct industrial negotiations. It has been made perfectly clear by my right hon. Friend—indeed, it was made clear in the debate last week—that these are delicate matters which are under negotiation. The Lord Privy Seal met the unions today to deal with this matter, and questions were asked of the Prime Minister during Question Time today. It would be wrong for me to attempt to add further to the replies which have been given already. This is not my responsibility. The responsibility lies with the Lord Privy Seal. My right hon. Friend the Prime Minister indicated today that the questions put to him would be referred to the Lord Privy Seal. That is as far as I propose to go at present.
  Mr. Fairbairn: I refer the Lord Advocate to the passage in question so that we are not in doubt. The Secretary of State for Scotland said:
  " In any case, it is the intention of the Government to reach a settlement before 1 April.… I can confirm what I have just said. I do not think it is a particularly useful function to carry on negotiations on the Floor of the House. In any case, one is dealing with a hypothetical situation, because it is certainly the intention of the Government that a settlement will be reached before 1 April. In my view, however, if the negotiations go beyond 1 April, there is not reason why the settlement should not be back-dated to 1 April. That is a matter for negotiation."—[Official Report, 13 March 1979; Vol. 964, c. 289.]
  Is that the Government's view?
  The Lord Advocate: The hon. and learned Gentleman has been helpful because he has made clear that what my right hon. Friend said is free from doubt. He may not like what my right hon. Friend said, but there can be no doubt about the clarity of it.
  I hope that hon. Members on both sides of the House will realise that it is
  Question accordingly agreed to.
  important that nothing is said in the House that will imperil a reasonable and sensible conclusion to the industrial dispute.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 162, Noes 20.

  Division No. 101]

  AYES

  [7.44 p.m.

  Armstrong, Ernest

  Goodhew, Victor

  Reid, George

  Arnold, Tom

  Gould, Bryan

  Rhys Williams, Sir Brandon

  Atkins, Ronald (Preston N)

  Gourlay, Harry

  Rifkind, Malcolm

  Bagier, Gordon A. T.

  Graham, Ted

  Roberts, Gwilym (Cannock)

  Bain, Mrs Margaret

  Grimond, Rt Hon J.

  Roberts, Michael (Cardiff NW)

  Biggs-Davison, John

  Grist, Ian

  Robertson, George (Hamilton)

  Boardman, H.

  Hardy, Peter

  Rodgers, Rt Hon William (Stockton)

  Boothroyd, Miss Betty

  Harrison, Rt Hon Walter

  Roper, John

  Boscawen, Hon Robert

  Hayhoe, Barney

  Ross, Rt Hon W. (Kilmarnock)

  Bray, Dr Jeremy

  Henderson, Douglas

  Rossi, Hugh (Hornsey)

  Brotherton, Michael

  Hooley, Frank

  Sandelson, Neville

  Brown, Hugh D. (Provan)

  Horam, John

  Sever, John

  Brown, Robert C. (Newcastle W)

  Hughes, Rt Hon C. (Anglesey)

  Silverman, Julius

  Buchanan-Smith, Alick

  Hughes, Robert (Aberdeen N)

  Snape, Peter

  Campbell, lan

  Hunter, Adam

  Spriggs, Leslie

  Carlisle, Mark

  Irving, Rt Hon S. (Dartford)

  Sproat, lain

  Cocks, Rt Hon Michael (Bristol S)

  Jackson, Miss Margaret (Lincoln)

  Stallard, A. W.

  Coleman, Donald

  Jay, Rt Hon Douglas

  Stewart, Rt Hon Donald

  Conlan, Bernard

  Jessel, Toby

  Stewart, Rt Hon M. (Fulham)

  Cook, Robin F. (Edin C)

  John, Brynmor

  Stoddart, David

  Corbett, Robin

  Johnson, James (Hull West)

  Stott, Roger

  Cowans, Harry

  Jones, Barry (East Flint)

  Stradling Thomas, J.

  Cox, Thomas (Tooting)

  Kilfedder, James

  Strang, Gavin

  Craigen, Jim (Maryhill)

  King, Evelyn (South Dorset)

  Taylor, Mrs Ann (Bolton W)

  Crawford, Douglas

  Knight, Mrs Jill

  Taylor, Teddy (Cathcart)

  Crawshaw, Richard

  Lambie, David

  Thompson, George

  Crouch, David

  Lawson, Nigel

  Tinn, James

  Crowther, Stan (Rotherham)

  Le Marchant, Spencer

  Tomlinson, John

  Cunningham, G. (Islington S)

  Lewis, Ron (Carlisle)

  Torney, Tom

  Davies, Bryan (Enfield N)

  Lofthouse, Geoffrey

  Viggers, Peter

  Davies, Rt Hon Denzil

  McCartney, Hugh

  Waddington, David

  Davis, Clinton (Hackney C)

  MacCormick, lain

  Wainwright, Edwin (Dearne V)

  Deakins, Eric

  McElhone, Frank

  Wainwright, Richard (Colne V)

  Dean, Joseph (Leeds West)

  McKay, Alan (Penistone)

  Walker, Terry (Kingswood)

  Dempsey, James

  Maclennan, Robert

  Wall, Patrick

  Dewar, Donald

  Marshall, Dr Edmund (Goole)

  Ward, Michael

  Doig, Peter

  Marshall, Jim (Leicester S)

  Watkins, David

  Dormand, J. D.

  Mather, Carol

  Watt, Hamish

  Douglas-Hamilton, Lord James

  Millan, Rt Hon Bruce

  Welsh, Andrew

  Douglas-Mann, Bruce

  Miller, Dr M. S. (E Kilbride)

  White, Frank R. (Bury)

  Dunlop, John

  Moate, Roger

  White, James (Pollok)

  Dunn, James A.

  Molloy, William

  Whitehead, Phillip

  Dunwoody, Mrs Gwyneth

  Molyneaux, James

  Whitlock, William

  Evans, loan (Aberdare)

  Monro, Hector

  Whitney, Raymond

  Evans, John (Newton)

  Moore, John (Croydon C)

  Willey, Rt Hon Frederick

  Ewing, Harry (Stirling)

  Morris, Rt Hon Charles R.

  Williams, Rt Hon Alan (Swansea W)

  Fairbairn, Nicholas

  Moyle, Rt Hon Roland

  Wilson, Gordon (Dundee E)

  Fairgrieve, Russell

  Murray, Rt Hon Ronald King

  Wilson, William (Coventry SE)

  Fernyhough, Rt Hon E.

  Noble, Mike

  Woodall, Alec

  Fletcher, Alex (Edinburgh N)

  Oakes, Gordon

  Young, David (Bolton E)

  Foot, Rt Hon Michael

  Orme, Rt Hon Stanley

  Younger, Hon George

  Ford, Ben

  Park, George

  Forrester, John

  Parker, John

  TELLERS FOR THE AYES:

  Fowler, Gerald (The Wrekin)

  Penhaligon, David

  Mr. James Hamilton and

  Garrett, John (Norwich S)

  Rees, Rt Hon Merlyn (Leeds S)

  Mr. Alf Bates.

  Garrett, W. E. (Wallsend)

  NOES

  Allaun, Frank

  Lamond, James

  Richardson, Miss Jo

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

  Lee, John

  Rodgers, George (Chorley)

  Bidwell, Sydney

  Litterick, Tom

  Thomas, Ron (Bristol NW)

  Colquhoun, Ms Maureen

  Madden, Max

  Wise, Mrs Audrey

  Cryer, Bob

  Maynard, Miss Joan

  Flannery, Martin

  Newens, Stanley

  TELLERS FOR THE NOES:

  Fletcher, Ted (Darlington)

  Ovenden, John

  Mr. Dennis Skinner and

  Kerr, Russell

  Parry, Robert

  Mr. Andrew F. Bennett.

  Bill read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. John Evans.]
  Bill immediately considered in Committee.
  [Sir MYER GALPERN in the Chair.]
  Clause 1 ordered to stand part of the Bill.

  Clause 2

    EXTENSION OF TIME LIMITS, & C.
    7.55 p.m.
    Mr. Rifkind: I beg to move amendment No. 6, in page 1, line 17, leave out
    ' one month after the expiry of the emergency period '
    and insert
    ' such period after the expiry of the emergency period which is equivalent to the length of the emergency period '.
    The purpose of clause 2 in its present form is to ensure that those members of the public who have seen the expiry of the triennium or any time-barred procedure because of this strike should have the provisions restored to them. One would wish to welcome clause 2 for that reason. It is nevertheless my suggestion that the clause in its present form is not wholly satisfactory. The desire should be to ensure that no member of the public loses any right that would otherwise be available to him as a consequence of this industrial action.
    Under the clause as drafted, once the emergency period has been completed, there will be a maximum of one month during which time members of the public or potential pursuers may initiate legal action or other action not open to them during the emergency period. The period of one month is a fixed period. It does not relate to the length of time this strike, at the end of the day, is seen to last, whether two or three weeks, two or three months, or longer. The period of one month in this clause is inflexible. I accept that for those potential pursuers whose limitation on the right to bring an action had less than a month to run when this emergency period began will in no way be prejudiced by the clause in its present form.
    I suggest that a different situation can easily arise if this strike extends to two or
    1396
    three months. Let us assume that the strike continues for the full three months that certain of the civil servants are threatening. Let us assume that a particular potential pursuer sees the expiry of the triennium a couple of days before the end of that three-month period. In other words, during the whole of the three months strike his right to initiate action will have been effectively prevented. He will have lost three months of the three years provided by Parliament. Yet in the terms of clause 2, in its present form, he will have only a month thereafter to remedy the problems that have arisen as a result of the industrial action.
    That seems unfair. If this Bill has the purpose of remedying defects caused as a result of this strike, the least we should expect is that members of the public should have the same minimum time as was originally provided by Parliament. In the case of the triennium, for example, where Parliament has laid down that a person should initiate an action within three years of the cause of that action becoming apparent, the total length of time available to that person should remain three years. In my submission, the period after the expiry of the emergency period should be at least equivalent to the length of the emergency period itself.
    I appreciate that the Minister or the Lord Advocate may suggest that if this amendment was accepted the effect would be that in certain circumstances members of the public would end up having longer than three years in which to initiate an action. If a person's full period, despite having lost only two or days after the beginning of the emergency period, despite having only lost two or three days in which to initiate an action, that person would be given a much longer period relating to the length of the emergency period. That is a justifiable complaint. It is one that may be made against the clause in its present form and against the amendment.
    8.0 p.m.
    The clause in its present form allows a maximum of one month—indeed, a minimum of one month—irrespective of how short a period into the emergency period the expiry of the triennium takes place.
    I suggest that the general objective should be to ensure that members of the public do not suffer any more than is necessary as a result of the industrial

    1397
    dispute. It seems reasonable to suggest that the period after the end of the emergency period in which action may be initiated or other action taken should be exactly equivalent to the length of the emergency. The implementation of that suggestion would be fair to the public and easy to operate. I hope that the Secretary of State will consider it in a favourable light.
    Mr. Millan: The amendment is concerned with a matter of judgment. I have considered the issue carefully and I believe that one month is reasonable. The emergency period will not necessarily end on the day that the courts return to work. I do not expect it to end on the first day that the courts return to work. If there has been dislocation, it will take time for the courts to return to normal working. I do not wish to speculate how long that will take. Obviously it will depend to a considerable extent on the length of the dispute.
    If the courts were to return to work rapidly following the Bill's Royal Assent, obviously the period of dislocation would have been too long but a good deal shorter than some of us, including the hon. Member for Edinburgh, Pentlands (Mr. Rifkind), fear. Therefore, the process of adjustment will take that much less time. If the strike were to continue and the courts were to be dislocated for a good deal longer, adjustment would take longer.
    In fixing the emergency period, I shall take account of the matters to which the hon. Gentleman referred. For obvious reasons, I do not wish to speculate. It would be hypothetical to do so. I give the hon. Gentleman the assurance that I shall leave a reasonable time for the courts to return to normality. When the courts have returned to that state, the month will run from that time. There will be a minimum of one month.
    Mr. Fairbairn: I am obliged to the Secretary of State for his response. I do not know what the volume of business will be of actions or criminal prosecutions that have to be initiated during the month. Will the right hon. Gentleman give the Committee an assurance that those who have withdrawn their services to the cause of justice will not be able to claim extra funds for clearing
    1398
    up a mass of work for which they are responsible?
    Mr. Millan: I hope that that will not be the position. The hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) may be aware that there are one or two other disputes in Scotland either current or recently settled. I have taken the view that, while in some circumstances those who return to work after a dispute necessarily work overtime and are paid for that work—I think especially of local authority workers—there can be no question of uncovenanted bonuses being paid to employees to clear up messes for which they are responsible. I have taken that view in a number of instances within my direct responsibility. I do not think that I can answer the hon. and learned Gentleman any more fairly than that. I do not like dealing with the hypothetical. The hon. and learned Gentleman knows my general view.
    We are talking about an adjustable period. I shall try to adjust it to meet the circumstances of the time in fairness to everybody. The time limits will apply to not only pursuers but defenders. The Committee will appreciate that if the time limits are extended defenders may use the extensions to frustrate or defer action. That could in itself be an injustice.
    It is difficult to achieve the right balance. These matters have been considered carefully. I do not say that one month is bound to be absolutely right, but there is a certain amount of flexibility as the clause stands. I hope that on the assurance that I have given on how I shall operate the clause the hon. Member for Pentlands will be willing to withdraw the amendment.
    Mr. Rifkind: I am grateful to the Secretary of State for his helpful reply. I am glad to hear that the extension of the triennium will not be one month after the end of the emergency period but such part of the emergency period during which the courts are presumed to be functioning. That will ensure that the period is not restricted to one month and will be significantly greater. In those circumstances, I am only too happy to beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Question proposed, That the clause stand part of the Bill.
    Mr. Rifkind: I am sorry to interrupt for a second time the Committee's progress on clause 2. I ask the Lord Advocate or the Secretary of State what will happen if a potential pursuer's triennum has expired during the emergency period and the potential pursuer has died during that period.
    Normally, as the Lord Advocate will know, if a pursuer initiates an action and dies his representatives are able to continue the action. It may be that but for the emergency period and the closure of the courts a potential pursuer, who might have been near to death, would have initiated action. I have in mind a case that has been brought to my attention. If because of the emergency period the action had not been initiated and the potential pursuer had died, it would not, on the face of the provisons in the clause, be possible for his representatives to raise a new action on behalf of the deceased.
    I ask the Government to indicate whether that is a real problem. It is one that has been put to me by solicitors in Scotland. If it is a real problem, how is it accommodated within the terms of the Bill?
    Mr. Fairbairan: There is a matter of supreme importance that I raise briefly at this stage. It affects other clauses and it will be helpful if the Government make the position clear.
    As the Secretary of State, the Lord Advocate and the Committee will know, threats have been made—not merely verbal threats but written threats—that if certain action is taken by certain people in the intervening period certain processes will be blacked. I have in mind, for example, a solicitor who has signeted a summons. That may apply in a large number of cases, civil or criminal.
    What happens if an employee, backed no doubt as he would be by the threat that if action is taken against him action will be taken by all, takes action which defeats the defence of the rights that we are trying to defend, and thus makes it impossible for the action to be raised, the prosecution to be taken or the trial to be heard within the equitable period that the Secretary of State has set?
    1400
    The Government should make some response to that. I do not want to say anything that will irritate, but it is important that the Government respond. Let us remember that in the Bill every right that we try to preserve exacerbates another right. The preservation of the right of the person who is the pursuer in the civil cause is in conflict with the right of the person who is the defender. A person has a right to say when three years are over that no action has been raised and that he is free. That person suffers greatly from the prescription of time in terms of the memory of witnesses. In saving one right we are inevitably compromising another. It will be helpful if the Government clarify whether the action of someone who returns to work may prevent the preservation of the rights that we are trying to preserve.
    The Lord Advocate: The hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) has raised two important issues. I shall reply to the latter issue first, namely, the protection of rights.
    The hon. and learned Gentleman is correct to say that in preserving a right of action for a pursuer we are perhaps inevitably creating potential prejudice for a defender. If we look at the picture broadly we see that the defender will be acquiring certain advantages, as in certain cases he will not require to defend an action as quickly as he might have done. There is a counterpart for this. It would not be right to suggest that this is a unilateral advantage to pursuers. It is of advantage and a disadvantage to both sides. That point is clearly important.
    I hope that the kind of action mentioned by the hon. and learned Gentleman will not take place. I hope that there will be no question of blacking. However, the Secretary of State will have this matter very much in mind, in exercising his powers under clause 1, in deciding when the period of emergency shall come to an end. It is not necessary to go beyond that tonight.
    I hope that I have made the position clear. The Government would take a serious view of and gravely deplore any action of the kind indicated by the hon. and learned Gentleman.
    The hon. Member for Edinburgh, Pentlands (Mr. Rifkind) put a specific question about the problem of the limitation

    1401
    on action when someone dies. I inquired into this point. I am reasonably satisfied that the clause as drafted does not give rise to this difficulty. The problem is not a real one, as any successor in the right of action which the deceased will have had—his executor or dependant—would have the benefit of the additional time during the emergency period and the month thereafter. The hon. Gentleman will notice that the wording of clause 2 is not confined to the actual pursuer. The emphasis is on the action itself.
    Question put and agreed to.
    Clause 2 ordered to stand part of the Bill.

  Clause 3

    PERIOD OF DETENTION OF UNCONVICTED PRISONERS
    Mr. Fairbairn: I beg to move amendment No. 5, in page 2, line 3, at end add—
    ' (2) Notwithstanding the provision of subsection (1) above, it shall be competent during the period of the emergency for an accused person detained in custody to whom subsection (1) applies, to intimate to the relevant court that he elects to be tried on indictment by a judge or sheriff sitting alone without a jury and such trial shall be held so soon as is practicable after such intimation.
    ' (3) In the event of such trial, the presiding judge or sheriff, before pronouncing his verdict shall be required to review the evidence, to make findings in fact and findings in law, and to give reasons for his verdict.'.
    The First Deputy Chairman: With this we may take amendment No. 7, in page 2, line 3, at end add—
    ' (2) An accused person who is subsequently convicted and sentenced to a term of imprisonment shall have deducted from such term of imprisonment any period of his detention which exceeded 110 days which occurred during the emergency period and which was in connection with the charge or charges of which he was subsequently convicted '.
    Mr. Fairbairn: In trying to preserve one right, one is compromising another. The rights that are in conflict come under clause 3. The untried person, whatever his record is in law and whatever the charge against him, is in law presumed to be innocent. We are suspending the Scottish equivalent of habeas corpus. Though I would not wish to be pessimistic—I am naturally sceptical—I trust that the
    1402
    emergency period will not last for three months. As my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) said, that kind of period was mentioned as the time scale to which the Secretary of State should pay attention. I have heard the period of six months mentioned as one that could be funded if a will were not granted.
    8.15 p.m.
    We know that the Lord Advocate took petitions to the High Court of Justiciary which were granted on 21 February in 39 cases. We should all be greatly concerned about 39 individual freedoms. Indeed, I hope that we are greatly concerned about one individual freedom. Let us look at those gentlemen. The Lord Advocate may be able to say that 30 of them might get out or that nine of them might be released. In that case, there is a public interest. Let us suppose that a strike lasted for three months. I do not know in which prison they would have been imprisoned after committal. Presumably it would be for periods of up to 90 days. We may add to that period the three months and the Secretary of State's nobile officium. He has taken it to himself to say that the emergency shall not end for equitable, political or other reasons for a further two months. If we come to that point, some people may have been in detention for a long period but subsequently acquitted—and were innocent in any event. That matter should concern the conscience of us all.
    It is for that reason that we have put down the amendment so that a person should be able in the emergency period to say"I know that I cannot be tried by jury because the mechanics of the clerk citing jurors is not possible ". He could be tried in some courts—I hope in the High Court—as some servants have put duty before the crowd spirit. It might be possible to arrange such trials. I should have thought that it was entirely equitable for a person to say"I am innocent; I do not wish to be detained indefinitely because of my previous record or because of the severity of the charge against me. I wish to conclude the proceedings by opting to be tried by a judge sitting alone without a jury."
    I do not wish to be understood as suggesting that we should suspend jury trials. We are not suspending such trials. During

    1403
    the suspension of jury trials we are giving people the civil right to be tried rather than to be detained without trial, and without limit of time. It would be equitable if such a person were allowed to say to the relevant courts"I elect to be tried, when it can be arranged, by a judge sitting alone."
    We have made an addition to our amendment, as a result of reflection. I pay tribute to the assistance received in this matter from my right hon. and learned Friend the Member for Wimbledon (Sir M. Havers). We have added a safeguard. If my proposal were agreed to, and the judge said at the end"I find you guilty ", it would be almost impossible, despite the notes of evidence, to mount an appeal The Lord Advocate will understand this. There are many circumstances in which the ground of appeal might not be capable of formulation unless we knew the basis upon which the judge approached his verdict. In other words, if in his mind he said"I disbelieve all the witnesses but I detest the accused ", and merely found him guilty, it would not be possible to formulate a relevant ground of appeal because there would have been sufficient evidence in the notes on which to convict him. But one would not know whether the judge disregarded the evidence but nevertheless found the man guilty, or disregarded some evidence that was essential for corroboration, or disbelieved some of it.
    The amendment therefore goes on to say:
    " In the event of such trial, the presiding judge or sheriff "—
    because this applies to all the courts—
    " before pronouncing his verdict shall be required to review the evidence "—
    as he would to a jury—
    " to make findings in fact and in law "—
    that is the basis upon which our summary appeals work—
    " and to give reasons for his verdict ".
    That is the nearest to an equitable basis that I was able to get.
    I sincerely hope that the Government will be willing to grant that right, which is in the interests of equity, and I hope that it will appeal also to those who, rightly and firmly, worry consistently about the civil rights of the individual. Detention without trial is inevitably necessary, even on a presumption of innocence. It is not pleasant, and I do not wish it
    1404
    to be undertaken without limit of time and without the opportunity for a person to say"I elect to be tried without a jury, because I am innocent, and I prefer that to detention."
    Mr. Robin F. Cook: The hon. and learned Gentleman is making a very tempting case, and we are all very much aware of the problems which have arisen. But let us consider the case of the innocent person who, knowing that he is innocent, elects to be tried in accordance with the provision made in the amendment and who is subsequently, for whatever reason, found guilty. Does the hon. and learned Gentleman consider that in those circumstances that person, to whom the amendment has given this right to elect to be tried without a jury, is likely to have any gratitude to us for making the suggested provision? Surely that person is likely to spend his sentence in prison repining the fact that we gave him this right and that he ill-advisedly chose to exercise it.
    Mr. Fairbairn: The hon. Member for Edinburgh, Central (Mr. Cook) made a similar point in the Supply day debate, and I think that he misses many of the relevant factors. I am quite sure that a very large number of people who were guilty of the crimes they committed have deeply regretted, when they were subsequently convicted, that they entrusted their fortunes to my hands. No doubt they have reflected upon little else during the time in which they have been incarcerated in one of Her Majesty's prisons.
    In life, whenever we have a choice, we do not know what the effect of it will be, or what would have happened if we had made our choice in another way. If we turn right we may drive into a bus. We do not know what would have happened if we had taken an alternative route. In every step of the law there are, for an accused person, some very difficult choices to be made. Here we are seeking to enlarge his choice. We are trying to prevent his detention. The question that he will have to ask himself, under this provision, is"Shall I risk wrong conviction by one judge, or even right conviction by one judge, or shall I risk indeterminate detention in anticipation of eventual right or wrong conviction by a jury?" That is the choice, and I do not think that that choice should be denied

    1405
    to him. I do not think that a great many people would elect to make that choice, but if only one elects to make it we shall have safeguarded one person from wrongful and indeterminate detention in anticipation, if he is convicted, of his sentence. He will be sitting in Barlinnie, Peterhead or Porterfield, or wherever it might be, for that period anyway, even if he is eventually convicted by a jury after the emergency is over. We are enabling him to start his sentence sooner. Let us be clear, therefore, that it is a bargain for the guilty, just as it is for the innocent.
    Amendment No. 7 proposes that
    " An accused person who is subsequently convicted and sentenced to a term of imprisonment should have deducted from such term of imprisonment any period of his detention which exceeded 110 days which occurred during the emergency period and which was in connection with the charge or charges of which he was subsequently convicted ".
    A period in detention served by a person subsequently acquitted cannot be undone, but under amendment No. 5 that person has the right to prevent it. I accept and appreciate what the Lord Advocate said. In Scotland we have short periods of detention before trial compared with—dare I say it?—England. It is not a different nation, as was said by the hon. Member for Galloway (Mr. Thompson), whose terminological in-exactitude is schizoid, but there is within our nation a separate system of law. Within the nation of the United Kingdom of Great Britain and Northern Ireland, although those of us in the legal profession should profess judicial ignorance, I understand that there are longer periods of detention before trial on serious matters in other parts of the United Kingdom that are not Scotland.
    I accept that we have that system and we are proud of it. I do not wish to be dragged by these matters into a lower place in the league. I wish Scotland to remain at the top of that league. It would therefore be equitable to say that this period should automatically be deducted from any sentence.
    I hope that the Government will accept the amendments.
    Mr. Grimond: Amendment No. 7 is unexceptionable and I think that the Government could accept that right away.
    1406
    I also support amendment No. 5. As has been emphasised, it does not compel a prisoner to be tried by a judge alone; it gives him the option to do so if he wishes.
    This is a most important clause. Under it someone may be kept indefinitely in custody, depending on the length of the emergency.
    Subject to the Lord Advocate's arguments, I am impressed by these amendments. If the emergency lasts a long time and someone is kept in custody for more than 110 days, will he have a right of appeal? There might be compassionate or other circumstances which might be grounds for a review of a person's case. It would be reasonable for that person to have some opportunity for appeal, but perhaps that is covered by an existing statute of which I am unaware.
    Mr. Thompson: In answer to the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn), I consider that there is a British State under which live the Scottish, English, Welsh and part of an Irish nation. The Germans have a perfect distinction between a nationality and staatsangehörigkeit. I shall continue to inscribe myself as"Scots"in hotel registers that demand to know my nationality.
    I hope that we shall be faced with only a short emergency. I do not agree with those who are beginning to speculate that months and months may be the likely duration. I take the point of the hon. and learned Member for Kinross and West Perthshire about the right of an accused to trial and his special point about the innocent. An argument cannot be based simply on the fact that other legal systems take an unconscionably longer time to deal with cases. From my time in Italy, I remember that there were people who waited years and years before the courts dealt with them. We must endeavour to maintain the Scottish system.
    The first amendment is a radical departure from our present procedure, and we should therefore hesitate greatly before committing ourselves.
    Mr. Fairbairn: Before the hon. Member gets too worked up about radicality—if that is the proper word; and I know that it will be difficult for him to comprehend that anything done in England is

    1407
    anything but venomous—may I say that—on many matters people can elect whether they wish to be tried by a judge or jury in England?
    8.30 p.m.
    Mr. Thompson: I am afraid that my knowledge of the English legal system is considerably less than my knowledge of the Scottish legal system, and as a mere schoolteacher I do not claim to have a vast grasp of the Scottish system. I have learnt quite a lot in my period as a Member of the House, much of it from the hon. and learned Member for Kinross and West Perthshire. I put on record my gratitude to him.
    Have we ever had such courts in Scotland at any time, and, if we have, what was the record of the sort of justice administered in those courts? I also ask the Lord Advocate what would be the effect on possible appeals as between cases dealt with by this radically new procedure and cases dealt with under our present well-tried system. Would there be a prejudice created in favour of an appeal by someone who was convicted under the procedure suggested in amendment No. 5? We must not create a category of convicted persons who would then have to their advantage on appeal the possibility that they could say that they were less properly dealt with under the amendment No. 5 procedure than under the present system.
    After I heard the speech of the hon. and learned Member for Kinross and West Perthshire, I could understand why there was this need for the judge to give reasons for his verdict under amendment No. 5. Juries are never required to give reasons for their verdicts, but if we consider what the judge said at the trial and the directions that he gave to the jury in his summing up we may detect what led to the verdict. But the system proposed under amendment No. 5 would create a prejudice in favour of the convicted person who subsequently appealed. It would be said that in the one case the appeal court knew the reason for the verdict and in the other case they did not and could not know because juries do not have to set down their reasons.
    For these reasons, I hesitate to support amendment No. 5 and I await the Lord Advocate's comments upon it. The second amendment appears to be common sense and worthy of support.
    The Lord Advocate: As the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) said, the purpose of the amendment is to give an accused person the opportunity of electing to be tried without a jury where the delay might seem to make that an attractive option. The hon. and learned Member went perhaps a little too far in suggesting that there is a wide option in England to choose between having—
    Mr. Fairbairn indicated dissent.
    The Lord Advocate: I see that the hon. and learned Member denies that it is a wide option. If that is so, we are at one. There is a very limited right in England to opt for a jury trial in certain situations. The option the other way does not arise. Nevertheless, the hon. and learned Gentleman did not place his argument on the situation in England. He related it to the emergency, and we should consider the merits of the argument in that context.
    I agree with the hon. Member for Galloway (Mr. Thompson) that it is serious to depart from our normal canons of practice. In fact, it would be a radical dilution of justice to depart from jury trials altogether. My hon. Friend the Member for Edinburgh, Central (Mr. Cook) made that point in his intervention. It is a very serious step. The practical issue at the end of the day is whether it is better to provide a new form of election which would contemplate a long and protracted strike or to proceed on the basis—which seems attractive to me—of the assumption that the strike will not be so protracted and that proper jury trials will be delayed but not for an excessive time. I accept that that places some burden on the Government to watch the situation carefully. Nevertheless, I believe that it would be premature to take the radical step that the amendment proposes. Not even in wartime were juries in Scottish criminal trials dispensed with.
    Mr. Rifkind: Nor were courts.
    The Lord Advocate: The hon. Member for Galloway asked whether there had been an occasion when juries had been dispensed with in Scotland. I suspect that there were such courts during Cromwell's brief rule in Scotland. I see that the hon. and learned Member for

    1409
    Kinross and West Perthshire is contradicting me. It would be unwise for me to get involved in the history of the matter.
    Mr. Grimond: I should like to reassure the hon. Member for Galloway (Mr. Thompson). Am I not right in thinking that the extension of juries into civil cases was a pure import from England and contrary to the Scottish tradition?
    The Lord Advocate: We are not discussing civil juries but the right hon. Gentleman is absolutely right. It would be a bold person who would say that the emergency justified such an extreme departure from the normal canons of justice.
    In view of what I have said about the Government's duty to keep a careful watch on matters, I hope that the Opposition will not press the amendment. There are two important defects in it. It does not deal wth a case where there is more than one accused and in which one accused elects to be tried without a jury. It would be intolerable and impracticable for that election without dealing with the problem of co-accused trials. It is not for the Government to suggest how the amendment could be remedied, but the solution may be to have the election confined to cases where all the co-accused agree to dispense with a jury.
    The other drafting defect is that the amendment makes no provision to require the non-jury trial to be held during the emergency period and the month to follow it. I am sure that it is the Opposition's intention in tabling the amendment that the expedited form of non-jury indictment trial should be dealt with quickly—the element of urgency is written into it. None the less, the amendment does not provide that such trials should take place only during the period of emergency. Again, I think that it would be intolerable for such trials to take place after the emergency when the extra month had elapsed. I understand the motives behind the amendment, but I think that it would be unwise for the House to give effect to it today.
    I sympathise with amendment No. 7, but I think that it is unnecessary. Section 218 of the Criminal Procedure (Scotland) Act 1975 specifically provides that
    " A court in passing a sentence of imprisonment shall, in determining the period of
    1410
    imprisonment or detention have regard to any period of time spent in custody by that person on remand awaiting trial or sentence."
    The court will therefore also be required, in determining the period of imprisonment for which a person is sentenced, to have regard to the period in which he has been kept in custody awaiting trial during the emergency.
    As a matter of practice, the prosecutor always draws the attention of the court to the period of time that an accused has spent in custody. I shall ensure that prosecutors will specifically draw the attention of courts to any period of time spent in custody because of the emergency.
    I hope that the Opposition will not press the amendment.
    Mr. Fairbairn: I listened to the Lord Advocate with care. I shall deal with the second matter first. The section of the Criminal Procedure (Scotland) Act 1975 that he quoted is the section which guarantees trial under the 110-day rule. It is therefore a little unfair for the right hon. and learned Gentleman to say that we are proposing to suspend part of the Act but that the rest will continue to apply.
    I hope that the Lord Advocate will make sure that prosecutors bring to the attention of the court in all cases not just that an accused person has, in terms of that section, been in custody for however long but that he will instruct procurators fiscal or advocates depute to invite the court to have regard to the fact that the period of detention was longer than it would have been but for the emergency period.
    The Lord Advocate: I am happy to give the hon. and learned Gentleman that undertaking.
    Mr. Fairbairn: That is an equitable answer to the problem and I am happy to rest upon it.
    However, I am more worried about the first matter. I am not impressed by the Lord Advocate clinging on to the feeble straw of the hon. Member for Galloway (Mr. Thompson). It is odd to see members of the Government Front Bench clinging on to that straw, as they have done twice in the debate, but I suppose that any straw is welcome in a tumultuous ocean in which drowning is the only likely course.

    1411
    It is a little difficult to take the Lord Advocate saying that our proposal is a desperate and radical departure from principle but that the Government will probably bring it in themselves if the strike lasts. I was interested that the right hon. and learned Gentleman pointed out that even in the war we did not suspend jury trials. As my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) said, we did not suspend the courts of justice either. Perhaps it is relevant to point out that we suspended trade unions during the war, and perhaps there is a lesson to be learnt from that.
    I find it irritating to be caught on the question of the co-accused twice in one week. English lawyers were trying to defeat my Private Member's Bill on the basis that it was taking away rights from the co-accused by protecting the rights of other co-accused. Scottish lawyers are now trying to do the same. I accept that the principle may be difficult in co-accused cases. I have given the election to individuals, and I believe that they should have it. The complications of co-accused cases are extremely difficult, and I would not like to see multiple cases if—dare I say it?—mobbing and rioting cases came before the courts. I would wish the trial to occur only when it was impossible to have a jury trial.
    I do not, as a matter of principle, like Ministers trying to run away from principles by hiding behind defects, particularly in emergency legislation. The Lord Advocate knows far better than any other hon. Member that I am an imperfect person who would be incapable of doing anything without defects, but, in the circumstances, I wish to leave amendment No. 5 before the House.
    Amendment negatived.
    Question proposed, That the clause stand part of the Bill.
    Mr. Grimond: May I ask the Lord Advocate a question that I have already asked him? As a layman, I should like to be assured that if by any chance this emergency continues and people are imprisoned without trial for a very long time, and their circumstances change, or they have compassionate grounds, or whatever, there will be some procedure by which their cases can be reviewed. It may exist already, but I want some reassurance on that if I may have it.
    The Lord Advocate: I apologise to the right hon. Gentleman. I had meant to deal with that when dealing with the amendment. There is a common law remedy in Scotland whereby a person who is detained and who feels that his detention is not warranted or justified in law can petition the High Court, and I think that remedy could be used in this situation.
    Question put and agreed to.
    Clause 3 ordered to stand part of the Bill.

  Clause 4

    PROSECUTION OF OFFENCES AND CRIMINAL DIETS
    8.45 p.m.
    Mr. Rifkind: I beg to move amendment No. 8, in page 2, line 12, leave out
    ' (which application need not be intimated to the accused person) '.
    The First Deputy Chairman: With this we may take amendment No. 10, in page 2, line 15, at end insert
    ' and such date shall be intimated to the accused person not less than seven days before it occurs '.
    Mr. Rifkind: In clause 4 the situation is envisaged in which a criminal diet is not able to be held during the emergency period because of the closure of the courts, and when that situation occurs it shall be deemed to be adjourned as if the accused person had failed to appear until such date as the court may determine upon application by the prosecutor. The clause in its present form indicates that the prosecutor making such an application need not ensure that any intimation is given to the accused.
    The situation, as I see it, has two possibilities. Eeither no intimation requires to be made in similar circumstances at the present time, in which case these words are completely superfluous and should not be in the clause; or, in circumstances similar to this, if it exists at the time, an intimation would be made, in which case there seems no good reason why an intimation should not be made in the circumstances provided for by this clause. I understand that it is the former rather than the latter which is likely to be the case, and that in these circumstances it is not normal to make intimation to an accused person. If that is the

    1413
    case, I simply suggest that these words are superfluous, and we have enough verbiage in Acts of Parliament without making unnecessary contributions to them, so I hope the words can be quite happily deleted.
    Amendment No. 10 provides in a related matter that where a diet has been adjourned to a new date on the application of a prosecutor, that date shall be intimated to the accused person not less than seven days before it occurs. I am aware that it would normally be the intention to provide such intimation to an accused person, but as I read the clause in its present form there is no provision for making that compulsory. Therefore, there could be the ludicrous situation of a new date having been fixed for an adjourned trial and the accused not having turned up because no one had chosen to intimate it to him and his nevertheless being penalised for his non-appearance. I am not saying that that would happen deliberately but it seems that it could happen by mistake. Therefore, there seemed to be very good grounds indeed for requiring that, in the circumstances provided for in this clause, intimation of a new date fixed for a criminal diet be made to an accused person within the reasonable time provided in this amendment.
    Mr. Millan: On amendment No. 8, I understand that in normal circumstances such applications are not intimated to the accused in any case. But of course these are not normal circumstances. Therefore, it is right that we state in the clause matters which perhaps in other circumstances it would not be absolutely necessary for us to state so that there is no uncertainty. I am advised that not only is it not normal to give intimation of applications but in a sense it is unnecessary because it is the result of the application and the actual date for which the diet is fixed that is of interest to the accused.
    Having said that on the first amendment, I think the logic is that, even if the second amendment may not be absolutely necessary because it would happen in any case, if one wants to make the clause completely logical and therefore state on the face of it everything that will happen the sensible thing would be to accept the
    1414
    second amendment, which I think would do what the hon. Gentleman is most concerned with—ensure that the accused is not put at a disadvantage by not being informed about the date. Therefore, if the hon. Gentleman would care to withdraw amendment No. 8, I should be perfectly happy to accept amendment No. 10, which I think would then give us a clause which would state the situation perfectly clearly.
    Mr. Rifkind: I agree that the present circumstances are not normal; there can be little dispute about that. However, in view of the right hon. Gentleman's approach and his willingness to trade off one amendment against another, I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Amendment made: No. 10, in page 2, line 15, at end insert
    ' and such date shall be intimated to the accused person not less than seven days before it occurs.—[Mr. Rifkind.]
    Clause 4, as amended, ordered to stand part of the Bill.

  Clause 5

    ARRANGEMENTS FOR COURT PROCEEDINGS DURING EMERGENCY PERIOD
    Mr. Fairbairn: I beg to move amendment No. 2, in page 2, line 20, at end insert
    ' the Secretary of State after consultation with the Lord President of the Court of Session or Lord Justice General '.
    The First Deputy Chairman: With this we are to take amendment No. 3, in page 2, line 22, at end insert
    ' (1A) Notwithstanding the provision of subsection (1) above it shall be competent for a judge of the High Court or a sheriff in the Sheriff Court, to make arrangements for the citation of possible jurors, and to hold jury trials '.
    Mr. Fairbairn: This raises a matter of great importance. The logic of the Secretary of State's approach to my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) attracted me. It displayed the logic of the accountant, namely, the definition of the art of going wrong with confidence. I trust that the right hon. Gentleman will accept, on the basis of the judgment of Solomon, one half of the baby which I shall now try to sell to him.

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    Let us be clear about clause 5. It refers to the position in law. The law of the land is the law of the land. It is not the law of the land as the Secretary of State decides to tell it to us. The clause says:
    " Without prejudice to any existing powers, a judge of any court may do anything during an emergency period…and…may authorise any person to do any such thing in relation to such proceedings."
    The provision does not say that that should happen only if the Secretary of State says so or that the Secretary of State should take the responsibility for what happens. It merely says that a judge may take this action.
    The practical and political effect of the provision—and we do not intend to let the Government run away from this—is that such people as the hon. Member for Bolsover (Mr. Skinner), and no doubt the right hon. Gentleman the Lord President of the Council, will say"We all know that it is notorious that in Scotland it was the judges who indulged in the blacklegs' charter and in strike-breaking ". They would no doubt add"If the rights of man were left to the judges, there would be precious few left ".
    Therefore, we want the Secretary of State to be the person who says to the judges"Thou shalt initiate the blacklegs' charter ". We want that to be clear and we do not want the right hon. Gentleman to hide behind his hideous desk in St. Andrew's House, or in his rather grander quarters in Dover House, where Lady Caroline Lamb had her adulterous association with the Duke of Wellington. I must add that that was not the case during the right hon. Gentleman's period of office. I think I can say, without risk of contradiction, that the Secretary of State has done nothing so romantic.
    Mr. Millan: Nothing romantic in Dover House, anyway.
    Mr. Fairbairn: The right hon. Gentleman says"not in Dover House ". He obviously wishes me to narrow the field of his Puritan past.
    It is important that this matter should be made clear. With great respect to the Secretary of State, what he said was duplistic. With great respect to the Lord Advocate, what he said was incomprehensible and struck me as an attempt by a man chasing a rabbit to try to prevent it going down either of the alternative
    1416
    holes through which it could escape because he did not wish it to do so.
    This is an important matter of principle. When people start throwing political propaganda about, as the hon. Member for Bolsover did this afternoon, they demonstrate that they are more interested in the rights of those who refuse to serve the law than in those who lose their rights when they do. We must be clear that this is a responsibility which the judges assume either on their own initiative or with the permission of, or on the instructions of, the Secretary of State. Those are the alternatives.
    The Secretary of State indicated this afternoon that he would take the responsibility to activate the procedure and, by inference, that the judges could not activate it without his authority. I think that that is what he said. I think that is what he meant. If he did not, let us hear what he did mean. It is essential that this should be clear. Those are the alternatives, and there is no other course. Either the judges can do it on the authority of the Secretary of State and not without it in any circumstances, or they can do it on their own initiative and the Secretary of State is irrelevant to the matter.
    The Secretary of State seemed to be giving the sort of answer that Christ gave when he was shown a Roman coin and replied:
    " Render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's."
    I have always thought that that was the most meaningless way of answering a question one could not answer. With great respect to the Almighty, it was a parliamentary answer.
    It is not good enough for the Secretary of State to give a reply such as:
    " Render unto me the political decisions and unto the judges the decisions to employ people in the courts ".
    Either it is a political decision activated by the authority of the Secretary of State—therefore amendment No. 2 says that the judges are doing it only with the authority of the Secretary of State—or it is something that the judges can do on their own initiative.
    I have a deep and frightened suspicion that the Government hope that if anybody who is employed starts to jump up and down talking about blacking, the Secretary of State will peep—or more

    1417
    likely the Lord Advocate, because he is a shorter man—over the Dispatch Box, showing as little of his anatomy as he possibly can, and say"Well, it was not us. It was the judges who did it. They are the blacklegs." In a situation as serious and constitutional as this, I think that the Secretary of State must take that responsibility and make it clear that he does so by allowing our amendment.
    Our second amendment—No. 3—permits, if it were possible,
    " a judge of the High Court or a sheriff in the Sheriff Court, to make arrangements for the citation of possible jurors, and to hold jury trials."
    At present they are in suspension. In a way this goes back to the previous amendment, to enable the despatch of trials where people are held in custody. If the hon. Member for Galloway (Mr. Thompson), who has now departed, is so concerned about the radical constitutional change to the election of trial by jury, let us see whether, in such courts as are functioning and have staff who are loyal to their duties, we can allow them to organise jury trials.
    That may mean that a judge has to appoint staff, on the authority of the Secretary of State, to cite jurors. If my recollection is correct, for every jury of 15 one needs to cite 45 people and it must be done by random selection from the electoral roll. One has to write out envelopes, send notice to the potential juror and record it. People may say that they cannot come, medical certificates have to be checked, and so on. It is a lot of work. That might require ancillary staff, but it certainly does not require anybody who is skilled in anything but the capacity to read writing or printing. In that regard, if what is standing between us and jury trials is the difficulty of the mechanics, let us give that power to appoint these people and let us for Heaven's sake not suggest that that is strike-breaking.
    9.0 p.m.
    If anyone does suggest that, let the Secretary of State, in all responsibility, accept amendment No. 2. Let him shame those who say that by asking"Would you rather that people lay in prison than that we asked one or two people to do the mechanics of citing juries so that justice may be done? "
    Mr. Robin F. Cook: I would not wish to pretend that whichever way the Government moved in respect of this amendment it would make much difference to the way in which I view this clause. I take the view of the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) that this clause is explicitly provided clearly and specifically in order to get round the practical effects of a strike. It does not matter whether we call it strike-breaking, which has become an emotive term and has value judgments underlying it, or whether we find some less value-laden term to describe it. The clause is clearly provided in order to get round the practical effects of a strike. That is the root of the objection which I and other hon. Members have to this clause.
    Now that we have finally come to the clause which has aroused the most concern among hon. Members, it is a pity that after two weeks in which the hon. and learned Gentleman has made some vitriolic speeches he finally rediscovers the good humour and wit for which we regard him with such affection.
    I believe that if the clause is to go through at all, there is something to be said for amendment No. 2. My right hon. Friend would be well advised to take note of the manner in which it was moved, because it was made quite clear that, if there is to be strike-breaking or a circumvention of the strike, it should be he who should be taking the responsibility for it. My right hon. Friend should take note that that point was made by the Conservative Opposition. If I were him, I should be grateful if the Committee were sensibly to vote this clause out of the Bill and to leave me without that albatross to carry.
    But if this power is to be given to anybody, there are a number of practical reasons why it should quite explicitly be given to my right hon. Friend rather than to those who sit as judges or sheriffs. First, it will not be all that easy to find any person to carry out the function of the clerks to the court. The only guidance we are given in clause 5 is that"any person"may be appointed to carry out this function." Any person"is not defined in any subsequent interpretative clause. Therefore, we await guidance as to whom the Secretary of State may have in

    1419
    mind for this function. It certainly will not be an easy function to fulfil.
    The one group of people referred to in our debate last week as perhaps stepping into the breach are solicitors. I have had many dealings with solicitors during my last five years as a Member of the House. I would not wish to malign a group that cannot reply to anything said under the cloak of privilege, but it would only be fair to say that my experience has been mixed. I am not necessarily convinced that it will be easy to find solicitors who will be capable of taking over the very detailed, skilled and unique functions of sheriff clerks and clerks of the High Court.
    If such people are to be found, it is clearly sensible that the search should be mounted by, and should be a responsibility of, my right hon. Friend rather than any individual sheriff or judge seeking to fulfil the terms of the clause.
    Secondly, there is the subsidiary question of the remuneration that will be received by any person who is appointed under this clause. It is very unlikely that solicitors will be prepared to do the work of sheriff clerks for the kind of remuneration which has led members of the Society of Civil and Public Servants and of the CPSA to go on strike in order to obtain an increase in that remuneration. But if it is suggested that the remuneration for solicitors who take this job on a temporary basis should be different and more generous in order to attract them to that kind of work, it will clearly have an inflammatory effect on the strike which at present is continuing.
    If any judgment is to be made, and a decision has to be taken on it, it is better that it is taken by my right hon. Friend because we are dealing with an extremely sensitive political decision. It would be improper to leave that decision to any individual sheriff or judge. I do not know how any sheriff or judge could come to a decision about the remuneration to be received by any person whom he may appoint under this clause.
    There is the matter of the relationship between the clerks and the judges and the sheriffs. It is an important relationship for the continuing good functioning of the courts. If the courts are to function competently and efficiently there should be a reasonable relationship between
    1420
    the sheriffs, the judges and the clerks. I cannot imagine anything less likely to help that relationship to survive than for the sheriff or judge to appoint substitutes for the clerks during a period of industrial dispute. If it is possible to rescue and preserve that relationship after the emergency, it is better for the decision to be taken specifically by my right hon. Friend than by individual judges or sheriffs.
    My right hon. Friend did not adequately deal with the point that I put to him on Second Reading. I referred him to the meeting yesterday of sheriffs in Glasgow who resolved that they did not want the power that is specified in the clause. My right hon. Friend may be able to clarify what they said to him. His response during Second Reading was that he would be taking the decision and that he would decide when this step should be taken. The decision of the sheriffs in Glasgow appears to be that they do not want this power in any event and do not want to have to work with people other than the clerks. It would be helpful if my right hon. Friend clarified this issue.
    Taking these factors together, it appears quite plain on practical grounds that if this power must exist—and I am opposed to it—it should be clearly vested in the Secretary of State rather than in the sheriffs or judges. As drafted, I find it difficult to persuade myself that the clause does that.
    Mr. Buchanan-Smith: Many of us are concerned about this clause, not so much as it was originally drafted because we understood quite clearly the purposes of the clause then. But during the debate on Second Reading many of us became confused by what the Secretary of State and the Lord Advocate were saying.
    The Secretary of State made it clear that he did not expect the power for the judges to appoint persons to do the work of the court to be exercised except under his direction. My suspicions were aroused when I and my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) intervened to find out precisely what was meant. The Secretary of State ran quickly for cover and refused to clarify further what he had said. This confusion became confounded in the winding-up speech of the Lord Advocate, who is normally very clear. Up to that point

    1421
    I was trying to put the best possible gloss on the matter. He did not, initially, want to allow any intervention on this point and when he eventually allowed an intervention he did not make himself clear.
    This has made it more necessary to return to the matter in order not only to discover precisely what is meant by this clause but to try to distinguish precisely what is the Government's motivation. I hope that amendment No. 2 will give the Secretary of State or the Lord Advocate the opportunity to clarify the issue. There are two causes for concern in the clause and the amendment seeks to remedy the matter. If the power to bring the clause into effect is to rest on a policy decision by the Secretary of State—and he implied that on Second Reading—the effect is to give the Secretary of State a power of direction to the judiciary to carry out a certain course of action.
    I cannot understand why the Secretary of State was so unwilling to deal with this matter on Second Reading. If he gives such a direction it will be totally out of keeping with the administration of justice and in contradiction with the separate functions of the judiciary and the Executive. At no time in the past has there been interference in matters between the Executive and the judiciary. We must have clarification.
    We are made even more suspicious by a matter about which hon. Members below the Gangway are particularly worried. The Secretary of State is trying to have it both ways. He is trying to soothe his hon. Friends below the Gangway by saying that although the judiciary has the power he does not expect it to exercise that power. The Secretary of State is trying to persuade his hon. Friends below the Gangway that he is imposing a threat to hold over those who operate the courts, and that his hon. Friends do not need to worry. In that way he hopes to gain his hon. Friends' support.
    Alternatively—and this is a more sinister aspect which my hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn) mentioned—the Secretary of State hopes to use the judiciary to break the strike. It is about that which his hon. Friends below the
    1422
    Gangway are worried, and rightly so. He hopes to take shelter in saying that no policy decision has been taken but that the judges have taken action. It is that attitude to which his hon. Friends objected in relation to legislation passed under the Conservative Government. In this confusion tonight we see the extraordinary spectacle of the Secretary of State attempting to bring into Labour legislation a principle which Labour Members opposed and later repealed by giving the courts power to deal with a strike.
    Mr. Grimond: The clause seems to mean exactly what it says. There is a third possibility. I suspect that the Secretary of State hopes to give a policy direction which the judges will not obey.
    Mr. Buchanan-Smith: My mind is too pure. I did not imagine that such a motive would cross the Secretary of State's mind. But the right hon. Member for Orkney and Shetland (Mr. Grimond) has greater experience than I in dealing with Labour Governments. That is a third possibility. I hope that the Secretary of State will clarify the position.
    The principle of giving a direction to the judiciary is involved. Alternatively, is the Secretary of State trying to shelter behind the judiciary in relation to how he deals with strike action in the courts? The House deserves an explanation why the clause is worded in such a way. If the Secretary of State does not accept the amendment, we must have an explanation. If the direction can be given only in the event of a policy decision by the Secretary of State, our amendment is appropriate.
    9.15 p.m.
    If the Secretary of State is genuine in the intention that he explained on Second Reading, it should be the decision of the Secretary of State himself. It should not be left to the judges. We have to remember that the judges are not responsible for the administration of their courts. It is the Secretary of State, not the Lord Advocate, who is responsible for the administration of the courts. If we are to have a clause of this nature, the responsibility should not be left to the judges. It is not appropriate for them. It should be specifically spelt out that responsibility rests where it ought to rest. The Secretary of State should face up to

    1423
    those responsibilities and not try to shelter behind a smokescreen.
    Mr. Dewar: There seems to be some confusion between what the clause says and what almost everyone seems to be agreed the clause means. It may alarm hon. Members on the Opposition Benches to know that, if I understand their position correctly, I agree with them. I am not sure what is encompassed by the word"judge ". We are assuming, presumably correctly, that it is a High Court judge, a senator of the College of Justice or a sheriff. I do not know whether this is defined. Stipendiary magistrates or people operating in district courts are presumably not included.
    The position of the Opposition is that a judge should have power on his own to do anything that can be done by the clerk of courts, sheriff clerk or other officer of the court within the narrow operations of the courts as at present authorised—bail appeals, full committals and so on—and that in a narrow group of hearings held in the criminal courts, the judge, off his own bat, should be able to complete the processes but that there should be a different position, if I understand the way the Conservative amendment has been drafted, if it is a matter of bringing in someone from outside to do these jobs.
    In other words, we are looking for a two-tier situation in which the sheriff can act ex proprio motu in order to complete the processes, record the decision and do the necessary paper work, but that if he wishes to import someone from outside to do it he should have specific permission, not necessarily a blanket permission, from the Secretary of State who shall have a duty to consult certain legal figures named in the amendment.
    I heard my right hon. Friend the Secretary of State make his opening speech on Second Reading. Although it was not spelt out in detail, I was under the impression that on the second and controversial element of the importation of outside staff he accepted that there would have to be specific authorisation by himself or by his Department and that there was no question of sheriffs or judges deciding on their own bat, having looked at a particular situation, that they would be justified in bringing in Mr. Joe Bloggs from the local bowling club, local solicitors
    1424
    from round the corner or anyone else they found useful to tidy up matters.
    I can hardly imagine that the Secretary of State or anyone else on the Government Benches would welcome that development. I have no doubt that the vast majority of sheriffs are manifestly sane and would not want to put themselves in that position. I understand that there is some evidence that the Glasgow sheriffs, having met and looked at the situation, have come up with the collective view that they would not wish to have that responsibility. Unfortunately, in any large group of people there are a few mavericks.
    I can imagine that in some county courts a sheriff might enjoy the notoriety and excitement of bringing in outsiders. He might get a rush of blood to the head. He might have been incited by the opening speech of the hon. and learned Members for Kinross and West Perthshire (Mr. Fairbairn), with its heady invective against strikes in general and this strike in particular. He may have taken at face value the fact that people are being tortured deliberately by sheriff clerks who, on the one hand, are praised as pillars of respectability and, on the other, belaboured by the same party as mobsters indulging in torture. Thus incited, that sheriff may well decide to go ahead and bring in outsiders. That would be extremely unfortunate. It would lead to a great deal of confusion and friction.
    I must confess that I think that the Opposition have a reasonable argument, on a plain reading and interpretation of the clause. The first part of the clause refers to a judge's power to act himself, and the second part refers to his power to authorise any other person. The two parts are couched in the same way. If we want the two-tier solution that I want, and which I think the Opposition want, it seems clear, unless my right hon. Friend produces some ingenious argument—it might not be difficult to find one that I have not thought of, but apparently nobody else in the Chamber has thought of one so far—that, as the clause is drafted, no authorisation is needed from outside and that a judge may act himself or authorise another to act in exactly the same way.
    I think that my right hon. Friend the Secretary of State was right when he described what he wanted the clause to mean.

    1425
    However, I am not clear that that has been achieved by legislative drafting. If the amendment is not acceptable, it seems that a form of words other than that which appears in the clause would be better. No doubt an amendment could be introduced in another place. If we are to build into the Bill the differentiation which in the interests of industrial peace seems invaluable—the bringing in of outside labour whenever it is thought justified in specific circumstances is clearly an extremely serious action and one that should be considered at the highest level before implementing it—something on the lines of the amendment will be necessary.
    Mr. Gordon Wilson: I add my support to the pleas of various hon. Members that the first amendment in the group be accepted by the Secretary of State. The wording of clause 5(1) gives power to judges to take action as they think fit. It is worded to give them permissive power. If a judge wishes to bring in contract labour from outside, he will be able to do so at any time of his choosing.
    The hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) said that it is the Secretary of State's responsibility to provide administration through the Scottish courts administration procedures. He is so responsible, and it would be wrong if that responsibility were to be passed to the judges.
    There is a practical problem. Who will pay the contract labour that is engaged? There is nothing in the Bill to specify from where payment will come. No scale is arranged. The Bill merely gives power to the judge or sheriff to take on staff—in other words, somebody who will act the part of the absent court official.
    The hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) said that there may be the intention of bringing in volunteers. I am not sure whether that would be effective. The wording of the clause suggests that the amendment would be an improvement. It places upon the Secretary of State the right and duty to make arrangements to deal with the emergency if it continues and if it worsens. The Secretary of State has to decide at what time he should take action. I should have preferred the power to be limited by forcing the Secretary
    1426
    of State to bring an order before the House of Commons. That would enable the House to judge whether the emergency required the specific powers that are being sought.
    If additional help is to be brought in, some care will have to be taken over selection. Selection should not be left to an individual sheriff or judge. Competency, qualifications and confidentiality will have to be judged. There could be a conflict of interest. If local solicitors are introduced to act the part of sheriff clerks, the ones who will know most about court procedure will probably be those who engage in litigation before the local court. Technical problems would emerge.
    For those reasons, I feel that the Secretary of State should take on board the arguments that have been advanced from both sides of the Chamber. He should assume the responsibility that is his and not pass the buck to the judiciary, as he seems to be doing in the clause.
    Mr. Rifkind: The hon. Member for Edinburgh, Central (Mr. Cook) made it clear that he had comments to make about the amendment and that he objected to the clause, as its purpose was clearly to break the strike or to contribute towards doing so. That was disagreeable to him. It is astonishing that the hon. Gentleman should be prepared to argue that in the case of any strike whose deliberate purpose was to cause the maximum inconvenience to the community the community should not be entitled to take such action as appropriate to combat that strike activity. It is not satisfactory to say that the community should simply sit back and suffer for the duration of the strike and must accept whatever inconvenience and hardship the strikers seek to impose upon them, and that any action of the community—or those acting on its behalf—to reverse that inconvenience is disagreeable and anti-social.
    This is not a simple dispute between employer and employee. The employees are using the public deliberately as a target. It should not be a matter of party controversy to suggest that the public and the Government should take all action in their power to ensure that inconvenience and hardship are kept to a minimum.
    The hon. Gentleman mentioned a meeting that he understood had taken place

    1427
    with the sheriffs in Glasgow, who indicated that they were not happy with clause 5. The sheriffs did not have the benefit of today's contribution from the Secretary of State. Perhaps the sheriffs looked at the Bill and assumed that the Act would state the position once it came into force. It may be that they naively and innocently believed that under the Act the judges would have the right to decide the matter and that there would be no reference to the Secretary of State having a role to play. Perhaps the sheriffs, being innocent lawyers, assumed that that was how the Act would operate.
    Mr. Robin F. Cook: I am advised that the decision to which the sheriffs came was that they would not work with any person appointed under this clause. I do not know whether that advice was correct. I understand that it was communicated to the Secretary of State's office. I wait to know what was that decision. If indeed that was the decision, it is incompatible with the line followed by the hon. Gentleman.
    Mr. Rifkind: With respect, I do not believe that there is the remotest possibility that the sheriffs informed anyone that they would refuse to act and would black anyone appointed by the Secretary of State to assist them in the courts. I do not believe that that is the case. If the hon. Gentleman was so informed, he has been misinformed and should check his sources before making such a case.
    The important point of principle is whether the sheriffs and the public should be entitled to look at an Act of Parliament and know what would happen or whether they should assume that the Act of Parliament did not help them and that they must look outside the Act at what a Minister said in the House of Commons—even if that contradicted what the Act appeared to indicate.
    The Secretary of State accepted one of my earlier amendments because it sought to clarify the position. He said that another amendment should not be accepted because it was desirable that the maximum clarity should be included in the Bill so as to ensure that there could be no misunderstanding by anyone of the rights and obligations of those affected by the emergency provisions. If that argument is good in respect of the previous amendment, it is much more relevant to this clause. The public and
    1428
    the judges should be in no doubt as to what is the statutory position and what are their rights and obligations.
    This clause is different from the other matters now being considered. The Secretary of State indicated that the Executive would interfere in the actions of the judiciary. It may be that in certain limited circumstances that would happen. If so, it is proper that it should be done under a provision approved by Parliament and included in an Act of Parliament. The Secretary of State indicated that the amendment would do that. However, the amendment coincides with the statement of policy by the Secretary of State. It goes no further than what the Secretary of State indicated he intended to do. According to the amendment, the power should be exercised by the Secretary of State after consultation with the Lord President of the Court of Session or the Lord Justice General.
    The Secretary of State said earlier that the judges would not be expected to use their powers under the provision until he had given permission for them to do so. If he did not mean that, the Committee will wait with eager anticipation to find out what he meant. At the very least, he has misled the Committee and allowed a great deal of time to be wasted in dealing with the matter simply as a result of his earlier speech in the House. He should either now speak and indicate what is the Government's view or he should approve the Opposition amendment and help to clarify the position. He must do one of those two things. He cannot simply ignore them.
    9.30 p.m.
    Mr. Millan: I made a very clear statement during the Second Reading debate. I said that once the decision had been taken by me I had every intention that responsibility in these matters would rest with me and not with the judges. I made that absolutely clear. I said that once the decision had been taken by me it would be for each court to decide whether in its own particular circumstances action of this kind was necessary and was possible. It would appear that what I said on Second Reading has not penetrated to all corners of the Committee. Therefore, perhaps I should be allowed another chance to try to explain what the clause says.

    1429
    The Committee ought to have some regard to the practicalities of the position. First, a number of statutory duties are laid on clerks of court or officers of court. This is where the problem arises. I need not explain these duties to the Committee, but there are a considerable number of statutes, rules of court, and so on, in which there is mention of the clerk of court or an officer of court. If the individuals concerned are not working, there are in those circumstances considerable difficulties in carrying out the business.
    The clause says, in the first instance—leaving aside for a moment the part of the clause which has caused some concern—that the judge himself—and that includes a sheriff—may do anything during the emergency period that is normally done by the clerk or officer of the court. I hope that that is perfectly clear. It is a matter of allowing the courts to do the maximum amount of business by using the staff that is available and using the powers of the judges themselves in the most flexible way. I do not think that there is any particular difficulty about this.
    The basis of the whole problem here, I repeat, is that there are certain individuals, officers of court and clerks of court, who have certain statutory duties and that it is not possible to set these aside and allow anyone else to carry out these duties. There are other parts of their duties which are not statutory, in the sense that there is no particular statutory provision dealing with them, and there can then be flexibility in the use of staff for dealing with these practical duties which the officers of court carry out. That is the first practical matter that I want to bring to the attention of the Committee.
    Secondly, we are dealing here with an emergency, and I must therefore have some regard to the practicalities arising in the emergency period. This is not permanent legislation, in relation to which one might wish to outline in considerable detail what would happen, where the whole of the legislation was being changed—the rules of court, and so on, and the use of clerks or officers of court. We are dealing here with a temporary situation, and therefore I have to have some regard to the practicalities of it.
    1430
    Thirdly, there is the question of the administration of the courts, which a number of hon. Members have touched upon. That is my responsibility and not that of the judge or sheriff. As matter of practice, it is not possible for a judge to appoint whom he wishes to deal with the business of the court. Recruitment and remuneration are for me and not for the judge. That limits what a judge can do in this emergency period, regardless of what might be written into the Bill.
    Mr. Fairbairn: The Secretary of State seems to be mystified by the fuzz of his own mind. The fact is that we are passing law. The law says that a judge may in any particular case authorise any person to do any such thing in relation to such proceeding. If the suspicions that have been voiced by a number of hon. Members are not right, the law says that Sheriff West, if there were such a person, who is the sheriff in Wickland, if there were such a place, may say to his friend the local solicitor"I say, Charlie, I shall not have justice held up any longer in my court. Now that you are retired, will you come and act as my clerk of court?"There is no point in the Secretary of State saying that in practice he would not send his wages. That man is a volunteer. That is the law that we are passing.
    Mr. Millan: If the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) will be patient I shall explain the clause, which has been discussed with the Lord President of the Court of Session.
    I hope that the strike will not continue for any length of time, but if it does I shall have to consider the question of outside help. Even if the strike does not go on for a considerable time, there may be a local situation that will require outside help. In those circumstances, one would have to examine an individual's qualifications to see whether he was competent to perform the duties that would be laid upon him under this clause. The judge and not the Secretary of State is the obvious person to do that. He is the person for whom the individual will work, and he should decide the adequacy of his abilities. It is not for me to judge the adequacy of an individual who may be brought into the court during an emergency to do work normally done

    1431
    by an officer of the court. That is why clause 5(1) is expressed in these terms.
    The question whether outside help should be recruited—leaving aside the possibility that a particular local situation may arise in which that might be considered—raises major policy matters. Of course these matters should be the responsibility of Ministers and not of judges, whether of the High Court or of the sheriff court. I made it absolutely clear on Second Reading that all these matters of policy are for me.
    I have explained why the clause is drafted in these terms. It deals with the practical situation of the individuals concerned rather than with the policy decision whether it would be desirable, necessary or inevitable that outside help should be provided for the courts. I have discussed this matter with the Lord President of the Court of Session and he told me that he wishes the policy decision to remain with me. He, as head of the judiciary, will not initiate action to recruit outside help in the absence of a policy decision of mine. That is the practical situation.
    Mr. Buchanan-Smith: He does not need to.
    Mr. Millan: The hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) says that he does not need to, but he cannot have it both ways. If I were to accept amendment No. 2 or amendment No. 3, I could enforce outside help in the courts against the wishes of the Lord President of the Court of Session. But the way in which the clause is drafted at present means that it is not possible for me to do so. If the hon. Member for North Angus and Mearns is worried about the Secretary of State interfering with the judiciary, he can avoid that by voting for the clause as it stands. The way to ensure that the Secretary of State would be able to impose outside help on the judiciary against its wishes is to vote for the Opposition amendments.
    There is no intention on the part of the Lord President of the Court of Session—and he wishes this to be made clear publicly—to call in outside help in the courts in Scotland, short of a policy decision by me. Even where such a policy decision was made, the discretion on whether outside help in any set of circumstances
    1432
    was needed would still rest with the individual judge or sheriff.
    Mr. Buchanan-Smith: I am grateful to the Secretary of State for the stage to which he has carried his explanation. As far as he has gone, I go with him. But does he realise that in clause 5 as it is drafted there is nothing to prevent any individual sheriff and the sheriff courts of Scotland from appointing someone to assist him in a particular job? No matter what assurances the right hon. Gentleman has had from the Lord President, nothing in the Bill can prevent an individual sheriff from doing that. In those circumstances, what is the value of the right hon. Gentleman's assurance that someone will be appointed only on his direction, as a result of a policy decision?
    Mr. Millan: Of course it is theoretically, practically and legally possible for a sheriff to decide to use this clause in a way that will enable him to recruit outside help without a policy decision having been made, or even in defiance of a policy decision made by me. However, I have discussed this with the judiciary and I am satisfied that it will not, except in exceptional circumstances in which I would expect consultation, allow this to happen. My hon. Friend the Member for Edinburgh, Central (Mr. Cook) and others were only too willing to assure me and impress upon me that the sheriffs and the judges did not want this power.
    9.45 p.m.
    The hon. Member for North Angus and Mearns may have different information. The matter has been discussed not only with the Lord President but with the sheriff principals. It cannot be said that they are anxious—indeed, they are the opposite—to initiate the introduction of outside help to the courts, except on the basis that the decision on a policy matter of this sort is taken by the Secretary of State. If I felt that the policy decision should be taken, I would take it.
    Mr. Fairbairn: I am beginning to wonder whether the lateness of the hour is disturbing the sanity of the Secretary of State. The matter has nothing to do with sheriff principals. Is it seriously suggested that, if Sheriff X decides to activate the law and appoint a retired local solicitor as sheriff clerk, he could be prevented from doing so by the sheriff principal? He

    1433
    can produce an Act of Parliament and say"I am obeying the law of the land ".
    Mr. Millan: I am not suggesting anything of the sort. The clause is drafted to allow a particular sheriff or judge, if he was so disposed, to appoint outside help. I have made that absolutely clear. The administration of the courts and remuneration are matters for the Secretary of State and my Department and not matters for the sheriffs or the judges. The Lord President has consulted the judiciary on the matter, and he has stated unequivocally that he wishes it to be publicly known that there is no intention on the part of the judiciary to recruit outside help, short of a policy decision by me. Therefore, the prospect of its happening is negligible.
    If there is a slight deficiency—I am not sure why Conservative Members are so worried about it—the amendment proposes a remedy, allowing the Secretary of State, regardless of the wishes of the Lord President of the Court of Session, the results of any consultations and the wishes of the local sheriff, to impose outside help in the courts of Scotland. That would be undesirable.
    Mr. Teddy Taylor: If this is a genuine misunderstanding and the Secretary of State wishes to retain the policy decision, would not the answer be to lay down that the new powers to appoint persons in particular cases should operate from a date to be specified by the Secretary of State? The Secretary of State admits to my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) that a sheriff could go ahead and make the appointment, although he thinks that is unlikely. On the other hand, the Secretary of State says that he wishes to retain the policy decision to himself. Would not the sensible thing be for the Secretary of State, by order, as from a date to be specified by him, to provide that this part of the subsection would come into effect? That would be a way to resolve what may be a misunderstanding.
    Mr. Millan: That is a suggestion, and if the hon. Gentleman put down a suitable amendment it would be considered. However, we are dealing with emergency legislation. I understand that it is the general wish of hon. Members that any sensible steps to help to ameliorate the difficult
    1434
    position in the Scottish courts should be taken. It seems odd to rush through this emergency legislation and then to say that one provision of that legislation could come into effect only later, by means of an order by the Secretary of State. The Opposition should consider the practical consequences of the amendment and what would happen if the strike continued, say, through the Easter Recess. It would be unwise of the House to accept the amendment.
    I have explained that policy decisions will be taken by me. That is a matter of considerable importance, and I am in the House to be questioned by hon. Members. There is no question of my sheltering behind the judiciary. The responsibility is mine and I intend to discharge it. That is what the judges want me to do.
    Mr. Teddy Taylor: We appreciate that a policy decision may not be necessary, but, if it is made, how does the right hon. Gentleman propose to communicate it to those affected and to the public?
    Mr. Millan: There is no difficulty about that. Before I introduced the Bill, I answered two private notice questions about what was happening in the courts. It is unlikely that I should make a policy decision without being questioned about it in Parliament. If the hon. Gentleman wants an assurance that I would come to the House with any policy decision, I give him that assurance.
    In case there is any misunderstanding, let me make clear, as I did on Second Reading, that I hope that that situation will not arise. I have no wish to get involved in such a procedure. However, if circumstances arise in which I feel that it is necessary that a decision should be taken, I will take the decision, communicate it to the House and be subject to cross-examination on it at that time.
    Mr. Fairbairn: Perhaps I may assist the Secretary of State. We are genuinely worried, and he seems to be arguing about a matter which is pretty obvious. Would he consent to an amendment inserting in subsection (1) the words
    " with the consent of the Secretary of State "?
    That would make the subsection read:
    " a judge…may, with the consent of the Secretary of State, authorise any person "
    and so on.
    Mr. Millan: If a manuscript amendment is tabled, I shall consider it. I said earlier that an authorisation must have regard to the qualifications of the person concerned, and that is a matter for the judge to decide in the light of local circumstances. The hon. and learned Gentleman would not expect me to make decisions about individuals.
    If a manuscript amendment were tabled in the terms proposed by the hon. and learned Gentleman, I would consider it. We shall have a Report stage because I have already accepted one amendment and it might be better for manuscript amendments to be considered then. Perhaps we could have your guidance, Mr. Godman Irvine, on whether any such amendment should be discussed at the Committee stage or later.
    The Second Deputy Chairman (Mr. Bryant Godman Irvine): As there has to be a Report stage, the Secretary of State may consider that he should deal with any manuscript amendments at that time.
    Mr. Millan: I am sure that the House will accept that suggestion. It would be more convenient to discuss manuscript amendments on Report because that would give me time to have a look at them.
    I hope that I have made the situation clear. I hope that it will not be necessary for me to make a policy decision. If it does, the responsibility will be mine. That is the view not only of myself but of the judges. They, as well as hon. Members, will be anxious to read my explanation.
    Lord James Douglas-Hamilton: Dissatisfaction with the clause has been expressed from both sides of the Committee and in every speech except that of the Secretary of State. However, in view of the right hon. Gentleman's assurance that the Government will be prepared to consider the matter again, through manuscript amendments on Report, I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Mr. Rifkind: I beg to move amendment No. 9, in page 2, line 23, after ' a ', insert ' certified '. The amendment refers to clause 5(2), which states:
    " During the emergency period, a copy of any document lodged in court in connection
    1436
    with legal proceedings…may be accepted by the court in lieu of the original…"
    Nowhere is there stated in the clause any way of ensuring that the copy that is to be used by the court and be considered as relevant, as the original would normally be, should be a certified copy or in any way guaranteed to be a true record of the original document. This seems to me to be a necessary and desirable precaution and I hope that the Government will find the amendment acceptable for that reason.
    Given that these are rather exceptional circumstances that are requiring the House to allow copies of documents to be used where originals would normally be necessary, the requirement that the copy should at least be a certified copy, thereby giving some indication or guarantee of authenticity, would appear to be a highly desirable precaution, and I hope that the Government will find this acceptable.
    The Lord Advocate: I understand the spirit in which this amendment is moved, but it is not really well directed. The amendment does not specify who has to certify that the document is a copy, but whoever had to do it could hardly certify that the document was a true copy in the absence of the original, which in this situation of crisis may be locked away in a safe to which access cannot be gained. That is the reason for a copy being necessary.
    Moreover, as the hon. Gentleman will be well aware, the clause also provides in subsection (2) that it is open to a party who disputes whether it is a true copy to prove that it is not a true copy.
    It would therefore appear to me that for both these reasons the amendment is misconceived and that it is better to leave matters as they are in the Bill as at present worded.
    Mr. Fairbairn: The Secretary of State inserted a word into this clause when he was explaining it on Second Reading which is not in the clause. It gives me some cause for concern, and with your permission, Mr. Godman Irvine, I think it is better if we raise it rather than let it pass. It is the word"original ", because the Secretary of State said several times"copy of an original document ". The clause does not say"original ", and if, as the Lord Advocate says, it is locked up

    1437
    in a safe it is clearly difficult to take a copy of it.
    Therefore, as the clause stands, it could be a copy of a copy of a document, because the word"document"does not imply the word"original ". I want to know whether it is the original, as the
    1438
    Secretary of State said, or whether a copy of a copy will do.
    The Lord Advocate: The word used in the Bill is"document"and that would, of course, carry the inference which the hon. and learned Gentleman suggested. It may be that one would be accepting a copy of a copy.
    Amendment negatived.
    Question proposed, That the clause stand part of the Bill.
    Mr. Grimond: I am glad that we shall have a chance to consider this matter, because otherwise we shall drive a cart and horses through the construction of the law.
    Is the Lord Advocate satisfied that there are adequate sanctions in the Bill to prevent frustration of its provisions? He knows that in certain strikes records have been removed and doors locked. If that were to happen with the intention of thwarting the Bill, I take it that that would amount to contempt of court. Perhaps the Lord Advocate will answer that point.
    It being Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.
    Committee report Progress.

    BUSINESS OF THE HOUSE
    Ordered,
    That the Administration of Justice (Emergency Provisions) (Scotland) Bill may be proceeded with at this day's sitting, though opposed, until any hour.—[Mr. Jim Marshall.]

    ADMINISTRATION OF JUSTICE (EMERGENCY PROVISIONS) (SCOTLAND) BILL
    Again considered in Committee.
    Question again proposed, That the clause stand part of the Bill.
    Mr. Robin F. Cook: I do not think that we should allow this clause to pass without addressing ourselves to the principle raised. I am opposed to the principle of the clause, and I should like to see it removed. I have advised the Government of the course I intend to take.
    I supported my right hon. Friend the Secretary of State for Scotland on Second Reading because there are items in clauses 1 to 4 of the Bill on which the Government have no option. However, I do not think that that stage has been reached in respect of the powers in clause 5. We have not yet reached the position where such powers are essential. Indeed,
    1440
    my right hon. Friend has already made it plain that he hopes that that time will not arise. Therefore, since I cannot support the principle of the clause, I feel that the Committee would be well advised to delete it.
    I have always understood that in an industrial dispute it is important to do nothing to raise tensions and tempers. However, that is exactly what we are doing in clause 5. We are providing specific authority and powers, either to the Secretary of State for Scotland or to the courts, to circumvent the practical effects of this dispute. I can think of nothing that is more likely to increase tensions and tempers.
    What we are proposing is, in a sense, worse. We are not saying that the powers will be exercised and that people will be appointed. We are putting the Secretary of State in the position of having the power to take that decision. I cannot imagine any power that I would less wish to have if I were Secretary of State.
    We all know what will happen if we pass this clause. From tomorrow onwards, my right hon. Friend will face constant pressure demanding that he takes a policy decision under clause 5 and instructs judges that, since they now have the power, they should appoint people. My right hon. Friend will be in an invidious position. The moment he takes such a decision, he will further inflame the passions of those involved in the dispute.
    There remains the interesting, and as yet unresolved, question of remuneration. In an earlier discussion I referred to the remuneration of"any person ". I understood the Opposition spokesman to say that"any person"to be appointed under clause 5 would be a volunteer, and, therefore, the matter of remuneration would not arise. I hear my right hon. Friend saying that that is nonsense. I could not concur with him more, because I have yet to find much voluntary labour on the part of anyone involved in the legal profession. I should be extremely surprised if we discovered it now. If I picked up my right hon. Friend's words correctly, he certainly imagines that remuneration will come into it. Indeed, he said quite specifically from the Dispatch Box that the decision on remuneration would be his and that it could not be taken by sheriffs or judges individually.

    1441
    That begs the question"What will be the decision that my right hon. Friend will reach?"Does he really expect that he will be able to recruit solicitors to do the work on a fee or a paid basis for remuneration which is no more than the men were receiving before taking strike action in order to increase their remuneration? Indeed, if I know anything about solicitors' fees, they are unlikely to do this job at all without remuneration which exceeds the amount being demanded by those who are currently on strike. I cannot imagine anything which will inflame the dispute more than paying solicitors an income which is greater than that which the men were receiving before they went on strike.
    The fact that the measure will inflame tempers and make it more difficult to resolve the strike is not central to my objection to the clause. I object to the clause because I think that it is an attack on the basic principle that working people have the right to withdraw their labour. That right to withdraw labour is an essential civil right. It is not only an essential civil right, but it has been an important power of working people by which they have won many gains throughout history.
    The hon. Member for Edinburgh, Pentlands (Mr. Rifkind) attacked me earlier for my view on this matter. If he were present, I would say to him that he was merely being consistent in his response to my anxiety about the clause, because when we debated the matter last week during the general, wide-ranging debate he made his position perfectly plain. His position was that the right to withdraw labour should be withdrawn from this particular category of work force. He believes that they should not have the right to strike. If he takes that view, naturally he will support clause 5 and resist the attempt of people such as myself to remove it from the Bill.
    Sometimes when I listen to the hon. Gentleman—this goes for some of the other speakers on the Opposition Benches—I tend to believe that the dispute is purely between the court staff and the Government and that that is the extent of the union's membership and the negotiations for a settlement. The action in the courts is part of a much wider dispute and negotiation. I say to the hon.
    1442
    Member for Pentlands that if the Civil and Public Services Association had really wanted to whip up the public and inconvenience the public, without regard to the hardship that would be caused, there is one obvious course that it could take which it has hitherto refused to take, and that is to pull out the clerks who work for the DHSS. Within seven days that would have a massive impact on a large chunk of the population. The CPSA has been responsible, in my view, in the selective action that it has taken because it has not chosen to hit the most vulnerable section of the population.
    There is a, way in which the public can have the inconvenience removed. It is not the case, as the hon. Member for Pentlands said, that the choice is between leaving the public to suffer or passing clause 5. There is another way, which is to obtain a fair and honourable settlement to the dispute, which is at present under negotiation between the Government and the Society of Civil and Public Servants. The answer is to resolve that dispute.
    Here we come back to the fundamental danger of clause 5. What clause 5 does—it is inescapable that this is the purpose of the clause—is to alter the balance of power between the work force which has chosen to withdraw its labour and the Government who are inconvenienced by that withdrawal of labour. That is the whole purpose of clause 5. It alters the balance by giving the Government the right, power and ability to circumvent the inconvenience they are suffering because of that withdrawal of labour. In altering that balance it makes it more likely that the settlement which will subsequently be achieved is more favourable to the Government and less favourable to those involved in the dispute.
    I understand that when one is the employer it is easy to persuade oneself that redressing the balance of power so that one can have the advantage appears progressive and responsible. I can understand that when one is in the position of an employer it is difficult to regard that measure as regressive.
    I have great faith that my right hon. Friend would not abuse that power, and would use it sparingly, if he had to use it. But what we are doing tonight is to create a precedent. We are saying that if there is a dispute in which the right to bring in additional labour can be provided

    1443
    only by legislation, we will not hesitate to come to the House and demand that such legislation be put before it. We are creating that precedent.
    I do not believe that it is in our interests to create that precedent. There may be a time when my right hon. Friend is not Secretary of State for Scotland and when that precedent may be valuable to those who serve in his place. It is important that we should save the Secretary of State from creating that precedent by taking clause 5 out of the Bill.
    Mr. Millan: I was asked two questions. First, the right hon. Member for Orkney and Shetland (Mr. Grimond) asked whether the clause, and, indeed, the Bill, could be thwarted by action taken by those who were in dispute. The clause itself provides for a remedy in the case of documents, where delays or dislocations may be caused by lack of access to documents. I believe that in that regard the clause will be effective.
    I also believe that if, in the event, the whole of subsection (1) had to be brought into operation—of course, the part involving the judges themselves will come into operation immediately—practical ways could be found to get round the kind of difficulties that the right hon. Gentleman envisaged. But local situations vary quite considerably. Some courts are working normally, some are working almost normally and some are not working at all, except for emergency or very urgent proceedings. Therefore, one must look at the local situation. In those circumstances, it would be wrong for me to give an absolute guarantee that we would have no dislocation or difficulty.
    My right hon. and learned Friend was asked a similar question about the situation when the strike was over and whether there would be continuation of action which might cause difficulties. I cannot guarantee that that would not happen, but it would be my intention that every effort should be made to deal with any practical problems that might arise.
    I do not think that I shall satisfy my hon. Friend the Member for Edinburgh, Central (Mr. Cook) by anything I say with regard to the principle of clause 5. During the period of this dispute I have never said that there should be, as it
    1444
    were, a legal bar on people employed in the courts from striking. That would be a matter for consideration and does not come under this Bill. If at any time there were a question of negotiation about no-strike clauses in agreements—this is something that is adumbrated in the Government-TUC agreement, although the particular category of workers who might be covered are not outlined—one would have to look at the consequences of that. I believe that one would want to do so not in a legal framework but in a framework of negotiation between the unions concerned and their employers.
    That is how I envisage it, and that is how the Government-TUC agreement envisages it. However, that goes into territory which is well beyond this Bill. At present there is no question, in terms of voluntary agreement, and certainly none in terms of legal provisions, of in any way diminishing the right to strike of anyone employed in a Scottish court.
    The Government have certain wider responsibilities. I have a wider responsibility to see that, so far as I can possibly achieve it, the courts continue to function, because that is in the interests of every citizen in the land. That, therefore, must be my primary responsibility. There are circumstances in which that responsibility cannot be discharged to its fullest degree because the practicalities are against it. So far as I can discharge these responsibilities, I intend to see they are discharged. That is the purpose of this Bill. If clause 5 were eliminated from the Bill it would seriously weaken the Government's overall pursuit of their objectives.
    10.15 p.m.
    I have dealt to a considerable extent with the question of outside help. I hope that on Report we shall be able to insert an amendment which will more clearly express the obvious wish of the House. My wish is that it be seen that the responsibility for policy matters is mine and not that of the judiciary. I should welcome an amendment that allows that to be incorporated in the Bill in a more explicit way.
    However, I believe that these powers may be necessary, though I hope they will not. If they were necessary, and if in my judgment I felt that they should be implemented, I should have no hesitation in

    1445
    saying that they should be. That is a matter for subsequent decision by me. It would be a considerable mistake if the Bill did not include those powers, even provisionally, for implementation by the Secretary of State if he decided that it

    Division No. 102]

    AYES

    [10.17 p.m.

    Armstrong, Ernest

    Ford, Ben

    Penhaligon, David

    Ashton, Joe

    Forrester, John

    Rees, Rt Hon Merlyn (Leeds S)

    Atkins, Rt Hon H. (Spelthorne)

    Garrett, W. E. (Wallsend)

    Rhodes James, R.

    Atkins, Ronald (Preston N)

    Gourlay, Harry

    Rifkind, Malcolm

    Bates, All

    Grimond, Rt Hon J.

    Robertson, George (Hamilton)

    Boardman, H.

    Hamilton, James (Bothwell)

    Rodgers, Rt Hon William (Stockton)

    Booth, Rt Hon Albert

    Hamilton, W. W. (Central Fife)

    Ross, Rt Hon W. (Kilmarnock)

    Boothroyd, Miss Betty

    Hardy, Peter

    Rowlands, Ted

    Bray, Dr Jeremy

    Harrison, Rt Hon Walter

    Sever, John

    Brown, Hugh D. (Provan)

    Hooley, Frank

    Smith, Rt Hon John (N Lanarkshire)

    Brown, Robert C. (Newcastle W)

    Horam, John

    Snape, Peter

    Buchanan-Smith. Alick

    Hughes, Roy (Newport)

    Spriggs, Leslie

    Campbell, Ian

    Hunter, Adam

    Sproat, lain

    Cocks, Rt Hon Michael (Bristol S)

    Irving, Rt Hon S. (Dartford)

    Steel, Rt Hon David

    Cohen, Stanley

    Jackson, Miss Margaret (Lincoln)

    Stewart, Rt Hon M. (Fulham)

    Coleman, Donald

    Johnson, James (Hull West)

    Stoddart, David

    Conlan, Bernard

    Jones, Barry (East Flint)

    Stott, Roger

    Corbett, Robin

    Jones, Dan (Burnley)

    Strang, Gavin

    Cowans, Harry

    Lambie, David

    Taylor, Mrs Ann (Bolton W)

    Cox, Thomas (Tooting)

    Lewis, Ron (Carlisle)

    Taylor, Teddy (Cathcart)

    Craigen, Jim (Maryhill)

    Lofthouse, Geoffrey

    Tinn, James

    Crawshaw, Richard

    Lyons, Edward (Bradford W)

    Urwin, Rt Hon T. W.

    Crowther, Stan (Rotherham)

    McCartney, Hugh

    Wainwright, Edwin (Dearne V)

    Cunningham, G. (Islington S)

    McElhone, Frank

    Walker, Harold (Doncaster)

    Davies, Bryan (Enfield N)

    McKay, Allen (Penistone)

    Walker, Terry (Kingswood)

    Davies, Rt Hon Denzil

    Maclennan, Robert

    Ward, Michael

    Davis, Clinton (Hackney C)

    Marshall, Dr Edmund (Goole)

    Weatherill, Bernard

    Deakins, Eric

    Marshall, Jim (Leicester S)

    White, Frank R. (Bury)

    Dean, Joseph (Leeds West)

    Millan, Rt Hon Bruce

    White, James (Pollok)

    Dempsey, James

    Molloy, William

    Whitehead, Phillip

    Dewar, Donald

    Monro, Hector

    Whitlock, William

    Doig, Peter

    Moore, John (Croydon C)

    Whitney, Raymond

    Dormand, J. D.

    Morris, Rt Hon Charles R.

    Williams, Rt Hon Alan (Swansea W)

    Douglas-Hamilton, Lord James

    Moyle, Rt Hon Roland

    Woodall, Alec

    Dunlop, John

    Murray, Rt Hon Ronald King

    Young, David (Bolton E)

    Ewing, Harry (Stirling)

    Newton, Tony

    Younger, Hon George

    Fairbairn, Nicholas

    Noble, Mike

    Fairgrieve, Russell

    O'Halloran, Michael

    TELLERS FOR THE. AYES:

    Fernyhough, Rt Hon E.

    Paisley, Rev Ian

    Mr. Ted Graham and

    Fletcher, Alex (Edinburgh N)

    Park, George

    Mr. John Evans.

    NOES

    Allaun, Frank

    Lamond, James

    Skinner, Dennis

    Bean, R. E.

    Lestor, Miss Joan (Eton & Slough)

    Thomas, Ron (Bristol NW)

    Bennett, Andrew (Stockport N)

    Litterick, Tom

    Torney, Tom

    Bidwell, Sydney

    Loyden, Eddie

    Wise, Mrs Audrey

    Cryer, Bob

    Maynard, Miss Joan

    Ellis, John (Brigg & Scun)

    Newens, Stanley

    TELLERS FOR THE NOES:

    Flannery, Martin

    Parry, Robert

    Mr. Robin F. Cook and

    Fletcher, Ted (Darlington)

    Richardson, Miss Jo

    Mr. Robert Hughes.

    Kerr, Russell

    Rodgers, George (Chorley)

    Question accordingly agreed to.
    Clause 5 ordered to stand part of the Bill.

    Clause 6

      PARTIAL SUSPENSION OF OPERATION OF S. 17 OF STAMP ACT 1817, ETC.
      10.30 p.m.
      Mr. Gordon Wilson: I beg to move amendment No. 11, in page 2, line 40, at end add
      was absolutely necessary in the interest of justice in Scotland.
      Question put, That the clause stand part of the Bill:—
      The Commitee divided: Ayes 116, Noes 22.
      ' and any such deed accepted by the keeper shall be valid and effective for the purposes of loans made under the Building Societies Acts notwithstanding any provisions to the contrary in such Acts '.
      The clause seeks to enable deeds to be recorded in various registers by virtue of mitigating the penalites for non-payment of the correct stamp duty. Its secondary purpose is to enable stamp duty to be paid at a later stage and for any deed to be used as an adminicle of evidence for whatever purpose is required. Apart from the industrial dispute in the courts,

      1447
      there is an industrial dispute that involves the stamping office. Although some lawyers have taken deeds from Scotland to London where there is no such dispute, for the purposes of most solicitors that is not feasible.
      The effect of the non-stamping of a deed is that building societies, in terms of the regulations provided in the Building Societies Acts, are unable to instruct the encashment of cheques. The cheques issued to solicitors are capable of being encashed only where there is a valid security, namely, a principal writ plus a standard security that is available for registration.
      The effect of the clause is to enable deeds to be recorded although they are not stamped, provided that they are stamped later. That is sufficient for a purchaser because it allows him to stamp the deed at a later stage.
      If the purchaser neglects to stamp the deed, that will be at his own risk. The deed will become valid if the time limits are not followed correctly as set out in the clause. However, the problem that arises, as I read the clause, is that it contains nothing that will override the specific building society provisions, which make it a breach of the rules of a society to release cheques and to have cheques encashed unless there is a security that is valid for all purposes.
      There is no security from the lender's point of view unless stamp duty is paid at a later stage. Bearing in mind the omission that I see in the clause, there will be difficulty in overcoming the prohibition that exists in building society legislation. I am not convinced that the clause as framed would allow a building society to permit solicitors to encash cheques and thus complete hereditable transactions.
      That will have many practical effects, and bad effects, on individual citizens. Stamp duty is fixed at a fairly low level, and these days a fairly ordinary bungalow or semi-detached house may be priced from £18,000 to about £28,000. That sort of property comes within the stamp duty bracket. If the loan cannot be provided by the building society, the purchaser has to take finance from a bank on a bridging loan, which can be extremely expensive because of the interest that is charged.
      I foresee a practical problem emerging from clause 6. The amendment is intended to rectify the position and to make it possible for building societies to authorise to their solicitors the encashment of cheques. I am told that one building society is prepared to run the risk of telling its agents that it is prepared for its cheques to be encashed in the emergency situation, but other building societies have specifically requested their agents not to do so. Therefore, there is a real problem. I hope that the Government will accept the amendment, which is designed to deal with the specific circumstances of that case.
      The Lord Advocate: Building societies are normally unwilling to lend to a borrower unless he has a recorded title to his property. At present, a borrower cannot record his title if his property is valued at £15,000 or more without his title being duly stamped. That gives rise to the problem.
      In the Government's view, the amendment is unnecessary. Clause 6 allows a borrower to obtain a recorded title to his property even though the title is not duly stamped. It specifically provides that a deed so recorded should be available for all purposes, provided that it is stamped within a certain period. I am assured that there is nothing in the Building Societies Acts to prevent building societies from lending on the security of such a title, although doubtless they will take steps to ensure that the borrower's title is duly stamped as soon as it is returned by the keeper after it has been recorded. I hope that any doubts will have been resolved and that if there is an administrative problem within a building society it will have been removed.
      Mr. Gordon Wilson rose—
      The Lord Advocate: I shall complete the argument, as I wish to point out a defect in the amendment.
      The amendment is defective because it provides that any deed accepted by the keeper should be valid for the purposes of loans by building societies. The deeds which may be accepted by the keeper for recording or registering in terms of this clause go much further than that. They are not restricted to deeds relating to loans on property. They could

      1449
      include deeds such as trust instruments. It would be nonsense to say that such an instrument should be effective only for the purpose of making loans.
      Mr. Gordon Wilson: I am not sure that I entirely accept what the Lord Advocate said. However, I prefer to leave that aside and concentrate on the situation which may arise in the absence of a specific provision to override the prohibition in the Building Societies Acts. I have been informed that a prohibition exists. I follow the rather involved argument which the Lord Advocate made on that subject. However, I am not convinced by it. I ask the Lord Advocate to do a little more research on the matter and consult the building societies before the Bill goes to another place.
      I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Clause 6 ordered to stand part of the Bill.
      Clause 7 ordered to stand part of the Bill.

    New Clause 1

      REFERRAL FROM CHILDREN'S HEARING
      ' No days falling within the emergency period shall count in the computing of the 28 days time-limit specified in section 42(4) of the Social Work (Scotland) Act 1968 (within which period referrals from a children's hearing must be heard by a Sheriff in Chambers.). '—[Lord James Douglas-Hamilton.]
      Brought up, and read the First time.
      Lord James Douglas-Hamilton: I beg to move, That the clause be read a Second time.
      At the time the new clause was put down, it seemed that referrals from children's hearings to sheriff courts might be time-barred. Since then I have received information from which it appears that these cases are going ahead. I should like the Lord Advocate to confirm that. In any case, the new clause may be covered by another part of the Bill. Perhaps the Lord Advocate will clarify that point.
      The Lord Advocate: I am happy to respond to the point put to me by the
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      hon. Member for Edinburgh, West (Lord James Douglas-Hamilton). I confirm that these referrals are proceeding in many areas. In so far as they are not proceeding in any area, they are covered by clause 2. Accordingly, with that reassurance, perhaps the hon. Gentleman will not press his new clause.
      Lord James Douglas-Hamilton: I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn.

    New Clause 4

      PICKETING OF COURTS
      ' During the emergency period it shall be an offence for anyone to picket a court of law in order to persuade other persons to desist from entering the said court in connection with the administration of justice therein'.—[Mr. Rifkind.]
      Brought up, and read the First time.
      Mr. Rifkind: I beg to move, That the clause be read a Second time.
      I am well aware that the question of picketing is controversial and goes well beyond this dispute and the question of the closure of the courts. Nevertheless, we are dealing with an emergency Bill, and the matter before the Committee at this stage is the appropriate procedure that should be permitted during this emergency.
      We know that outside a large number of the courts in Scotland officials who normally work within the courts are seeking, by normal picketing methods, to prevent the entry into the courts of justice of persons seeking entry therein.
      This is happening in two quite distinct sets of circumstances. On the one hand, it is happening in respect of sheriff courts and other buildings which are empty because of the strike and where the picketing is not significantly different from the picketing of any industrial premises during any industrial action. But picketing of a different nature is also taking place, and that is in those circumstances where legal actions of various kinds, albeit of a restrictive nature, are continuing.
      For example, in the Court of Session and in the High Court of Justiciary a number of legal matters are still being determined by judges, and bail appeals

      1451
      are being heard by judges in certain of the courts. In certain of the sheriff courts trials are proceeding, sometimes because the sheriff clerks have not come out on strike and on other occasions because, although industrial action has been taken, it has not been completely successful. In those circumstances, the picketing of courts where legal procedures of various kinds are continuing to take place seems to me to be particularly objectionable. It is against the public interest and it is a form of picketing which cannot be justified, even in the present circumstances.
      If, in a particular court, it has been possible to proceed with, say, a summary trial, and pickets outside that court are carrying out normal picketing, they are coming dangerously close to interfering with the administration of justice. What is the purpose of the picket, other than to try to prevent someone who has a legitimate purpose in entering the court from carrying out that legitimate purpose? If, in a particular sheriff court, there is a summary trial, or even a jury trial—in one or two of the sheriff courts this may still be possible—and that court is being picketed, what is the purpose of the picket?
      Who are the pickets trying to prevent from entering the court? Presumably they will seek to dissuade the judge from entering the court. If they are unsuccessful in that respect, they will seek to dissuade both the prosecuting lawyers and the defence lawyers from crossing the picket line. If they are unsuccessful with the lawyers, presumably even the accused, if he has been out on bail, is a person who has to cross the picket line. Ministers are shaking their heads, but that is exactly what is happening in Scotland. Perhaps if they visited Scotland and realised what is happening in the courts north of the border—these things are not happening in England and Wales—they would realise the seriousness of the situation.
      10.45 p.m.
      If a summary trial is being held—as it is in several sheriff courts in Scotland—and if the court is being picketed, the accused has to go through the picket line, with all the problems that that involves. It is not simply the accused, because there are witnesses who are being called, either by the prosecution or by the defence. They have to take a very important decision whether to fulfil their legal requirements
      1452
      to attend the court as they have been summoned to do, and thereby cross the picket line. If they are trade unionists, it may be very difficult for them to decide whether to accept the request of the pickets and refuse to enter the court, thereby risking the wrath of the court and possibly being dealt with for contempt of court for refusing to attend.
      If there are the occasional jury trials still being held in the sheriff courts, the people called for jury service also have to face the problem whether to cross the picket line and report for jury service and thereby be seen to help the administration of the courts or to accept that they should not cross that picket line.
      It is not a decision that a judge, juryman, lawyer, witness or accused should have to make. Picketing a court of justice is different from picketing any other establishment. There is no problem if nothing is happening in that court. If the building is empty, no one is particularly aggrieved. But where legal proceedings are continuing, in however truncated a form, it should be a specific offence for a person to picket that court. At present, persons seeking to prevent others from entering court might already be coming perilously close to breaking the law, and I should be interested to hear the Lord Advocate's view.
      The Lord Advocate: Has the hon. Member had a report from anyone who has been stopped by a picket from entering a court of law?
      Mr. Rifkind: I had hoped that the Lord Advocate would answer my point. He has evaded the question and put a separate matter. In Edinburgh the sheriff court, Court of Session and High Court have been regularly picketed each and every day for a greater part of the day. On each occasion there have been legal proceedings inside the court.
      The Lord Advocate has the ultimate responsibility. Is he satisfied that lawyers, judges and other members of the public should have to choose whether to cross a picket line or possibly break the law by failing to turn up in court? If not, how will the Government respond to that problem? We do not know whether it is already a criminal offence to seek to persuade someone against responding to a summons to appear in court. It is a legal matter. If it is already an offence, the new clause

      1453
      may be unnecessary. If not, why does the Lord Advocate feel that the Government need not act?
      Mr. Sproat: I support most strongly the plea of my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind). If the Lord Advocate indicates his view, it may not be necessary to have the new clause. Picketing of courts is the most objectionable kind of picketing that can be imagined.
      The Lord Advocate asked for examples. I have had no evidence so far of anyone who has been stopped from entering a court, but we have heard that the strike could go on for weeks or months. If tempers get inflamed and the strike becomes more bitter, one could imagine that happening in one's more nightmare moments. Those who work in court might decide every two or three years that they are underpaid, and strikes could become a regular feature of our way of life. If that happened, pickets could well take it into their heads to seek to persuade people not to enter court and bring improper pressure to bear.
      We have already this year experienced other sorts of pickets outside places of work, taking people's names and threatening to ensure that in future they are blacked. Pickets could begin to black people entering the courts, in the same way as they black road hauliers and companies using those hauliers. The new clause is designed to prevent that.
      I hope that the Lord Advocate will either accept the spirit of the new clause or tell us that any sort of picketing of the courts of law is illegal, and that if evidence were brought of pickets trying to interfere with the course of justice those concerned would be subject to legal action.
      Mr. Millan: It would be unwise for the Committee to accept a new clause of this sort. The law of picketing is difficult and controversial. It would be very unwise for me to agree to amend it, even if I accepted the merits of the new clause, which I do not.
      The new clause is defective anyway, because it provides for an offence without a penalty. I do not want to see that written into Scottish law. It is an interesting concept, but I do not want to consider it at this hour of the night.
      Mr. Fairbairn: If I may twist the tail of the Secretary of State back in his own face, may I ask him whether there are any other premises in the land where, if a picket persuades someone attempting to enter that he should not do so, he becomes the subject of a criminal penalty? If there is not, we are not inventing a crime without a penalty, but a penalty without a crime.
      Mr. Millan: That is inaccurate and has nothing to do with that point that I was making about the clause being defective. Even if it were not defective, I would not be in favour of it.
      It is unwise to attempt to right the law of picketing in this way. Picketing is allowable if it is peaceful. The Lord Advocate made a statement about the law of Scotland on picketing in a written answer on 31 January. That answer bears reading because it sets out the position clearly.
      People are free to cross picket lines at any time. There is no legal right to turn people away. Therefore, there is no question of a picket at a court of law compelling anyone who wishes to cross the picket line not to do so. The Lord Advocate asked the hon. Member for Edinburgh, Pentlands (Mr Rifkind) whether he has any information of illegal picketing, intimidation, or of people being turned away from the courts unreasonably or improperly, whether they were judges, sheriffs, police, witnesses or accused. He did not answer that, so I assume that there is no such evidence. If there were any evidence of improper or illegal picketing in this dispute, the right course would be to give that evidence to the police, who would then be able to see that the law was upheld.
      It would be very unwise to put this new clause in the Bill, and in the circumstances I do not recommend it.
      Mr. Rifkind: The Secretary of State has given an unsatisfactory reply. He has stated that he has received no evidence of any illegal picketing or intimidation being carried on outside the courts of Scotland. At no time did I suggest that there had been, and that was not the point of my new clause. The picketing that I have seen in Edinburgh has been entirely peaceful, within the present law and without the unfortunate

      1455
      features that there have been in other disputes.
      The point that I was making, which obviously failed to penetrate, was that even peaceful persuasion outside a court of law, when there are proceedings going on within the court, is improper and should not be permitted. The purpose of picketing—even peaceful persuasion—is to seek to persuade witnesses, the accused or others involved to fail to perform their public and legal duty of appearing in court. The Secretary of State is putting members of the public in an invidious position—particularly ardent trade unionists. He is saying that if they are required by law to attend as a witness any court during the course of the dispute, and if in order to enter that court they have to cross a picket line—albeit of peaceful persuasion—they have to choose between going against their principles and crossing the picket line, and maintaining their principles and thereby incurring the strong likelihood of being fined for contempt of court. A trade unionist may feel strongly about crossing picket lines—unlike the Secretary of State—and the choice is unfair.
      The choice is more likely to have to be made as a result of the emergency legislation, because the point of the Bill is to facilitate a greater number of court proceedings than there have been in the last few weeks. If the Bill has any effect, the possibility of people being required to attend court will increase, and therefore the number of people expected to cross a picket line in order to fulfil their legal duty will also increase.
      The Secretary of State has failed to understand the purpose of the new clause, much less to answer it. He is showing gross insensitivity to the problems of those members of the public in Scotland who have to cross a picket line to fulfil their legal duty.
      Question put and negatived.
      Bill reported, with an amendment; as amended, considered.
      Mr. Deputy Speaker (Mr. Bryant Godman Irvine): I should inform the House that Mr. Speaker has selected the manuscript amendment in the names of the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) and the
      1456
      hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn).

    Clause 5

      ARRANGEMENTS FOR COURT PROCEEDINGS DURING EMERGENCY PERIOD
      11 p.m.
      Mr. Buchanan-Smith: I beg to move, as a manuscript amendment, in page 2, line 21, after"may ", to insert
      " with the consent of the Secretary of State ".
      I do not want to delay the House further at this hour. We had a considerable debate on this matter in Committee, and the Secretary of State could have saved the House a great deal of time if he had been a little more sensitive to our arguments.
      The amendment covers the point that the right hon. Gentleman was trying to make earlier, that if a member of the judiciary wishes to appoint someone to help him or to take the steps specified in clause 5 he will be able to do so only with the consent of the Secretary of State. The right hon. Gentleman will have to make a policy decision before that part of the clause comes into effect. Given the co-operative and constructive manner in which the Opposition have endeavoured to assist the Government to improve this essential legislation, to ensure that it works properly and that it has the effects that the Government wish but have failed to ensure, I hope that the Secretary of State will accept the amendment.
      Mr. Millan: I am willing to accept the amendment. The House is clearly desirous that the Secretary of State, in whose abilities it has such tremendous confidence, should appear in this and every other piece of legislation at every opportunity.
      It has always been my intention that I should have to take the policy decision, but not that I should have to give detailed authorisation to every individual who may be appointed under the clause. That is perhaps an unnecessarily detailed involvement, but the House wants the explicit role of the Secretary of State put into the Bill, and the amendment achieves that aim.
      Conscious of the confidence that the House reposes in me, I am happy to

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      recommend that the amendment should be accepted.
      Amendment agreed to.
      Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading) and agreed to.
      Bill accordingly read the Third time and passed.

      EUROPEAN COMMUNITY (ENERGY POLICY)
      11.4 p.m.
      Mr. Nigel Spearing: On a point of order, Mr. Deputy Speaker. On the Order Paper there is item No. 2 entitled"The Community's Energy Policy ", which reads:
      " That this House takes note of European Commission Documents R/2311/78, R/2163/78 and R/2712/78, and endorses the Government's approach in pursuing the national interest and those of United Kingdom industries and consumers in discussion of these proposals."
      In the Vote Office there is a document of deposited business at the EEC Council. On that document we see that on Tuesday 27 March there is to be a meeting of the Energy Council concerning the business covered by the motion. I am seeking information whether there has been a request to make a business statement, either tonight or at some other time, because if the House is unable to debate the motion before next Monday evening the Government will not have fulfilled their obligation to bring such a motion to the House before a decision is made at the Council of Ministers.
      Mr. Deputy Speaker (Mr. Bryant Godman Irvine): That is not a matter for me, although I have no doubt that the hon. Gentleman's remarks will be noted in the right quarter.

      KNOTTINGLEY (GENERAL MEDICAL SERVICE)
      Motion made, and Question proposed, That this House do now adjourn.—[Mr. Joseph Dean.]
      11.5 p.m.
      Dr. Edmund Marshall: I regret the necessity of having to raise yet again
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      on the Floor of the House the subject of general medical service on the Warwick estate at Knottingley.
      I have referred to this problem on two previous occasions, first in an Adjournment debate on 24 November 1972, and, secondly, in a general debate on the Health Service on 20 April 1978. I do not wish to repeat in detail what I said on those occasions, but I remind the House that the problem relates to a building now owned by the Wakefield area health authority. The building was constructed in 1967–68 to provide a health centre for a housing estate at Knottingley known as the Warwick estate, on which between 5,000 and 7,000 people now live.
      Although the building was specifically designed to include consulting rooms for GPs, no family doctor surgeries have yet been held there. My constituents on the estate have to travel either a mile to the next nearest surgery at Ferrybridge or two miles to a surgery at Cow Lane in Knottingley, most of them passing the health centre on their way. This is a silly situation, which causes annoyance and frustration locally.
      In August 1977, 1,040 adult residents from households, with an additional 1,260 children, signed a declaration saying that if a new practice was established at the health centre they would, in general, wish to be included on the panel of patients there. With that number of prospective patients, a viable practice, possibly consisting of two doctors, could be based at the health centre. Unfortunately, the medical profession, both locally and nationally, has acted in such a way as to prevent any doctor from holding surgeries at the health centre.
      In the debate on 24 November 1972 the then Minister, the hon. Member for Somerset, North (Mr. Dean), indicated the view of the Department that the best hope of getting an additional surgery on the estate was by the recruitment of an additional partner to one of the practices operating at Ferrybridge, which could then open a branch surgery at the health centre. I was not aware of any efforts made by that practice, which then consisted of Drs. Walton, Busson and Atkins, to recruit an additional partner during the following five years, but apparently their intention to do so remained.

      1459
      In a meeting arranged with the chairman of the Wakefield AHA to discuss this problem with representatives of relevant local committees on 23 June 1978, the then chairman of the local medical committee for the Wakefield area, Dr. L. C. Grahame, of Badsworth, near Pontefract, assured me that the same practice, now consisting of Drs. Walton, Atkins and Gupta, was still anxious to recruit a fourth partner with a view to opening a branch surgery at the health centre on the Warwick estate.
      That encouragement was fortified when I learnt that, with effect from 1 August 1978, a fourth partner had been recruited to the practice—a lady by the name of Dr. C. A. Pinder. Through the family practitioner committee for the Wakefield area, I therefore asked when the enlarged practice would open a branch surgery at the health centre. The response from the practice, dated 11 September 1978, was a bald refusal, stating that it was not the intention, either then or in the near future, to extend the practice arrangements to include branch surgery facilities at the Warwick estate health centre. So far as I am aware, that practice has in no way expanded with the recruitment of the fourth partner, who is simply serving to take some of the normal work load which would have been carried by Dr. Walton and Dr. Atkins, who are apparently advancing in years. In the case of Dr. Atkins, he is not in good health.
      The additional partner, whose recruitment was made possible simply because Knottingley was classified as an open area with fewer doctors per head of population than the national average, had been absorbed into the previous work of an ageing practice. It seems that I was misled by the chairman of the local medical committee, Dr. Grahame, when we met on 23 June 1978. I understand that he has since retired.
      It is, of course, open to any of the other existing practices of Knottingley or Pontefract to commence health surgeries at the centre, because the two towns are grouped together for the purposes of medical manpower. I therefore approached the six local practices with that in mind. Because the average number of patients per doctor is markedly less in Pontefract than in Knottingley, it would be appropriate for a Pontefract practice
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      to open a branch surgery at the health centre.
      Three of the six practices which I have approached have considered the position but find that they cannot expand their present practice arrangements. That includes the other Knottingley practice, which has the names of approximately 80 per cent. of the residents of the Warwick estate on its list of patients, but, for reasons which I do not find convincing, it is not willing to help its existing patients on the estate by holding branch surgeries there.
      The members of other three practices in Ferrybridge and Pontefract—namely, Drs. Walton, Atkins and Gupta; Drs. Hough, Hewitt, Simpson and Smith; and Drs. Dewes, Kidd and Lewis—did not see fit even to reply to my letters on this subject, even though I enclosed prepaid reply envelopes for the last two of the practices that I have mentioned. Needless to say, my letters—of which I have copies here—were in friendly and reasonable terms.
      Not only are the existing practices in the locality unwilling or unable to start a branch surgery at the health centre, but I am afraid that the recruitment of the fourth partner to the Ferrybridge practice has made it virtually impossible for any new practice to be set up based on the Warwick estate. This is because the addition of the doctor at Ferrybridge has so reduced the average number of patients per doctor in Knottingley and Ferrybridge that the classification of the area for medical manpower purposes has been altered from"open"to"intermediate ", and it would no longer be automatic for an application from a suitably qualified doctor to practise in the area to be approved.
      The level of division between the two classes of area was raised by 100 patients per doctor in 1975. This means that Knottingley is now an intermediate area. According to a written answer given to me by my right hon. Friend the Minister of State on 5 March 1979 at column 498 of Hansard, applications to start new practices in intermediate areas are rarely granted. In any case, no such application in either an open or intermediate area could be approved with any additional financial allowance necessary to get a new practice off the ground while the list of

      1461
      patients builds up. Such an allowance is available only for areas classed as"designated ", where the average number of patients per doctor, including the new doctor, still exceeds 2,500.
      Together with interested organisations in Knottingley, I have explored the possibility of raising funds locally to meet the initial expenses of a doctor setting up a new practice at the health centre in the absence of an initial practice allowance. It was very disappointing to learn in a letter from my right hon. Friend that any general practitioner who accepted such a payment from voluntary sources would be in breach of his terms of service under paragraph 32 of the NHS (General Medical and Pharmaceutical Services) Regulations 1974. In other words, although it is legal and very common for a member of the medical profession to practise both within the NHS and privately, often seeing the same patients under both sets of arrangements, it is apparently illegal for a community that badly wants a doctor to offer some extra financial incentive to help one to set up a new practice.
      What all this boils down to is that the profession of general medical practitioners, at both local and national levels, is able to exercise rigid, self-protective power in situations such as Knottingley to prevent the community from obtaining the general medical services that it clearly wishes to receive. The local practices are able to operate a boycott of the health centre, refusing even to consider holding branch surgeries there for a trial period. This boycott is operated with impunity, because the administrative arrangements for general practitioners within the NHS are designed to suit the convenience of the profession far more than the convenience of the public. As long as general practitioners retain the status of independent contractors, even though paid out of public funds, they will avoid being publicly accountable in the true sense of the term.
      Of course, it is only a small minority of general practitioners who behave in an anti-social fashion. For instance, everywhere else in my constituency family doctors have happily moved into health centres built for their use. But I am afraid that the present structure
      1462
      of the NHS helps and protects the antisocial minority among general practitioners.
      I conclude by asking my right hon. Friend to consider pursuing three possible courses of action. First, will he consider amending the regulations of 1974, to which I have referred, to allow doctors to receive financial payments from public subscription in circumstances such as those I have described at Knottingley? Secondly, will he seek to reduce the dividing line between the open and intermediate classes of area for medical manpower purposes to what it was before 1975 so that Knottingley, for instance, would again become an open area? Thirdly, and more generally, will he use his influence wherever possible to make it less difficult for the thousands of my constituents who live on the Warwick estate to obtain the services of a general practitioner at this health centre, which was built for that purpose over 11 years ago right in the heart of their neighbourhood? Without some change in the situation in one of those ways, I am afraid that, reluctantly, at present I can see no way of making further progress towards a solution of this vexed problem.
      11.20 p.m.
      The Minister of State, Department of Health and Social Security (Mr. Roland Moyle): For a number of years my hon. Friend the Member for Goole (Dr. Marshall) has argued on behalf of his constituents for a doctor or doctors to practise from the clinic set up in the health centre on the Warwick estate at Knottingley. He raised the matter a year ago in a Supply debate on the National Health Service. He has since written to me and my Department. He has asked questions in the House and he has been in contact with the chairman and secretary of the medical practices committee to seek a solution, and I think that the best service that I can perform for him this evening is not only to explain how the Government see the situation but to set the whole problem in context.
      One has to start with the status of the general medical practitioner, who is, as my hon. Friend said, an independent contractor. He is not a salaried employee of my Department or the Health Service and is not subject to any management or

      1463
      disciplinary controls as such. He provides general medical services in accordance with prescribed terms of service as set out in the appropriate National Health Service regulations, which are the general medical and pharmaceutical regulations 1974, as revised, and his contract is with his family practitioner committee.
      That does not mean that there are no controls over the distribution of general medical practitioners. There are controls. They have existed since the NHS was set up, and I should like to explain how these controls operate because they have an important bearing on my hon. Friend's problem.
      To provide general medical services under the National Health Service as a principal, a registered medical practitioner must first apply for admission to the medical list of the local family practitioner committee. That committee, after consulting its local medical committee, must refer the application to the medical practices committee.
      That is now a national committee. It is empowered to refuse the application if it considers that the number of doctors already providing general medical services in the locality is adequate. By this control, the medical practices committee aims to prevent increases in the number of doctors in areas where there are sufficient doctors already and to encourage them to set up practice in the under-doctored areas. The committee is seeking to achieve an even distribution of doctors throughout England and Wales, so that everywhere patients will have reasonable access to a doctor.
      To help the committee to judge the adequacy of the number of doctors, it divides the country into practice areas which it classifies according to the average number of patients per doctor. As my hon. Friend has already divined, the committee uses four classifications, designated, open—these are areas where applications to practise are normally granted—and intermediate or restricted areas. In those areas applications may be refused on the ground that the number of general medical practitioners already there is adequate.
      There is another control exercised by the medical practices committee should a general medical practitioner in England and Wales resign or die. It is for the
      1464
      committee to decide whether a vacancy should be filled. If there are sufficient doctors there, an existing practice may take over the patients, or patients may be advised to choose a new doctor from among those already there.
      Classification of areas is always subject to change as new doctors come into an area. Those who retire may or may not be replaced.
      When deciding individual applications, the medical practices committee endeavours not to be too rigid in applying the classification of area list size. It tries to take account of local circumstances after consulting the family practitioner committee, which is an important channel for identifying the local circumstances.
      Knottingley is part of the Knottingley, Pontefract and Osgoldcross practice area and, as my hon. Friend said, for many years it was classified as an open area. This meant that a doctor wishing to set up there would have had his application granted by the medical practitioner committee. But there have been recent increases in the number of doctors practising there and the classification has been altered to intermediate. That means that an application to practise in Knottingley will not now necessarily succeed. So far no one has applied to practise there. If someone did apply and the medical practices committee refused the application, the doctor concerned would have a right of appeal to the Secretary of State, who would obviously have to consider, in deciding the appeal, the adequacy or otherwise of the existing manpower in the practice area.
      I should make it clear that the medical practices committee is an independent body. It is not part of my Department. It comprises practitioners, with two lay members. It is a hard-working body and meets twice a week for 48 weeks of the year. The committee undertakes difficult work. It is not easy to tell a medical colleague that he may not practise where he wants to, but that is what a great deal of the work often involves. The committee deserves more credit than it generally receives.
      I turn to the local circumstances which concern my hon. Friend. I recognise that for some people in the area the distance to the nearest doctor's surgery may be up

      1465
      to two miles. This creates real problems, particularly for mothers with young children and for elderly or disabled people. In most parts of the country most people's homes are within less than a mile of a doctor's surgery, or, indeed, of several surgeries. But with just under 23,000 general practitioners to serve the whole of England and Wales it is not possible for everyone to have equally close geographical access.
      The total number of doctors in general practice is steadily expanding. Doctors necessarily tend to be concentrated in relatively densely populated areas and close to locations to which people travel for other purposes. Some medical practices have branch surgeries and—this was the solution advocated by my hon. Friend—there must be compromises. The principle of taking the service to the patient may sometimes be in conflict with the ideal that all surgeries should have full equipment and full support from various services which form part of the primary care team. The family practitioner committee and the medical practices committee have these considerations in mind. They try to balance them, but it has not been possible to come up with an ideal solution in Knottingley and the Warwick estate.
      The health premises on the Warwick estate already provide, of course, a wide range of health care. It was always intended to use them for mothercraft and relaxation classes, chiropody, speech therapy and baby clinics. These are in full swing. In addition, this centre provides a base and office for health visitors, home nurses and domiciliary midwives. A dental wing to replace old premises in Knottingley is being added and will provide new facilities which will be completed towards May.
      I turn to the regulations that apply to the provision of services by individual practices. Doctors are independent contractors. They decide where they would like to practise and then proceed, as I have already explained, to obtain the approval of the medical practices committee in the area. The new doctor gives to the family practitioner committee details of the premises from which he proposes to practise, his surgery hours and the limits of his practice area. The family practitioner committee must consult the
      1466
      local medical committee before it gives its decision. Approval cannot be unnecessarily withheld.
      The doctor is responsible for providing his patients with general medical services at his surgery, at their homes or elsewhere in his practice area. When doctors in a practice are considering how many surgeries they should provide and where they should be, they should take full account of the needs of all their patients, but they cannot ignore the effect of their decisions on their own financial position.
      They can expect to receive from the family practitioner committee a fair reimbursement of the rent and rates element and a proportion of the costs of their staff. The amount that they receive indirectly in this way for expenses varies broadly with the size of their practice, but not in accordance with their actual expenses. The profession as a whole accepts the drawbacks in this arrangement—which has an element of swings and roundabouts—as part of the price of maintaining its independent status. The same terms of service apply to a family doctor in a health centre, and he has freedom of choice in deciding where he sets up his surgery, whether that applies to a health centre or to the more traditional forms of surgery.
      In general, health centres are not provided unless the local doctors have expressed an interest in working from them, and doctors are not legally committed to moving into the health centres when they are built. Doctors can change their minds. For example, while a health centre is being built there might be a change in the membership of a practice, which might affect the decision to move in. Other enforced changes in health practice, such as increases in proposed health centre charges or fears about jeopardising independence and security of tenure, may also persuade doctors during the construction period not to go ahead with their originally expressed intention of practising from the health centre.
      In the Knottingley case, the four-doctor partnership which had expressed an interest in a health centre on the estate has been reduced to three doctors. It is accepted, as my hon. Friend said, that this partnership had said that it would consider working from the clinic if it got a fourth partner. It recruited a fourth partner in the middle of last year. The family

      1467
      practitioner committee reminded the practice of its undertaking. In reply, the practice said that it had considered carefully the position but had decided against providing a branch surgery in the clinic.
      I can well understand the disappointment of my hon. Friend at this outcome after all his endeavours and hard work. As I have tried to indicate, the initiative in these matters remains with the doctors. My hon. Friend will recall from previous correspondence between us that I was not aware of any failure by this practice to provide general medical services for patients living on the estate. It is generally a question of convenience and travelling time.
      I can well understand my hon. Friend's concern for his constituents on the Warwick estate and the difficulties which face, for example, young mothers having to make their way some distance to a doctor's surgery. I have no doubt that he was disappointed that the local partnership, when it got its additional partner, concluded that it was unable to open a branch surgery on the estate. The pattern
      1468
      of general medical care is tending to group general medical practitioners in a pattern which provides better services for individuals on a more centralised basis and therefore involves some more travelling for the public.
      Given this pattern of care and the need to use limited medical manpower to the best purpose, it is impossible to arrange for all residents within semi-urban areas to be within a mile of a surgery, convenient though that might be. If there is any comfort for my hon. Friend to take from the current situation, it will be from the knowledge that there has been some improvement recently in the number of doctors serving the locality—even if their distribution is somewhat distorted—and that the medical practices committee considers that Knottingley is now better supplied with doctors than many other parts of the country. That is cold comfort, I am afraid, but it is all I have to offer.
      Question put and agreed to.
      Adjourned accordingly at twenty-seven minutes to Twelve o'clock.

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

  SOUTH AFRICA: APARTHEID AND ECONOMIC SANCTIONS
  Lord NOEL-BAKER: 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 summon an early conference of Commonwealth Prime Ministers to consider the advisability of mandatory economic sanctions against the Republic of South Africa, in order to persuade the Government of South Africa to abandon the policy of apartheid and the violation of human rights which apartheid involves.
  The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, Commonwealth Heads of Government will meet in Lusaka in August: no doubt Southern Africa will be among the matters discussed.
  Lord NOEL-BAKER: My Lords, I thank my noble friend for that reply. Does he recall that we had a second World War because we failed to impose diplomatic sanctions on Japan over Manchuria, as proposed by Lord Cecil; because we failed to impose oil sanctions on Mussolini, as proposed by Sir Austen Chamberlain; because we failed to impose economic sanctions on Hitler? Does my noble friend recall that Sir Winston Churchill said in 1944 that the war could easily have been prevented, if the League of Nations had been supported with loyalty and resolution?
  Lord GORONWY-ROBERTS: My Lords, my noble friend deploys a very powerful historical case, based on experience, for the effective substitution of
  996
  diplomatic and economic sanctions for the usages of armed conflict in the solution of international disputes. I am sure he will agree with me that the refinement and the perfecting of this revolutionary policy of sanctions, instead of armed force, must take a great deal of time, experiment and determination.
  Lord INGLEWOOD: My Lords, following the reference to the last war, can the noble Lord tell us on which side South Africa fought?
  Lord GORONWY-ROBERTS: Yes, indeed, my Lords; South Africa sided with the democracies in opposition to fascism. It is a little daunting that since then it has practised its own form of fascism.
  Lord BROCKWAY: My Lords, may I ask the Minister whether this proposal is not now reaching the agenda of practicality? Did not Sweden last week restrict investments and trade to South Africa? If the present Namibia negotiations fail, though I am glad to say that they began promisingly yesterday, will there not be great pressure from Commonwealth countries for sanctions against South Africa?
  Lord GORONWY-ROBERTS: My Lords, I would hesitate to prophesy whether pressure will be all in one direction, even within the Commonwealth. This is one of the considerations that Her Majesty's Government must bear in mind when they consider, in any connection, the position of economic sanctions. It is a substitute for war, but one which must be considered only in cases of extreme gravity. Other considerations which this country, like any other country, is entitled to take into account, are that, indeed, we are dependent on South Africa and Southern Africa for many of our vital raw materials, that we have an investment interest there amounting to about £5,000 million sterling, and that on the preservation and, possibly, expansion of the proper political as well as economic conditions of those interests may depend the prosperity, and indeed the employment, of many hundreds of thousands of our workforce.
  Lord CARRINGTON: My Lords, leaving aside for the moment the very

  997
  powerful arguments which the noble Lord has just used against the imposition of economic sanctions, will the Government bear in mind, when they are thinking about this issue, the possible effects of economic sanctions on those very people whom the noble Lord, Lord Noel-Baker, is trying to help?
  Lord GORONWY-ROBERTS: Yes, my Lords, certainly. I am quite sure that my noble friend has that very much in mind. I am sure that he is looking to the end result of stability and peace precisely for those countries in Africa, as well as for the rest of the world. Indeed, Botswana, Lesotho and others would be involved if we came to the point of applying mandatory economic sanctions in this case. What I am saying—and I am very proud to associate myself with what my noble friend has said—is that we must constantly consider actions such as this in appropriate situations, admittedly of the utmost gravity, but always weighing them against the proper considerations which I have tried to outline to the House this afternoon.
  Lord HATCH of LUSBY: My Lords, can my noble friend confirm that every reputable African leader inside South Africa and in territories adjacent to South Africa has called for sanctions—
  Several noble Lords: No!
  Lord HATCH of LUSBY:—and has expressly stated that their people are prepared for the short-term hardship which that would entail, in order to weaken the forces of apartheid which are now oppressing them?
  Lord GORONWY-ROBERTS: My Lords, I cannot confirm what my noble friend has said about the consensus of feeling in Africa. It is perfectly true, however, that there are very profound feelings about apartheid, not just in the intellectual West, but among the African populations and indeed across the world. We cannot give the South African Government a blank cheque to continue along the road that it is insisting on following, without warning it that it may at some point come up against the conscience of the world, and perhaps against action which, admittedly, will harm the rest of
  998
  us, but may prove to be inevitable in the circumstances.
  Lord BARNBY: My Lords, for clarification and in pursuit of the question which has been asked by my noble Leader may I ask this: With regard to his replies to this Question and to several other Questions which have recently been asked in the House regarding this matter, does the Minister understand that the insinuated requirements include the early establishment of a black majority Government? If so, does the Minister feel that so complicated an industrial complex, and so technologically advanced a country, could be run by an inescapably insufficiently sophisticated Assembly without resulting chaos which would cause terrible damage to our trade and our investments in South Africa?
  Lord GORONWY-ROBERTS: My Lords, that is a matter of assessment and opinion. I should certainly not wish to compete with the noble Lord in a technological assessment of how one Government more than another would run the economy of any given country in Africa. We have had examples of warnings of that kind being given in similar circumstances and being proved afterwards to be absolutely baseless. I hope there will be a solution on the basis of majority rule in Rhodesia which will be quickly followed by the full co-operation of at least the Free World with that country and with that Government in order to enable that country to run its economy at the highest point of efficiency. As to the other noble Lords who wish to intervene in this short debate, perhaps my noble friend the Leader of the House will wish to apply his own brand of sanctions.
  Baroness GAITSKELL: My Lords, would my noble friend not agree that to call for sanctions is about the easiest thing in the world to do and that many African countries do it continuously in the United Nations, but that to implement sanctions is one of the hardest things to do in the case of a big and powerful country like South Africa?
  Lord GORONWY-ROBERTS: My Lords, I welcome that interjection. This is not the time to go into the philosophy of all this. It is as easy to call for drastic sanctions as it always has been to call

  999
  for war. The implications in both cases have to be very carefully considered before finally a decision is taken.
  Lord ORR-EWING: My Lords, is it not a fact that South Africa is the prime supplier of the Free World's manganese and vanadium? Is it not also true that 85 per cent. of the Free World's supplies of platinum and 80 per cent. of the Free World's supplies of chrome come from South Africa? Therefore, have not those who advocate sanctions an obligation to consider what is going to happen to the Free World's supplies, to industry in the Free World and to the Free World's defence industries if sanctions are applied against South Africa? Have not alternative sources to be developed and made available?
  Lord GORONWY-ROBERTS: My Lords, the policy of Her Majesty's Government is to ensure the continuous supply of vital raw materials to this country, its industry and its workforce.
  The LORD PRIVY SEAL (Lord Peart): My Lords, I sense the feeling of the House. I think it is for the noble Lord who asked the Question to ask his final question. Then we should go on to the next Question.
  Lord NOEL-BAKER: My Lords, I thank my noble friend for his answers. May I hope that the Government will consider that sanctions are the alternative in South Africa to mass killing, and that if killing happens it will not be the blacks who leave Africa, as Field-Marshal Smuts said to me the last time I saw him before he died.

  SHEEP SLAUGHTER ON HIGHWAYS
  2.48 p.m.
  Lord TRANMIRE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
  The Question was as follows:
  To ask Her Majesty's Government whether they are aware of the mounting annual slaughter of sheep on moorland highways in national parks and what action they propose to take to remedy the situation.
  Baroness DAVID: My Lords, we are aware of the problem and it is particularly acute in the North York Moors National Park. Ways of dealing with it are currently being considered by a working group, consisting of representatives of the farming, national park and highway interests, in consultation with the Countryside Commission. In other national parks, the problem is less acute.
  Lord TRANMIRE: My Lords, I thank the noble Baroness for the courtesy of that reply. Is she aware that the Ministry of Agriculture, who took part in that working party, have shown that in 1977 on a stretch of seven and a half miles of moorland highway 516 sheep were slaughtered, and that last year one farmer on a one-mile stretch of highway lost 86 sheep and had to give up his heft?—which means, of course, extra problems for the rest. Will the noble Baroness initiate a policy of securing that these dangerous lengths of speed track across the moors are adequately fenced?
  Baroness DAVID: My Lords, we are aware of the heavy losses along two particular stretches of A-class road, the A.171 and the A.169. However, as I am sure the noble Lord knows, the Countryside Commission are not in favour of fencing in national parks because they feel that fencing is unsightly and makes access more difficult for the walker. However, at a recent meeting of the North York Moors Working Group it was pointed out that the cost of fencing would be excessively high, due to the very low stocking rates, and that difficulties are caused also by the fact that there are no common management committees. However, these factors are to be considered by the Countryside Commission at their meeting on 3rd May, so they could then come up with a different decision.?
  A noble Lord: My Lords, why not have a speed limit?
  Lord GISBOROUGH: My Lords, will the noble Baroness take into account that the estimated cost of fencing is some £40,000 and the estimated loss in sheep is about £10,000, and therefore a return of 25 per cent. must be worth thinking about?
  Baroness DAVID: My Lords, I will indeed pass that on.
  Viscount INGLEBY: My Lords, is the Minister aware that the roads concerned are frequently blocked by snow—and indeed I think are so blocked at the present time—and will she consider the possibility of combining snow fencing and sheep fencing, at a considerable saving in cost?
  Baroness DAVID: My Lords, I will certainly pass on that suggestion to the appropriate quarters.

  EUTHANASIA: THE DPP AND ENFORCEMENT OF THE LAW
  2.51 p.m.
  Lord SUDELEY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
  The Question was as follows:
  To ask Her Majesty's Government whether they are aware of Dr. Colin Brewer's publicly expressed disagreement with the statement by the Director of Public Prosecutions that there was insufficient evidence to prosecute him for the attempted murder of a cancer patient; and whether they will instruct the Director of Public Prosecutions to make absolutely certain that the law is enforced in cases of "active euthanasia".
  The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, the Director of Public Prosecutions considers every such case on its own merits and he will institute proceedings if he believes that they are justified. It is for the Director to decide whether the evidence justifies proceedings in any particular case. My right honourable and learned friend the Attorney-General is satisfied that the Director is appropriately enforcing the law.
  Lord SUDELEY: My Lords, while thanking the noble and learned Lord for that Answer, may I ask whether he would agree that cases of the kind referred to in the Question are much less likely to occur if instruction in the care of the dying is properly given throughout the land by hospice doctors, who are the real specialists in the field, and the home care service for the dying is much improved? In this context may I ask whether the noble and learned Lord is aware—I am afraid this is
  1002
  a medical question and not a legal one—that the instruction in the care of the dying at University College Hospital is given only by a radiotherapy consultant, and at present there are no comprehensive arrangements for a night district service for the care of the terminally ill who are dying at home?
  The LORD CHANCELLOR: My Lords, the noble Lord has raised some interesting questions which do not, alas! arise from the Question on the Order Paper, and I am afraid, having no expertise in the matters which he has discussed, I cannot assist him or the House upon them.
  Lord HALE: My Lords, is not my noble and learned friend aware—I know he is!—that there have been a substantial number of cases recently of considerable importance and gravity, and that the Director quite obviously is now handling so many cases that he cannot give personal attention to all of them? Directors come to different conclusions at different times, and more and more cases are brought and withdrawn, more and more charges are lodged and then amended. For example, is any action contemplated in connection with the sale of fraudulent pictures for substantial sums following the withdrawal of the charges against Mr. Tom Keating?
  The LORD CHANCELLOR: My Lords, my questioners are engaged in interesting irrelevancies, I am afraid. I am extremely sorry but this is not the occasion for a survey of the decisions of the DPP; but my experience of that office is that they work jolly competently.

  EXCHANGE CONTROL: ADMINISTRATIVE COSTS
  2.54 p.m.
  Lord BOYD-CARPENTER: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
  The Question was as follows:
  To ask Her Majesty's Government what is the present cost of the administration of Exchange Control.
  The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): My Lords, exchange control is administered by the Bank of England as the agents of the Treasury, using powers delegated under Section 37 of the Exchange Control Act 1947. For the year to 31st March 1979 the Bank of England's expenses for the administration of exchange control are expected to amount in total to £13 million. These expenses are met by the Treasury from voted funds. In addition, the cost of Treasury staff engaged full-time on exchange control, including its enforcement, is about £300,000 a year. The cost of exchange control work done by officers of Her Majesty's Customs and Excise as part of their duties cannot be separately identified.
  Lord BOYD-CARPENTER: My Lords, while thanking the noble and learned Lord for the courtesy of that Answer, may I ask whether he would also agree that additional expenditure is incurred by companies and by individuals in the process of seeking permission to use their own funds for the purposes which they judge most expedient; and at a time when the Government are priding themselves on the oil-generated strength of sterling, is it not time to consider whether it is necessary to maintain this control at all?
  Lord McCLUSKEY: My Lords, I am certainly aware that there is additional expenditure of the character referred to by the noble Lord. Of course I cannot assess the amount of it. In relation to the more important matter which has been raised, I do not think your Lordships would want me to go into an extended answer about what my noble friend Lord Goronwy-Roberts called "the philosophy of all this"; but in relation to North Sea oil it is certainly very doubtful whether the best use of the benefits of North Sea oil would be to encourage funds to flow overseas rather than into investment in productive industry at home. I may say in addition that the Government look at this matter continuously. As the noble Lord and the House know, it has been in operation for some 40 years and on the basis of a short term, or even indeed a short-medium term, increase in the value of sterling or improvement in the balance of payments, one must not take a decision which might have very serious adverse consequences for this country.
  The Earl of GOWRIE: My Lords, without for a moment wishing to go into "the philosophy of all this", is it not the case that capital monies exported abroad, earning dividends there which are then remitted to this country, are just as valuable an export as subsidised shipping, for example, and go just as far to ameliorate the problems of unemployment?
  Lord McCLUSKEY: My Lords, of course I accept that there is an advantage in exporting capital abroad and thus increasing invisible earnings; but the disadvantage is that if one suddenly, or too quickly, dismantles all these barriers which have existed for so long, one is likely to create a short term or medium term balance of payments problem which is liable to have a serious effect upon the problem of inflation, and we all regard that as being the most important problem facing us at the present time.
  Lord BALOGH: My Lords, is it not more convenient in serving the national interest if the capital which is coming in is used to buttress our national reserves and not the speculative activities of some crazy people?
  Lord McCLUSKEY: My Lords, I really do not want to go into that either because it is really a byway in relation to this Question.
  Lord BOYD-CARPENTER: My Lords, in replying to my noble friend on the Front Bench with reference to rapid dismantling of these controls, is the noble and learned Lord indicating that the Government are considering doing so by stages; and in that context are the Government considering our obligations under Article 67 of the Treaty of Rome in so far as capital movements within the Community are concerned?
  Lord McCLUSKEY: My Lords, if I may take the two points together, in the first place I am not saying that the Government are contemplating relaxation by stages, but I am saying that we have already relaxed; in October 1977 we made a relaxation which allowed more sterling borrowing by non-resident investors, and at the beginning of 1978, as your Lordships will recall, we abandoned the 25 per cent. surrender rule. These have been important

  1005
  moves in the direction and it is right that they should be gradual. In relation to Article 67, the noble Lord will be aware that we have an authorisation under Article 108 of the Treaty which allows us not to obtemper the terms of Article 67. I may say that in that authorisation we are in good company because Denmark, France, Italy and Ireland—the five of us constituting a majority of the EEC membership—also have authorisation under Article 108.

  BANKING BILL
  3 p.m.
  Lord McCLUSKEY: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
  Moved, that the House do now resolve itself into Committee.—(Lord McCluskey.)
  On Question, Motion agreed to.
  House in Committee accordingly.
  The Lord Aberdare in the Chair.
  Clause 1 [Control of deposit-taking and meaning of "deposit"]:
  Lord REDESDALEmoved Amendment No. 1:
  Page 1, line 17, at end insert—
  (" or
  (c) notwithstanding Schedule 1 of the Bill, the business is the National Giro.").
  The noble Lord said: The object of this Amendment is to bring the National Giro into the scheme. At Second Reading we covered this point at some length; I made the point and the noble and learned Lord, Lord McCluskey, replied. He came up with the figure that should the Giro in fact be brought into the scheme it would only make a contribution of £40,000. I expressed surprise that this figure was so low and he very kindly subsequently wrote to me to say that the figure would be £60,000. I must confess I was a little disappointed, because I was hoping the figure might be higher still.
  However, I do not wish to take up a lot of your Lordships' time on this particular Amendment, because the principle is, I believe, very simple. It is merely this. It has been talked out in another
  1006
  place and to a degree in this House, and it has been agreed that the National Giro shall make a similar contribution to the Treasury. Our argument is that the Giro should make a contribution to the scheme, and I think that is very fair, because, as was said in another place, the Giro wishes to be considered as a bank so that it can really compete. In fact the Minister said in another place that he did not think he was fulfilling the wishes of the National Giro in taking the particular line that it would be excluded from the scheme. Therefore, I believe that the Giro's contribution—whether it be £40,000 or, as now increased by 50 per cent., £60,000—should go into the fund.
  At Second Reading we went into some detail about the fund, and I do not propose to weary your Lordships further, apart from making the point that the fund, if we are going to have a fund, is going to be paid for mainly by the people who are not actually likely to go down, whether they be the clearers or the National Giro, because the National Giro is supported by the Government. Therefore, if the National Giro wishes to be regarded as a bank, and I believe it does, then it should fulfill all the obligations laid upon it by this new legislation. In this age of equal opportunity and equal rights, I feel that what is good for the goose should now be good for the gander, and I believe that the gander, being the National Giro, should be good for a contribution to the fund. I beg to move.
  Lord McCLUSKEY: As the noble Lord, Lord Redesdale, said, this matter has been discussed before, though in fact in another place the principal emphasis was not upon this aspect of the matter but upon the aspect of supervision. I should perhaps just for completeness remind your Lordships that the National Girobank, as it is properly called—not the National Giro as described in the Amendment—is already subject to a degree of supervision very like that to be carried out by the Bank under this Bill. That has been fully described and it may be seen in the report of the proceedings in another place, so there is no question of the National Girobank enjoying a soft option in relation to supervision. So far as the deposit protection scheme is concerned, Girobank is excluded from contributing to the deposit protection scheme

  1007
  by virtue of its exclusion in Schedule 1 from the supervisory provisions of the Bill. We shall see when we come to later Amendments that there is one to delete the Post Office from Schedule 1.
  The essential point is this. As part of a nationalised industry, it enjoys an effective Treasury guarantee, so its depositors look to the Treasury, not to the fund, as their ultimate insurers. This is a point of great theoretical importance—though I hope never of practical importance —because the noble Lord, Lord Redesdale, used the expression "likely to go down", and of course one has to accept that within this kind of scheme he is not talking about it being very likely that any one of the big four will go down. However, there is a theoretical possibility that they will go down. There is no theoretical possibility that the Treasury will go down. The Treasury is the insurer in respect of the Girobank and there is an effective Treasury guarantee.
  Of course, it would be wrong if the banks with which the National Girobank was competing were to contribute to the fund and the Giro made no contribution at all, because that would give Giro a competitive edge. Accordingly, it is provided that the Girobank will pay to the Treasury in respect of its implicit guarantee a contribution equal to what it would pay if it were a member of the scheme. Of course, this also extends to any further or special contributions which may be called for under the scheme, thus preserving the competitive position throughout. The payment is to be made to the Treasury for the benefit of the taxpayers, because it is the Treasury and the taxpayer who stand behind the Girobank. Girobank's depositors can in principle derive no extra benefit from the scheme, whereas even in the case of the clearing banks some extra protection, however remote, is provided.
  In relation to the amount, I promised that I would eat humble pie if my figure of £40,000 turned out to be wrong. It was wrong, and in so far as I am permitted to do so, I shall eat humble pie. The figure is in fact £60,000. The figure of £40,000 was calculated by reference to the minimum contribution of £5,000. That has now been changed to £2,500 and on the recalculation the figure is
  1008
  appropriately £60,000. As the noble Lord acknowledged, that does not make much difference to the substance of the argument because it would have a scarcely noticeable effect on the other contributors. It would not at all affect the big four, who are already likely to contribute at their maximum of £300,000.
  I would ask that this Amendment be not accepted. In any event, it is technically defective in that it does not describe the National Girobank properly. I think that its purpose could be achieved, if, contrary to my suggestion, the Committee wanted it, by accepting a later Amendment.
  Lord CARR of HADLEY: I wonder if I could ask the noble Lord to amplify one or two points. First of all, he stated as a fact that the National Girobank is subject to Treasury supervision and that that is as good an assurance as anybody could have that it will be properly supervised. That may be so. He also stated as a fact that it would be to the Treasury that the depositors would look as their insurers. I accept that that may be a factual description of the position as it is, but this situation arose before this Bill, before other banks were going to be supervised and before there was going to be supervision. Now we are introducing this system of supervision of banking and the fund protection for customers, why not put all the banks on the same footing? In other words, he explained the facts of the situation but he did not give any reasons for its continuance. I understand why it was so in the past because the system we are now introducing in this Bill did not exist. But now that it does exist and the National Girobank is wishing to be treated as a bank and wishing to compete with other banks, I fail to see why it should not be treated in exactly the same way as other banks and have both its supervision and the fund provisions transferred to the new system, so that at least we have a common system applying to all. I should have thought that was the rational and logical way of dealing with the matter. I wonder whether the noble Lord could address himself to that.
  Secondly—and I apologise if I am ignorant about this—where does the legal basis for the Treasury control and guarantee rest? I do not mean this

  1009
  disparagingly, but is it just a matter of Government assurance, or is there some legal basis for the fact that the National Girobank is subject to Treasury supervision and does have to make an equivalent contribution to the Treasury, so that in terms of monetary contribution it will at least be on all fours with the clearing banks if we allow it to remain where it is at the moment? I think that before we finally make up our minds we should like to know a little bit more about the reason for this, and also have the assurance of the permanence of the present arrangements.
  Lord McCLUSKEY: With regard to the second point, I think that I am right in saying that the National Girobank is part of the Post Office, and it is the character of the Post Office as a nationalised industry that matters. I am reminded that the legal basis for supervision is contained in the Post Office Act 1969 and the Post Office (Banking Services) Act 1976. That is, I think, the legal basis. The result is that ultimately it is Ministers who are accountable to Parliament for the Girobank.
  Under the Bill there is no accountability by the Bank of England to Parliament for its supervision of individual institutions, although it is accountable in the general way in which it administers the whole system. So, if we put Girobank into the supervisory system designed for private commercial institutions we would be removing it to a great extent from public sector accountability. That is the argument and I think that that was the argument rehearsed in another place when the matter was discussed there. The banks, the institutions with which we are dealing in the Bill, are different in character from the Post Office as a body existing under the Post Office Act 1969.
  Lord CARR of HADLEY: I should like to ask the noble and learned Lord two further questions. Under the Post Office legislation, would Ministers have power to alter the standards of supervision? I am not necessarily suggesting that they would have power to reduce it, but would they have power to alter the standards of supervision and make the standards of supervision of the National Giro different from the standards applied to other banks? Secondly, would Ministers
  1010
  have power under the Act to alter the level of contribution and again make it less—or more for that matter—than the levels of contribution of the banks that come under the Bill which we are discussing? I think that that, too, is an important matter.
  Lord McCLUSKEY: I am not sure that I can give a confident answer, but I believe that Ministers have power to give directions and certainly have power to vary the amounts. But, of course, there would be no likelihood that the Treasury would require the Girobank to pay different sums from the sums which I have indicated it would pay; namely, sums equal to those which it would pay if it were in the scheme set up by the Bill.
  Lord ROBBINS: Are not the arguments to some extent at cross-purposes? It may very well be that depositors in Girobank, having the Treasury behind them, will feel reasonably confident that they will not be allowed to go bust. But I wonder whether that is the ultimate philosophy of the Bill. I seem to recollect that this issue was raised as long ago as the Radcliffe Committee which pointed to the absence of control of various credit-giving institutions which were beyond the fringe of Bank of England control. Since that time various suggestions have been made whereby the powers of the Bank of England to control the credit base as a whole have, from time to time, been discussed. I must confess that it seems to me to be rather odd that the Bank of England should not be entrusted with this aspect, or that the Bank of England should have to consult with some other Ministry whenever it makes regulations in this regard. It seems to me to be quite an unnecessary complication of what, after all, in the interests of the economy as a whole, is the main purpose of the Bill.
  Lord McCLUSKEY: Starting from where we are now and from where we have been for some time, the Bank of England is now exercising effective supervision in relation to the primary banking sector, but not in relation to the National Girobank and that is because responsibility for the National Girobank is taken by Ministers. I hope that we are not at cross-purposes because what I am ultimately saying is that the Bill, in so far

  1011
  as it creates a deposit protection fund, sets up a fund which is available in theory —and in some cases regrettably in practice —to make some recompense to the depositors who deposit with the sector covered by the fund. The depositors with National Giro Bank will never look to that fund: they will look to the Treasury in the highly unlikely event of a situation arising on which the provisions of the Bill would bite. I do not think that that situation would arise at all. However, there is a sound theoretical difference between depositors looking to the deposit protection fund and depositors with the National Girobank who would never look to that fund at all. And if, even in theory—never mind the practice—they are never to look to it, then it seems wrong that the National Girobank should contribute to it.
  Lord BOYD-CARPENTER: I should like to ask the noble and learned Lord to clear up a point he made in reply to my noble friend Lord Carr of Hadley. He sought to reassure my noble friend who had asked a question as to whether Ministers in the Treasury would have the power to make sure that this Bank conducted itself properly, made the proper contributions and so on, by reminding the Committee that Ministers have the power of giving directions. I apologise to the noble and learned Lord if I am wrong—and it is some time since I have looked at the Post Office legislation—but I must confess that I am under the clear impression that, under the legislation the directions which Ministers can give to the Post Office Corporation are directions of a general character. If that be so, it would not really seem that a direction, for example—to take the specific case—to increase the contribution, could possibly be described as a general direction as distinct from a specific one. If I am right in my suspicion—if I may put it that way—that there is no power to issue specific directions, is not perhaps the reassurance of the noble and learned Lord a little less reassuring than I am sure he intended it to be?
  Lord McCLUSKEY: If the noble Lord is right then that may be the conclusion. I cannot refer him to any specific part of the Post Office Act 1969. However, the pattern of these Acts is of course as the noble Lord has described.
  Lord BOYD-CARPENTER: I am referring to general directions.
  Lord McCLUSKEY: I am assured that, in fact, the power to require the Girobank to do what I have said is to be done, exists; if the Committee wishes me to come back to that matter in order to give chapter and verse, then an opportunity will certainly arise in the course of this afternoon when we come to discuss Amendment No. 36, which, as the noble Lord will recognise, returns to this same matter. I do not want to mislead the Committee. I am reluctant to continue talking because I have run out of information!
  The Earl of GOWRIE: Those of us on all sides of the Committee who face my noble friend Lord Boyd-Carpenter on matters of information usually find that we need several minutes to recover our breath and check what he has given us. I wish to return very briefly to a smaller point. The noble and learned Lord, the Minister, said at the outset that our Amendment was technically defective because it does not contain the word "bank". If that is the case then I accept it. Nevertheless, a great part of the Bill is connected with nomenclature because of the nature of what kind of institutions can call themselves banks for trading and competitive purposes and the like. Indeed, I think that the noble and learned Lord would acknowledge that. What we are objecting to here is that we have the National Girobank—and I stress the last word—acting as it were in competition with other banking services, but disenabled, as it were, from contributing to the deposit protection scheme to which the other banks have to contribute.
  The noble and learned Lord's reason for this is that the National Girobank is as good as a Treasury guarantee. Certainly I cast no aspersions on a Treasury guarantee, but nevertheless, in the noble and learned Lord's own words, this is subject to changes in national fortunes, the situation of the IMF, and to a political direction of one kind or another. I think that many of us will feel more assured if it is directly in the bailiwick of the Bank of England. However, our direct objection is that here is the Girobank able to act and to trade effectively as a bank but not having to participate in a scheme in

  1013
  which, by law, the other banks are required to participate. This seems to us to be unfair and highly damaging to ordinary bank competition.
  Lord McCLUSKEY: On the drafting point, I merely sought to draw attention to the fact that the Amendment talks about the "National Giro", and the correct title of the institution, if I may so call it, is the "National Girobank", "Girobank" being one word. In any event, this is not a legal entity in itself; it is only part of the Post Office. That is why the Amendment which matters is Amendment No. 36, which deletes the Post Office from Schedule 1.
  On the other point, of course, part of what I am saying is that it cannot be contemplated—given the character of the Post Office, and the National Girobank as forming one of its parts, as it were—that Ministers could allow the Post Office or the Girobank to fail to pay out to its depositors. Therefore, there are no circumstances in which the depositors could look to this fund. Accordingly, there is no reason why this fund should receive contributions from the National Girobank.
  3.22 p.m.
  Lord CARR of HADLEY: I am sorry to keep pressing the noble and learned Lord, but this is a matter of great concern on two grounds: first, the one which I had principally in mind when I made my first intervention, that now that we are, at long last, to have a proper system of banking control in this country, it is important from a commercial point of view to treat all banks equitably, fairly one with another. The noble and learned Lord keeps stressing the absolute invincibility of the Treasury as an ultimate guarantor. Perhaps we would accept that, but in so far as that appears to the general public to be a better guarantor than the protection provided by the system of supervision and the fund applying to the other banks, it might give the National Girobank an unfair competitive edge over the other banks. I do not think that we want that.
  I must confess that I am not currently versed in the fortunes of the National Girobank, but in the period when I was a member of the Cabinet I remember that the operations of the National Girobank were causing grave concern. There might
  1014
  be a Government containing Ministers who believed in some way that it was right almost to subsidise the activities of the National Girobank at the taxpayers' expense. Indeed, in so far as it is making a loss—I am not sure what it is doing at present, but at the time I have in mind it was making a very substantial loss—it could, of course, be said to be sudsidised in that way. Therefore, there is a matter of equity here, particularly when we remember that the clearing banks must provide the bulk of the protection fund, even though they are the least likely—apart perhaps from the National Girobank —ever to let their depositors down. Therefore, we face a basic inequity anyway, and to exclude the National Girobank would add to it.
  I do not want to rest entirely on that because I think that the Government and the Committee should pay more attention to the point of economic management raised by the noble Lord, Lord Robbins. We are the last substantial country to have some supervision in this form of our banking system. Personally, I believe that most of us strongly welcome this, even though we do not welcome all aspects of the Bill and have doubts about the fund and one or two other details. When we are doing this, surely it is right to put the whole of the control of the banking system under the Bank of England, which, after all, is itself nationalised and has a close relationship with the Government. To have this control separated seems to me to be one more bit of British unnecessary, messy complication. I am afraid I must say to the Minister that, to us on this side of the Committee, to put them all together is a matter of principle.
  Lord McCLUSKEY: I should like to make a few remarks on the matter of equity. First, I agree, of course, that institutions, such as the National Girobank, which competes with the other institutions which are to be subject to the provisions of the Bill, should be treated equitably. As regards contributions, I do not think that the noble Lord would disagree with me when I say that in so far as the National Girobank is required to make an equal contribution (regardless for the moment of its destination), there is equity there in the matter of competition.
  With respect, the other point the noble Lord made was, I thought, a bad one.

  1015
  He said that if the National Girobank has this ultimate guarantee from the Treasury, that would be seen by the public to give it a kind of competitive edge because it could not fail. If we include the National Girobank in the Bill, is the noble Lord suggesting that the Treasury should withdraw its ultimate guarantee from the Post Office? If not, by putting it into the fund, one does not remove that competitive edge which it seems to have, because it is absolutely solid—as solid as the Treasury. Therefore, with respect, I do not think that on either ground the noble Lord is right. I would simply rest upon the submissions that I have made to the Committee.
  Lord REDESDALE: I did not entirely agree with the last point which the noble and learned Lord made because this competitive edge is as far as payment is concerned, not solidity. The other point which I should like to raise is that the Girobank is already listed by the Bank of England. It complies with the 12½ per cent. reserves for assets and ratios and the other matters within this. Therefore, it is already within the system. If it is within the system, I believe that it ought
  to be there altogether. I have already said that it ought to pay a comparable amount into the fund, for the reason that if it goes into the fund—and we are all talking about it being unlikely that the Girobank would go down, because it is guaranteed by the Treasury—it is unlikely that the clearers would go down.
  The last point I should like to make is that should a clearer go down—and I raised this question during the Second Reading debate—we should be in such an awful financial mess overall that even the Treasury would be looking a bit unhappy at that point. This is a matter of principle. I accept that the actual wording is defective. As the noble and learned Lord knows, I was held up in the snow in the North of England and was unable to check things through down here; I arrived rather late. Therefore, accepting that the Amendment contains that defective part, and accepting that we can look after that point later, I am afraid that we would wish to press the Amendment.
  3.28 p.m.
  On Question, Whether the said Amendment (No. 1) shall be agreed to?
  Their Lordships divided: Contents, 106; Not-Contents, 61.

  CONTENTS

  Airedale, L.

  Eccles, V.

  Northchurch, B.

  Alexander of Tunis, E.

  Effingham, E.

  Nugent of Guildford, L.

  Amory, V.

  Elles, B.

  Nunburnholme, L.

  Auckland, L.

  Elliot of Harwood, B.

  O'Brien of Lothbury, L.

  Avebury, L.

  Elton, L.

  Polwarth, L.

  Avon, E.

  Emmet of Amberley, B.

  Porritt, L.

  Balfour of Inchrye, L.

  Exeter, M.

  Rawlinson of Ewell, L.

  Barnby, L.

  Gainford, L.

  Redesdale, L.

  Barrington, V.

  Gisborough, L.

  Robbins, L.

  Beaumont of Whitley, L.

  Gladwyn, L.

  Robson of Kiddington, B.

  Berkeley, B.

  Glasgow, E.

  Rochdale, V.

  Blake, L.

  Glenkinglas, L.

  Rochester, L.

  Bolton, L.

  Gowrie, E.

  Romney, E.

  Boyd-Carpenter, L.

  Grey, E.

  St. Aldwyn, E.

  Byers, L.

  Gridley, L.

  St. Davids, V.

  Caithness, E.

  Hampton, L.

  St. Helens, L.

  Carr of Hadley, L.

  Hankey, L.

  Sandford, L.

  Carrington, L.

  Harding of Petherton, L.

  Sandys, L.

  Cathcart, E.

  Hayter, L.

  Seebohm, L.

  Clancarty, E.

  Henley, L.

  Selsdon, L.

  Clifford of Chudleigh, L.

  Hylton-Foster, B.

  Sharples, B.

  Clitheroe, L.

  Kinloss, Ly.

  Skelmersdale, L.

  Clwyd, L.

  Kinnaird, L.

  Sligo, M.

  Cockfield, L.

  Kinross, L.

  Somers, L.

  Colville of Culross, V.

  Lauderdale, E.

  Strathclyde, L.

  Cork and Orrery, E.

  Loudoun, C.

  Sudeley, L.

  Cornwallis, L.

  Lucas of Chilworth, L.

  Swansea, L.

  Cottesloe, L.

  Lyell, L.

  Thomas, L.

  Daventry, V.

  Macleod of Borve, B.

  Tranmire, L.

  De Freyne, L.

  McNair, L.

  Trefgarne, L.

  Denham, L. [Teller.]

  Mancroft, L.

  Vaux of Harrowden, L.

  Derwent, L.

  Merrivale, L.

  Vernon, L.

  Donegall, M.

  Molson, L.

  Ward of North Tyneside, B.

  Drumalbyn, L.

  Mowbray and Stourton, L.

  Wigoder, L.

  Dulverton, L.

  [Teller. ]

  Willoughby de Broke, L.

  Ebbisham, L.

  Netherthorpe, L.

  NOT-CONTENTS

  Ampthill, L.

  Hale, L.

  Pargiter, L.

  Aylestone, L.

  Hanworth, V.

  Peart, L. [L. Privy Seal.]

  Bacon, B.

  Hatch of Lusby, L.

  Raglan, L.

  Blease, L.

  Henderson, L.

  Rhodes, L.

  Blyton, L.

  Houghton of Sowerby, L.

  Ritchie-Calder, L.

  Brock, L.

  Jacques, L.

  Sainsbury, L.

  Brockway, L.

  Janner, L.

  Serota, B.

  Buckinghamshire, E.

  Kilbracken, L.

  Stewart of Alvechurch, B.

  Burton of Coventry, B.

  Leatherland, L.

  Stone, L.

  Collison, L.

  Lee of Newton, L.

  Strabolgi, L.

  Cooper of Stockton Heath, L.

  Leonard, L.

  Taylor of Gryfe, L.

  David, B. [Teller.]

  Listowel, E.

  Taylor of Mansfield, L.

  Elwyn-Jones, L. [L. Chancellor.]

  Llewelyn-Davies of Hastoe, B.

  Wallace of Coslany, L. [Teller.]

  Fisher of Rednal, B.

  Lloyd of Hampstead, L.

  Walston, L.

  Gaitskell, B.

  McCluskey, L.

  Wedderburn of Charlton, L.

  Gardiner, L.

  MacLeod of Fuinary, L.

  Whaddon, L.

  Garner, L.

  Morris of Borth-y-Gest, L.

  White, B.

  Gordon-Walker, L.

  Northfield, L.

  Wilson of Radcliffe, L.

  Goronwy-Roberts, L.

  Oram, L.

  Winterbottom, L.

  Granville of Eye, L.

  Pannell, L.

  Wynne-Jones, L.

  Greene of Harrow Weald, L.

  On Question, Amendment agreed to.

  Resolved in the affirmative, and Amendment agreed to accordingly.
  3.38 p.m.
  Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 2:
  Page 2, line 24, after ("body") insert ("for the time being").
  The noble and learned Lord said: I beg to move Amendment No. 2. This is a drafting Amendment. The reference in Clause 1(5)(b) to a body specified in Schedule 1 differs from the reference in Clause 2(1)(d) in that it does not include the words "for the time being". Since there is a distinction in the present drafting it could be taken that Clause 1 (5)(b) refers to Schedule 1 as it stands on the passing of the Act. This is not intended, and the Amendment removes any doubt. I beg to move.
  Clause 1, as amended, agreed to.
  Clause 2 [Exceptions from prohibition in section 1(1)]:
  Lord REDESDALE Lord REDESDALE moved Amendment No. 3:
  Page 3, line 23, at end insert ("provided that in the case of the body specified in Schedule 1(7) a scheme approved by the Chancellor of the Exchequer has been put into operation within eighteen months of the first day appointed under section 50(3) hereof").
  The noble Lord said: I beg to move Amendment No. 3. This covers the subject of building societies. We raised this in the Second Reading debate. It
  1018
  is not that we believe that there is a situation which is very serious, but it is something which we believe ought to be cleared up. The building societies are meant to be producing a comparable scheme to the scheme that we have in this Bill. If that is the case, then it would seem only fair that they should have a scheme in operation at the same time as the banking scheme.
  I said in my Second Reading speech that there had been a marked change since 1962 when the building societies held only 22 per cent. of the deposits and now this figure is 40 per cent. They now have, in fact, the lion's share of the deposits. I believe that they should compete on all fours with the clearers. This particular Amendment gives ample time for a scheme to be put in hand whereby they have a comparable scheme to the banking fund scheme operation within 18 months of the first appointed day. I believe that 18 months is a fair time. We have been told that they are going to have a scheme. Therefore, I think it only fair that this major section of the market which, after all, has recently had some failuresc—more failures, in fact, than in the banking world —should be regulated in a way, and a scheme should be brought in which is approved by the Chancellor of the Exchequer. In that way they would be competing fairly and affording to their depositors the same level of surety that the banks will be giving.
  Lord JACQUES: Building societies have power under Section 43 of the Building Societies Act 1962 to enter into arrange-

  1019
  ments for making funds available to meet losses incurred by their investors. It was under such arrangements that losses to investors of the Grays Building Society, which came to light in the course of last year, were made good. The Council of the Building Societies Association have had detailed discussions with the Chief Registrar of Friendly Societies on the feasibility of establishing a permanent scheme for investors under Section 43, and I understand that, subject to a number of technical details, it is now near to completion. If for any reason this scheme should not go forward, the question of statutory provision for the protection of building society investors will need to be considered.
  The application of the EEC Credit Institutions Directive is of course at present deferred in relation to building societies but it is intended that in the future legislation will be introduced to provide for the authorisation of societies to comply with the Directive's requirements. I think that that would be a more appropriate time to introduce measures for the protection of building society investors, if such measures prove necessary; in my view they will not prove necessary.
  The Earl of GOWRIE: Does the Minister think such measures will prove necessary in the case of the clearing banks? The problem we are having all along is that there appears to be one rule for banks and another for institutions which effectively are in competition with banks to offer particular kinds of financial services to customers. The building societies—and good luck to them, say we—have been singularly successful in picking up business from the ordinary small investor, the unit trust and so on, yet the Government are effectively saying that the building societies can be trusted with making private arrangements of their own whereas the banks cannot, and that is plainly unfair to the ethos and philosophy of banking.
  Lord JACQUES: We are not saying that. Building societies are governed by the statute which gives great authority to the Chief Registrar of Friendly Societies and all arrangements made under Section 43 for the protection of depositors must be made with his approval, so there is a protective scheme which requires approval
  1020
  from a Government agency—namely, the Chief Registrar of Friendly Societies—and it is working well. Let it work well.
  The Earl of GOWRIE: The noble Lord, Lord Jacques, is not really taking my point. I am not saying there do not exist methods and assurances and protective mechanisms to safeguard depositors with building societies. That is not the point. I am not saying building societies are in some way removed from various obligations or various protective mechanisms. I am simply saying that building societies are not required to pay into the fund under this Bill, and that is what is distorting the position of building societies in relation to that of banks, which is a different point altogether.
  Lord JACQUES: That most building societies do not pay into that particular fund does not give them an advantage; they are already paying into their own fund, and when the new scheme is commenced there will be a fund of £1½million to cover the liabilities of building societies with powers of further call-up, and the fund will be under trustees. It is not being done in some slipshod way. Building societies and the Chief Registrar are benefiting from the experience they have had of Section 43, and I suggest that recent experience has shown that the building societies are determined that their investors shall have very adequate protection.
  Lord HANKEY: I should declare my interest in that I am a director of the Alliance Building Society. The noble Lord, Lord Jacques, hit the nail on the head—he is very experienced in this matter—and, without question, the building societies are not on all fours with the clearing banks. They are most carefully controlled by the 1962 Act and they lend their money mostly on bricks and mortar, which one cannot say of the clearing banks, and further they have not suffered a fringe bank crisis. It is clear that they looked after their investors extremely carefully when the Grays Building Society affair broke out and they all contributed to a fund on that occasion to make sure there were no untoward effects. I therefore do not believe there is any cause for the Amendment, and if it goes to a Division I shall vote against it.
  Lord REDESDALE: I think I must have misheard the noble Lord. I believe he said the building societies were not competing on all fours. Perhaps they are not, and perhaps that is how they have managed to get up from 22 per cent. to 40 per cent. of all deposit-taking. I should be grateful if the Minister would clarify one point. Did he say they paid into a fund when it was necessary for funds to be paid in, but that it was not an on-going fund which had been set up; that if an occasion like the Grays Building Society occurred then money would be paid in?
  Lord JACQUES: The position, as I understand it, is that for some years past the building societies have looked after their investors and fully protected them. They have done that by subscribing when necessary, but now they are required to introduce a scheme which will go further than that in that there will be a fund with trustees. The details of the scheme, except for a few technical matters, have been agreed with the Registrar and I expect the new scheme will come into operation well in advance of the time the movers of the Amendment have in mind. In any case, I can give a Government assurance that if it does not, then when we come forward with legislation required by the EEC Directive we shall take the kind of steps which the Opposition have in mind; but knowing our building societies we do not think that will be necessary.
  3.50 p.m.
  Lord CARR of HADLEY: I should like to ask the noble Lord one more question. If the scheme is almost ready, why does he find the Amendment in any way burdensome? The sole purpose of the Amendment is to ensure that the building society position is covered on all fours with the bank situation simultaneously, or at least within a reasonable period of being simultaneous. We consider that otherwise there is not fairness between these two very important media of saving and deposit-taking on behalf of the public.
  I wish to point out to the noble Lord, Lord Hankey, that no one on our side of the Committee who supports the Amendment is wishing to throw stones, or even tiny grains of sand, at the building societies. Of course the building societies have a fine record, but so have the clearing
  1022
  banks. In fact the clearing banks, perhaps because there are fewer of them, and because they are large, have an even cleaner record. There have been some disasters in the building society world. It is true that, when these have occurred, the other building societies have rallied round and dealt with the situation; but so have the banks in similar circumstances. In fact, the clearing banks have rallied round and dealt with a situation which did not arise among themselves at all. Therefore, the record of one industry is very much on all fours with that of the other. I make it clear that from this side of the Committee we do not propose to oppose the fund, but we do not believe that it is necessary to protect those who deal with banks. We think that the supervision system is necessary, and that is why we welcome it. However, if the fund is to be imposed upon banks, and the clearing banks are to undertake the main burden of it, it would seem that in terms of fairness in competition the building societies themselves should accept a similar liability. This may not be necessary in either case, but this is another instance in which what is sauce for the goose ought to be sauce for the gander.
  Lord JACQUES: Yes, but the building societies have already swallowed that sauce; they are already protecting their investors. They are to do this by a form similar to that required by the Banking Bill. They are to do this in letter and in spirit. In any case we do not like the Amendment because it would also bring the building societies within the supervisory system of the Bill, which is quite unsuited to their needs. We think that the matter should be left entirely as it is, but we say that if legislation is necessary in this field we shall not hesitate to introduce it.
  Lord REDESDALE: I am most grateful that the noble Lord has raised the point about bringing the matter under the supervision of the Bank of England. In fact the Amendment sets out to do something else. It says that, unless a scheme has been put into operation within 18 months, the body concerned would have to come within the scheme proposed. I am sure that the building societies do not wish to come within the supervisory scheme. The Amendment does only one thing. It attempts statutorily to set a time limit

  1023
  regarding the scheme, which I am sure will be an excellent one—I am not questioning that at all—and to ensure that the scheme is set into effect. I think it a very reasonable Amendment because if what the noble Lord says about the scheme coming into effect within a very short time is correct, it will have met the requirements of the Amendment.
  I want to turn to the point which the noble Lord, Lord Hankey, raised so as to clear up any misconception. He said that the building societies have looked after any relevant situations that have arisen. Of course I agree with that; they rallied around the Grays society. I do not think that the noble Lord was present for the Second Reading, though I may be wrong about that— —
  Lord HANKEY: No, I was not.
  Lord REDESDALE: On Second Reading I made the point that in the secondary banking crisis it was the clearers who put up 80 per cent. of the £1,200 million required; and it was a lifeboat scheme which saved any depositor in a British bank from losing his money. The noble and learned Lord, Lord McCluskey, was kind enough to confirm that point, but I want to raise it again so that the noble Lord, Lord Hankey, appreciates it. No depositor in a British bank has lost money. I acknowledge his point about the building societies having rallied round, but I point out that the clearing banks rallied round in a much bigger way. I believe that that takes care of that question.
  We on this side of the Committee are, I believe, being reasonable about this matter. We are in effect saying to the Government, "Fine, you are producing a scheme, an excellent scheme, but let us have a time limit set on it so that is is actually put into effect". That is all we are saying. I consider our request reasonable, and I cannot see so reasonable a man as the noble Lord, Lord Jacques, denying that most reasonable request.
  Lord JACQUES: In principle there is no difference between us. The Opposition are saying in effect, "All right, those concerned have nearly finished with the scheme, but if they do not finish within 18 months, then they come within this
  1024
  scheme". In reply we are saying, "Nonsense; they will have their scheme ready long before the 18 months expire, but if they do not, then we shall by legislation insist that there be a scheme fitted to their requirements". So there is no basic difference between us; it is merely a difference of procedure. We think it better to do it our way by having a scheme suited to the requirements of those involved.
  Lord REDESDALE: Surely we are in agreement. There will be a scheme suited to their requirements. That is what the noble Lord has said. Presumably the scheme will be approved by the Chancellor of the Exchequer, and it will be ready within a very short time. Am I not right in saying that? If the scheme is to be ready within a very short time the requirements laid down in our Amendment will have been met. Therefore I cannot understand how the noble Lord can object to the Amendment, because what is sought will have gone through in any case within the time period.
  Lord JACQUES: If the scheme did not go through, the consequences would be different in the Opposition's case than they would be in ours. We say that there will be a scheme suited to the requirements of those concerned, whereas the Opposition say, "Oh, no, we shall have this scheme". We believe that our solution is the better of the two.
  Lord CARR of HADLEY: Am I to understand from what the noble Lord is saying that a differently drafted Amendment, providing that there must be a suitable scheme by a certain date, would be acceptable to the Government?
  Lord JACQUES: That is not the Amendment which we have in front of us, and I should like to take advice upon the noble Lord's suggestion. I think that what the noble Lord proposes would be an unnecessary Amendment, and it would litter the Bill with unnecessary details. But, frankly. I see no reason why the noble Lord should not table such an Amendment if he so wishes.
  Lord REDESDALE: I knew that the noble Lord was most reasonable. If he will give an assurance that he will look at this matter and let us know his views, I shall not press the Amendment.
  Lord JACQUES: I give an assurance that we shall look at the point raised proposing that there shall be a building society scheme within a specified time.
  Lord REDESDALE: I am quite happy with that assurance. I take full responsibility for the Amendment. It was my idea to provide a link to act as an incentive towards getting the scheme into operation, and I thought that was quite reasonable. On the basis that the noble Lord has given an assurance I beg leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Clause 2 agreed to.
  Clause 3 [Recognition and licences]:
  3.59 p.m.
  Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 4:
  Page 5, line 21, after ("of") insert ("Part I of")
  The noble and learned Lord said: I beg to move Amendment No. 4. Amendments Nos. 4, 5 and 40 are associated and, if they were included in the Bill, they would make a provision in Schedule 3, directed to institutions in existence on 9th November 1978 (the date of introduction of the Bill in another place) allowing United Kingdom-based institutions to be eligible for recognition on the basis of their worldwide banking activities if in all respects they meet the other criteria for recognition. The Amendments relate to the position of a number of British overseas banks; and this, I think, was a matter which was raised in another place.
  I think my right honourable friend in another place, the Minister of State, made it clear in Committee there that it is not the intention that the Banking Bill should inadvertently damage the interests of British overseas banks, which in the main carry on their banking activities abroad. He therefore undertook to bring forward an Amendment at Report. This was not possible in the time available, and this series of Amendments, Nos. 4, 5 and 40, carry out that undertaking, though a little late. I should perhaps add that the banks concerned have extensive branch networks abroad, but two of them take no deposits at all in the United Kingdom and the remainder take very few. Without this Amendment, therefore, the two that
  1026
  take no deposits would be ineligible for authorisation under the Bill; the others would be eligible for a licence, but not for recognition, since they do not provide a wide range of banking services in the United Kingdom. In all other respects, all these institutions could be expected to meet the criteria for recognition in Part I of Schedule 2. So the position of these banks could be severely prejudiced if the Bank could not grant them recognition and they accordingly lost their banking status here. I beg to move Amendment No. 4.
  Lord REDESDALE: I should like briefly to say that I am most grateful that the noble and learned Lord has carried out the undertaking which was given by the Minister in another place, because it clears up a situation which was rather unhealthy. I am most grateful that he has done so.
  Lord O'BRIEN of LOTHBURY: May I ask a question on this Amendment? Can the noble and learned Lord tell me whether it would enable a Commonwealth State savings bank which operates in London to continue to do so?
  Lord McCLUSKEY: I think we are going to come to the matter of Commonwealth State savings banks at a later stage, but as I understand the position—and I shall no doubt be corrected if I am wrong—that is not connected with this series of Amendments.
  Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 5:
  Page 5, line 22, at end insert ("and the provisions of Part II of that Schedule shall have effect with respect to the grant of recognition to certain corporate institutions which were in existence on 9th November 1978").
  Clause 3, as amended, agreed to.
  Clauses 4 to 8 agreed to.
  Clause 9 [Duration of directions and direction-making power]:
  4.4 p.m.
  The Earl of GOWRIE The Earl of GOWRIE moved Amendment No. 6:
  Page 11, line 9, leave out ("fourteen") and insert ("twenty-one").
  The noble Earl said: Under the two previous clauses, which we have just passed into the Bill, Clauses 7 and 8, the Bank of England is empowered to revoke the ability of an institution to take deposits. Being given these powers, it must of course give notice to the institution that it is going to revoke their ability, that it is going to lean on them; and during that time, having given the warning, as it were, it may also give direction to the institution, to the bank in question (let us call it the bank), to restrict or regulate the business transacted by the bank.
  These, of course, are very serious and grave powers, and are of great consequence for any bank which is under scrutiny or in trouble in some way, and we accept that they are necessary under the general framework of the Bill. But, if exercised, they will have a deep effect on the institution concerned, and because of that serious effect the institution, the bank, is of course allowed to make representations—to appeal against the Bank of England's verdict, if you like.
  What we are seeking to do here is to give the institution in question a little more time in which to appeal. It is allowed only 14 days in which it may make any appeal. We think this is too short a time for a decision to be taken on whether to appeal against a decision which affects the heart of the business of that particular kind of institution. It will want to defend itself; it will need to marshall facts; it will need to open its accounts to every kind of scrutiny; witnesses or directors of the bank may have to be called back from abroad, and the like; and I really think a little more time is needed.
  At an earlier stage of the Bill, in another place, the Minister of State at the Treasury showed that he had read his Johnson and defended the Bill against similar Amendments from our side of the Committee by arguing that, under such danger, the bank concerned would find that its thoughts would be wonderfully concentrated if it knew that, so to speak, it was going to be hanged in a fortnight. I do not think that what we are suggesting would really extend the delay very long, because we are suggesting a period of only three weeks, of 21 days in all. Of course, when one says a fortnight, that is not 14 working clays, it is only 10 working
  1028
  days; and there are also many variable factors, such as bank holidays, Christmas, some kind of recess or industrial troubles, strike action or the like, which would make a fortnight, 10 working days, quite unreasonable. So in this Amendment we simply submit that 21 days should be the period in which appeals should be allowed.
  In making these remarks, I should like to point out to the Committee that we have a consequential Amendment to Schedule 4 which is really on the same point, so I will speak to it now; that is to say, Amendment No. 41 on the Marshalled List is covered by the remarks I have made. I beg to move.
  Lord JACQUES: Directions may be issued to an institution only when the Bank has given notice that it proposes to revoke all deposit-taking authority. This is a very serious step, which will not lightly be undertaken by the Bank. As Clause 8 makes clear, directions will be issued where the Bank considers this is in the interests of depositors, and in particular to safeguard the assets of the institution. It is desirable, in this situation, that any period of uncertainty should be as short as possible; and this is in the interests of all concerned, including the institution itself. Moreover, the institution may of course appeal to the Chancellor. under Clause 11(1), against the issue of directions; and to lengthen the period for representations to be made to the Bank would impose a further week's delay before the appeal could be made. So far as holidays are concerned, I would expect that an institution which was in these difficulties would be working whatever the holiday was. It certainly would if I had anything to do with it.
  The Earl of GOWRIE: I think that last remark begs the question, because the institution might not accept that it is in difficulties. It might be the Bank of England's mistaken notion that it is in difficulties. The noble Lord's substantial point, I think, is that where you get financial institutions, banks and the like, in trouble, you get the danger of an escalating lack of confidence, and non-confidence can spread like a disease over the financial community. Yet I think that if this Bill—which, after all, is coming before us fundamentally as a response to the secondary banking crisis

  1029
  of a few years back—with this provision of 14 days in it, had been in existence as an Act at that time, the proliferation of non-confidence might have been much faster, because under that Act the Bank of England would have been shutting down institutions effectively without any scrutiny of what was in fact happening or of which ones should properly be shut down and which ones should not. So in making an appeal for, effectively, another working week, I do not think one is really being unreasonable at all.
  The noble Lord, Lord Jacques, mentioned the question of an appeal to the Chancellor of the Exchequer. The exigencies of the parliamentary and Government timetable might mean that the Chancellor of the Exchequer would not be able to give enough time, at a particular period, to his decision. Not only is it very important for the institution concerned that the decision should be the right one; it is very important for the general level of confidence in the economy, which the noble Lord, Lord Jacques, was quite right to raise, that any decision is the right one and has been taken with full regard to the facts and with full representations being made by the institution under scrutiny and the like. I do not like to accuse the noble Lord of being churlish but I think that he is (let us say) being stingy. I think that three or four more working days is not an unreasonable thing to ask.
  Lord JACQUES: I think that the noble Earl is confusing two periods of time. At the beginning of his argument he was concerned with the time before a direction was made: that there may be such difficulties that the Bank would be giving directions here there and everywhere and did not know where to give them. He was dealing with the time element before the direction. That is one thing. What the Amendment is concerned with is the time element after a direction is given. I suggest that much of his argument has therefore no bearing on the issue before the Committee.
  The Earl of GOWRIE: I am happy to accept the noble Lord's point. I do not accept that my argument had no relevance to what is before the Committee, but I am happy to accept that what I have been talking about in the Amendment is the
  1030
  period after the direction has been given. But there are provisions that I can see (and the noble Lord will correct me if I am wrong) about the period of notice between the time the directive is going to be given and the time that it is announced that it may be given. I think that the noble Lord is splitting hairs. I am concerned here with a hypothetical institution in some hypothetical situation of trouble. The institution receives a directive from the Bank and the Bank must have power to enforce its directive. We do not quarrel with that. But under our sense of fairness, and not only under our sense of fairness but under our anxiety to maintain confidence by seeing that the facts are brought out and that the facts are right about the working of any particular institution—under those two philosophies, we consider on both sides of the Committee that it is reasonable that there should be a period in which the institution under scrutiny should be able to appeal, to make representations and the like.
  Allowing for the fact that we in this country are still wedded to our weeekend and the rest of it, the noble Lord has not convinced me that 14 working days—and there are not even 14 working days here—is sufficient time for these kinds of representation to be made. Why is he therefore not prepared to extend it to 21 days?
  Lord JACQUES: I think that we are all aware that these things do not normally happen overnight. There is always a reluctance on the part of a public institution to interfere with the business of a bank. There are discussions going on and there are even threats sometimes that, "We shall have to do this unless …". Consequently the time element is much greater than the noble Earl is suggesting that it is. In fact, the whole matter will have been discussed weeks beforehand.
  I am saying that once a decision has been made that a direction shall be given, then one should proceed with the utmost speed and this should minimise the period of uncertainty. There has been already sufficient uncertainty before the direction was given. I believe that in the circumstances 14 days is the better period. I would point out also that if this Amendment were carried there would be consequential Amendments to be made in the Bill. For example, the whole thing

  1031
  must be dealt with in 28 days, and if you take 21 of them, then it would not leave much time after that.
  The Earl of GOWRIE: Naturally, there would be consequential Amendments, but I think that on Committee stage we are dealing with the merits of the argument of a particular Amendment on its own. If it has merit then we can work out later what would be the consequential Amendments. I am not disposed to squabble too virulently about these extra days. The noble Lord, I think, is being slightly stingy in legislative terms. We are perhaps not disposed to stick on this because, like the noble Lord, we have confidence in the Bank of England and in the fact that any institution under scrutiny would be scrutinised only as a result of responsibly-taken action by the Bank of England. We are not critical in that way.
  I am bothered, perhaps more than are some of my noble friends, about the logistics of raising an appeal against this serious kind of action by an individual company. I do not think that the noble Lord has met me on the point. He says that it is vital to confidence that this be taken with the utmost despatch. In working business terms, a difference of five working days does not alter the principle of despatch. However, I am in an amiable and tolerant mood, and in that spirit I beg leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Clause 9 agreed to.
  Clauses 10 to 15 agreed to.
  Clause 16 [Powers to obtain information and require production of documents]:
  4.16 p.m.
  Lord REDESDALE Lord REDESDALE moved Amendment No. 7:
  Page 17, line 9, at end insert—
  (" (9) Except in the case of an overseas subsidiary of a United Kingdom institution, an accountant shall not be qualified to furnish a report under subsection (1)(b) unless he is a member of one or more bodies of accountants established in the United Kingdom and for the time being recognised for the purposes of section 161(1)(a) of the Companies Act 1948 by the Secretary of State.").
  The noble Lord said: This Amendment takes up from where the matter was last argued in another place. It concerns the question of a qualified accountant. In another place it was vehemently argued by the Minister that definition as a qualified accountant was not necessary. This is a matter of opinion. In our view, it is necessary to qualify an accountant whereas it is not necessary to qualify a solicitor. There are two aspects to this. When one talks about an accountant, it is, I agree, unlikely that the Bank would put up any old unqualified accountant. However, I believe that if one specifies an accountant in a Bill like this it should be one who is recognised for the purposes of Section 161(1)(a) of the Companies Act 1948. This would, I believe give a good clear definition.
  The second point is that the provision does not in any way undermine the additional accountancy experience and qualifications that are likely to be required for this type of business. These people would probably be selected by the Bank. We are putting it quite neatly and succinctly here. I agree that, when an Amendment to try to achieve the same end was put up in another place, it went on for rather a long time, and I accept the Minister's strictures about this. But I think we have overcome the difficulty. I hope that the noble Lord, being in a reasonable mood, will be prepared to accept this particular Amendment. I beg to move.
  Lord JACQUES: From time to time in the past we have been accused of making legislation far too complicated. I have heard that from the Benches opposite on several occasions and I have been the target of it. Here we are trying to make it simple and the Opposition are trying to prevent us from making it simple. We would accept that, generally speaking, where a reference is made to an accountant one should define an accountant as a qualified accountant and the nature of his qualifications should be made clear. We would accept that, in normal circumstances, that is most desirable. But we think that this particular clause is an exception.
  The intention behind this provision is that the Bank should be able to require an institution to have the information reported on by an accountant acceptable

  1033
  to the Bank. It is important that the accountant should have adequate specialist knowledge and skill for the proper execution of the reporting requirement. But it is inconceivable that the Bank, having this power to specify that an accountant should be acceptable to it, should then approve the appointment of an accountant without the requisite professional qualifications. In effect, the Bank's power is to discriminate on grounds of specialised knowledge among qualified accountants, and not to sanction the appointment of an unqualified accountant. It is for this reason that we think that the Amendment is unnecessary.
  I must also point out that it is unfortunately defective. It would exclude accountants authorised by the Department of Trade as having overseas qualifications equivalent to those obtained by members of recognised United Kingdom accountancy bodies, except in the context of overseas subsidiaries. The point in question is not overseas subsidiaries but something quite different—that is, institutions licensed to operate here through a branch of an overseas bank which operates here. Very often the information that would be required would be information that would have regard to all the activities of the overseas concern which had a branch here. Consequently, it might require an accountant who did not meet the qualifications required in this country. He might not even be on the Department of Trade's list though fully qualified in his own country. He may be the right person to act because he is the one who has the full knowledge of the particular bank's activities. We should have to provide for that. For Heaven's sake! let us not make this unnecessarily complicated by having to do that.
  Lord REDESDALE: I am never one to try to complicate an issue; I would much rather have it simple. I am still not entirely happy with the point that it is unnecessary to have a definition in this Bill whereas it is necessary in other Bills. I do not think the noble Lord is being altogether fair on that one. I was thinking very much on his last point—
  Lord JACQUES: We have a definition in the Bill where it is needed; for example, there is the accountant employed by the Protection Board. The qualifications are
  1034
  laid down there. This is something different. This calls for qualifications within qualifications.
  Lord REDESDALE: I do not think it actually lays down the actual qualifications. It still just says, "qualified", I believe. As he has made the point, perhaps the noble Lord can state where it actually says this and what the words are?
  Lord JACQUES: Schedule 5, paragraph 4.
  Lord POLWARTH: While the noble Lord is pursuing this reference, may I declare an interest and say that I find the noble Lord's explanation a little difficult to follow. It is almost universally the case in Statutes that, where the services of an accountant arc prescribed as being necessary, a definition is given of the qualification. The term "accountant" does not imply any qualification. The term "solicitor" does in that profession; but the term "accountant" can be used by anybody without challenge. It would have been simpler had we allowed the same definition as already appears in other Statutes to appear in this case. I said that I had an interest to declare because if the noble Lord were to carry his Amendment, I should technically be qualified to carry out these functions. Nothing in the Amendment would oblige the Bank of England—if indeed they were so mad as to do so—to select me to carry out these functions, I have not the necessary experience. I do not think that the question of simplicity arises in this case. I see the point about reporting on institutions with an overseas parent, but this could surely be dealt with by an additional Amendment referring to similar qualifications or qualifications normally accepted in the country of domicile of the institution.
  Lord REDESDALE: I do not entirely accept this point. I do not wish to labour it too fully. When the noble Lord raised the question of an overseas bank, I was trying to think, having declared my own interest in working for an overseas bank, how this could affect one. I do not think his point is valid there. I do not want to take up the time of the Committee any longer and I beg leave to withdraw the Amendment at this stage.
  Amendment, by leave, withdrawn.
  4.26 p.m.
  Lord SELSDON Lord SELSDON moved Amendment No. 8:
  Page 17, line 9, at end insert—
  ("(10) Any information obtained by the Bank from an institution in accordance with the provisions of this section shall be confidential to the department of the Bank responsible for Banking Supervision and shall not he disclosed to any other department of the Bank or to any department of Government or to any other body or person.").
  The noble Lord said: I move this Amendment in the names of my noble friends. It raises that old stalking horse of confidentiality. I do not wish to burden the Bill with unnecessary clauses or terminology; but concern has been fairly widely expressed, both in another place and outside, that this Bill may in some way adversely affect the image of confidentiality, and that through the Bill the Government or outsiders may inadvertently have access to information that could be against the interests of a bank's customers. It is not a major issue but I should like the noble Lord to give certain assurances. I should like to put to him the question that could be posed to banks in London by their customers. What reply can one give to a customer who questions whether information passed to his hank in confidence could inadvertently be made more widely available, thereby making the whole affair detrimental to his own interests?
  The noble Lord will be aware that many banks and banking centres around the world are envious of the reputation which banks in London have managed to obtain. Confidentiality is critical to the future of banking in this country. It is not so much confidentiality among our own domestic customers but it is the confidence of international depositors and customers. I shall use one example: the noble and learned Lord will be aware that the Middle East States move up and down in different political arenas with frightening rapidity and have currently about 200 billion dollars invested abroad. It is estimated that in one way or another an excess of 50 billion dollars of this is in the banking system in London. Discussions which one may have with individuals or institutions always embody a phrase like: "Is it really safe? Will anybody know? How sure can I be that your system is as confidential as that of other countries? How sure can I be
  1036
  that when legislation is passed harmonising EEC banking law information passed to the Bank of England may not be made available to some foreign central bank?"
  All of us have supreme confidence in the Bank of England; but we wonder whether the bank may have questions put to it by Government or others to which it will have to reply, and that information may thereby leak into the system and be damaging to the interests of the customers of the bank. I beg to move.
  Lord McCLUSKEY: I have listened to what the noble Lord has said in presenting this argument. I want to make it clear to the Committee that the Bank may obtain information under Clause 16, and in that event the person from whom the information is sought has to provide it. The Bank may—and I am addressing myself to the argument that the noble Lord put forward—seek information without demanding it under Clause 16. In that event, the person concerned may well ask himself the kind of question that the noble Lord, Lord Selsdon, put. In either event, when the information comes to the Bank it is the provisions of Clause 19 which then apply. When the person asks: "What protection have I got against disclosure of this information?" the answer is to point to Clause 19 and say: "That is the protection which applies whether it is given as a result of a request from the bank under Clause 16 or given otherwise". The answer is that Clause 19 is the one which provides the safeguards. I will come in due course to Clause 19, but there are difficulties about the particular Amendment which I would have to point to.
  It would be rather difficult to confine the information to a department of a bank, and I think the noble Lord recognises the problems involved there. It would mean, for example, that the governor of the bank himself could not be informed if he were not a member of the particular department concerned. In other words, the department is not a legal entity and one could not enforce it. I think one has to approach it simply on the basis that at this point this Amendment would not be appropriate. One has to look at the quality of the safeguards provided in Clause 19. If they are thought to be inadequate then it would be appropriate

  1037
  for those who thought them inadequate to seek to move an Amendment at that point.
  Lord SELSDON: I agree with the noble and learned Lord that in general this Amendment is not perfect and that if Clause 19 were properly applied it might well sort out this particular problem. But I would point out that the next Amendment is also related to this and I would prefer to speak to that. I beg leave to withdraw this Amendment.
  Amendment, by leave, withdrawn.
  Clause 16 agreed to.
  Clauses 17 and 18 agreed to.
  Clause 19 [Confidentiality of information obtained by the Bank]:
  4.32 p.m.
  Lord SELSDON Lord SELSDON moved Amendment No.9:
  Page 20, line 23, leave out ("or in the public interest").
  The noble Lord said: I beg to move the Amendment standing in the names of my noble friends. We come here to the impact of Clause 19 and in particular the inclusion in the Bill of the words "in the public interest." This point was raised on Second Reading and has been aired pretty thoroughly in another place. Much depends on who it is who decides what is in the public interest. If I understand it correctly, the Government could declare that it is in the public interest that certain information be made available to them by the Bank and that the making available of that information could be detrimental to the interests of a Bank's customers. I should be most grateful if the noble and learned Lord would care to comment on this.
  Lord McCLUSKEY: I think that ultimately under the clause the question of "What is the public interest?" could fall to be decided by the court, because the structure of the clause means that the disclosure of information to which the clause relates is not permitted, and any such disclosure which is made without being permitted can be visited by a fine or imprisonment under subsection (7). Accordingly, if a disclosure is made which
  1038
  is not authorised by the clause and it comes to the court's attention, the court may judge that an offence has been committed; and in that sense the court is the ultimate arbiter. But at the particular point at which the decision is taken, it is the Bank which is the arbiter. May I just point out to the Committee what the effect would be if we were to delete the words "or in the public interest." It would mean that the circumstances in which the Bank could pass information to the Treasury would be restricted to those where it was in the interests of depositors; but there might be circumstances where it would be difficult to argue that the interest of depositors as such was involved, and there would certainly be a case where the wider public interest was involved.
  An instance was given in another place and perhaps I should repeat it: I think it carried some weight and was so accepted by the Opposition there. That was that it may come to the attention of the Bank, through its scrutiny of information which it had obtained, that an institution it was supervising was being used either to finance terrorist groups in this country or being used somehow by terrorist groups for the channelling of funds. That is one instance; there may be others. It is to be hoped that such cases would be extremely rare, but it comes to this, that in taking the practical decision it is the Bank which must judge of the public interest. I find it rather difficult to see, given the character of the supervision and the fact that the information is channelled through the Bank, who else can be called upon to do it—
  unless the Bank is required to go to someone outside and say: "We want you to decide whether this is in the public interest." Of course, that involves the Bank itself first of all taking a decision that it will get the answer "Yes"; so they are taking very much the same decision. I hope, having said that, that I have given the noble Lord the assurance he looks for; but at the end of the day the Bank must be in a position to put this information, to which it uniquely has access, in the way the Bill allows, knowing that if it does so wrongly it can be visited with criminal penalties.
  Lord SELSDON: I am very satisfied with that. If it really is true that it is within the judgment of the Bank and one could trust the Bank, I think we would accept that. However, I would

  1039
  point out that there are occasions when the judgment of the Bank may not be as precise and accurate as all that; for instance, as in the recent issue of longterm stock, where the hallowed halls of the Bank of England were rather more reminiscent of an Eastern bazaar selling whisky on the last day before prohibition! However, having said that, I beg to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  On Question, Whether Clause 19 shall stand part of the Bill?
  Lord McCLUSKEY: I think that the noble Lord, Lord Selsdon, thought that if he made his point and then quickly withdrew the Amendment there would be no reply to it. I think we are talking about entirely different circumstances.
  Clause 19 agreed to.
  Clauses 20 to 26 agreed to.
  Clause 27 [Maximum and minimum contributions]:
  Lord POLWARTH Lord POLWARTH moved Amendment No.10:
  Page 27, line 1, leave out subsection (2).
  The noble Lord said: We now come to Part II of the Bill relating to the deposit protection scheme. I am afraid I must again declare my interest as a director of a bank which will be affected by the scheme. I hasten to say that none of the major banks—English, Scottish or, so far as I know, any others—are in favour of this scheme for the reasons that were given on Second Reading by many noble Lords, including myself. Clearly this is a major prop of the Bill and a central part of it. It has been passed in another place and, accordingly, I think we would be wrong to challenge any further the principle of having a scheme. But that does not mean that we should not endeavour to make it as fair in operation as possible. That is the purpose of my Amendment and I am afraid it may take a little time to explain.
  The point concerns the allocation or spreading of the contributions to the fund. This is basically governed by Clause 23(5) on page 24 of the Bill, which states:
  "… the amount of the contribution of each institution shall be ascertained by applying to the institution's deposit base"—
  that is, the total of its deposits as laid down in the Bill—
  "…the percentage determined by the Board …".
  That seems quite straightforward, but we immediately come to the exceptions. I should remind your Lordships that the initial contributions are required to amount in total to between £5 million and £6 million, with the provision for topping this up in further stages if so required later on.
  When We come to Clause 27 we find two qualifications to the percentage formula. The first one is to the effect that the maximum contribution from one institution shall be £300,000. This was inserted, I think, at the instance of the London clearing banks—that is, the Big Four, as we know them—who felt that with their undoubted standine and record it would be unreasonable for them to carry the full percentage amount of the fund. There is another exception at the bottom end. Originally this was a minimum fee of £5,000 per institution, regardless of how small—I think, partly on the grounds of an entry fee to the club, if one may call it that; perhaps, partly, as deterrent against frivolous applications; partly to cover administrative costs and so on.
  Even at that stage there was a feeling among the middle-size banks—that is, those that fell neither into the big category nor into the very small category—that they would be hard put upon under this formula. They would be carrying the percentage necessary to make up the balance in between. Those banks comprise, notably, the three Scottish banks, a number of others such as Williams and Glyn Mills, the Yorkshire Bank, the Ulster Bank, the Co-operative Bank and. I suspect, quite a number of the leading merchant banks as well.
  When the Bill was going through another place, some impassioned pleas were made on behalf of the smaller institutions. I recollect, in particular, my honourable friend the Member for a south of Scotland constituency who brought tears to the eyes of his audience with his tales of the hardship to the Lockerbie Savings Banks in having to contribute £5,000 to the fund. The Minister was so moved by those pleas that he agreed—I think, on the spot—to reduce the figure from £5,000 to

  1041
  £2,500. But you cannot tamper with one factor to an equation, without affecting the rest of it, and I am not sure that he considered how the remaining £2,500 was going to be made up and by whom. With a maximum contribution, it could he made up only from the middle-size institutions, subject to the percentage formula.
  It is difficult to be precise as to the figures, because not even the Bank of England can tell for certain until all the institutions have registered and been through the process. But it has since been elicited from them by the Scottish banks that the working of the formula could result in initial contributions by the percentage contributors in the neighbourhood of 0.02; that is, two one-hundredths of 1 per cent. of their deposit base. Applying that in the case of the Scottish banks, this would produce an average figure of about £200,000 each. Bearing in mind that the maximum for one of the Big Four is £300,000, and that the Scottish banks are on average about one-tenth of the size in deposits of an English bank, this seems highly inequitable.
  I challenge your Lordships to find customers of a Scottish bank who would admit to their record of management of property and experience being in any way inferior to that of their albeit larger English brethren. After all, they have survived for a considerable time the vicissitudes of banking, the fortunes of trade and so on, two of them for over 250 years. Nor, I imagine, would a Yorkshireman, an Ulsterman or a member of the Co-operative Society feel otherwise about the banks associated with their parts of the world or that movement. It seems to me that if we are to suffer under the demands of this protection fund, then we should suffer relatively equally. That is the reason for my Amendment, the effect of which would be simply to remove the upper limit and apply the percentage formula right upwards above the basic minimum entry fee.
  I appreciate that, on the face of it. this Amendment has not been very popular with our English colleagues of the Big Four. Nevertheless, I hope they will feel that we have a case of some kind here and may help us to seek redress. Since I put down this Amendment— indeed. it was only yesterday—I have heard that there
  1042
  may be moves afoot, behind the scenes between the banks, to try to devise a formula which is a little less inequitable, and perhaps to commend it to Her Majesty's Government before the Bill completes its passage. I should be very happy if this could come about. The last thing I should want is an unseemly brawl, between us of the Scottish banks and our very good friends of the English banks, probably with the Bank of England having to act in the unpleasant position of referee. If these talks are now afoot—as I know they are—and if the noble and learned Lord, Lord McCloskey, feels able to indicate that his cars would not be closed to further representations on the make-up of the deposit protection fund from those of us involved, then of course I should he most happy not to press my Amendment. I beg to move.
  4.47 p.m.
  Lord KINROSS: I am grateful to the noble Lord, Lord Polwarth, for putting down this Amendment and I give it my full support. While I do not have an interest to declare, in the generally accepted meaning of that word, I should perhaps mention that for a short period of years I was a director of the British Linen Bank, which was then a wholly owned subsidiary of Barclays Bank, who sold their interest to the Bank of Scotland. They, in turn, have kept the British Linen Bank alive and it is still. I am glad to say, very much a flourishing organisation. It was founded in 1746, some 50 years after the Bank of England and the Bank of Scotland, and your Lordships will note that the British Linen Bank was formed one year after the rebellion of 1745. Perhaps with a view to placating the victorious English, it was called the British Linen Bank instead of the Scottish Linen Bank, which would have been more natural.
  But to return to the Amendment, I welcome the concept of this Bill and, though I should have thought that the control and supervisory powers of the Bank of England would mean that bank failures in future were most unlikely. I accept that from the point of view of the public image of the Bill the establishment of the deposit protection scheme, which is set out in Part II. may be desirable but certainly not essential. Having said that, however, it seems to me that the method

  1043
  of calculation of contributions to the fund, as the noble Lord, Lord Polwarth, has said, in terms of Clauses 23 to 27 of the Bill, and particularly Clause 27(2), must inevitably lead to an inequitable and unfair division of contributions by contributory institutions.
  Clause 24(3) of the Bill states that where an institution has a deposit base, then, subject to the minimum contribution of £2,500, which is provided for in Clause 27(1), the amount of an initial contribution levied shall be such percentage of the deposit base as the board consider appropriate
  "to put the institution on a basis of equality with the other contributory institutions",
  having regard to the initial contributions which produce, in aggregate, a total of not less than £5 million nor more than £6 million.
  If the matter remained there, all the institutions would be assessed on a basis of equality with the other contributory institutions, subject only to the minimum contribution of £2,500, and I should be content. But that is not the position, because Clause 27(2), which this Amendment seeks to delete, provides that:
  "the initial contribution … levied from a contributory institution shall not exceed £300,000".
  I have no idea what will be the deposit base of the various institutions which will be contributing to the deposit protection scheme. However, it is quite apparent from the figures which my noble friend Lord Polwarth has quoted that, if the maximum contribution remains, the Scottish Banks—and no doubt others—will be contributing, on a percentage basis, sums which can in no way put them. to quote the Bill again:
  "on a basis of equality with the ether contributory institutions"
  and which are quite out of proportion to the size of the institutions which will contribute the maximum sum laid down by the Bill: namely, the English clearing banks.
  If this Amendment is carried and if, as a result, the maximum contribution is deleted from the Bill, then an equitable balance between the contributory institutions will be preserved. The same maximum of between £5 million and £6 million will be achieved by adjustment of the rate of interest, and the basic minimum sub-
  1044
  Scription of £2,500 for the smaller banks will be preserved. In this way, a true proportional contribution, according to the deposit rate of the various contributors, will be preserved and equity will he achieved.
  The Bank of England has a reputation for being fair-minded and I am sure that the same can be said of the English clearing banks, all of which will. I hope, collectively realise that if this maximum contribution remains in the Bill a grave injustice will be done to the Scottish banks and other institutions with a smaller deposit rate than the English clearers. The same reputation for fairness in such matters applies to the noble and learned Lord, Lord McCluskey, the Solicitor General, who will, I hope. think again on this matter before it comes back to the House on Report.
  4.53 p.m.
  Lord McCLUSKEY: The two noble Lords who have spoken made out a very reasonable case, but the problem is that one can make out just as reasonable a case both for the figure of £2,500 at the one end and for the figure of £300,000 at the other. As the noble Lord, Lord Polwarth, said, the case made at the Committee stage in another place on behalf of the Lockerbie Bank in the South of Scotland moved my right honourable friend Mr. Denzil Davies almost to tears, although he is a Welshman, and he accepted an Amendment. One has to acknowledge, as was pointed out during the course of earlier proceedings here, that the banks least likely to fail—because if failure happened it would have very little to do with the Deposit Protection Fund—are the biggest banks, including the London clearers.
  The effect of the Amendment would be that their contribution to the cash fund would rise from 22 per cent. of the cash fund, assuming a fund of £5½ million, to about 51 per cent. of the cash fund, and there would he a corresponding reduction in the contributions made by the middle institutions. However, the real point is that everyone who is concerned with this matter recognises that one cannot achieve perfect justice, given the many considerations other than pure parity in terms of the size of the deposit base. The Government believe that they have gone as far as they can reasonably go, but my

  1045
  ears, and those of the Government, are certainly not closed. If, as a result of the initiative which the noble Lord, Lord Polwarth, has taken in the matter and the discussions which he has spoken of, the scheme can be modified in a way which satisfies and meets with the agreement of the clearing banks and the Scottish banks, I am quite certain the Government would be very favourably disposed towards such an agreed scheme.
  Lord POLWARTH: I am very grateful to the noble and learned Lord for his reply. I appreciate the difficulties over securing absolute equity, which probably will never be achieved. I am glad that the noble and learned Lord has recognised my case and the case of the Scottish banks and other similar institutions. With his assurance, I shall be very happy to withdraw my Amendment at this stage.
  Lord McCLUSKEY: Before the noble Lord withdraws his Amendment, may I, with the leave of the Committee, point out that there is not much time, as he will no doubt recognise, and that the Government would like to consider whether there are other implications in the case of any proposal which comes forward. No doubt those who are considering the matter will bear this point in mind when considering the timing.
  Lord TAYLOR of GRYFE: I very much welcome the assurance which has been given by the noble and learned Lord, Lord McCluskey. It is obvious that there is some inequity in the distribution of the contributions to the fund. Although the noble Lord, Lord Polwarth, anticipated some opposition from our English friends, I hope this will not be so. In view of their substantial involvement in the Scottish banks, I hope they will see that there is a certain interest in reducing the contribution of the Scottish banks to the fund.
  Amendment, by leave, withdrawn.
  The DEPUTY CHAIRMAN of COMMITTEES (Lord Maybray-King): I think that takes care of the next Amendment, Amendment No.11, which is linked with Amendment No.10. Therefore I call Amendment No.12.
  4.58 p.m.
  Lord REDESDALE Lord REDESDALE moved Amendment No.12:
  Page 27, line 23, leave out from ("order") to end of line 27.
  The noble Lord said: We come back to a point which was given a fair amount of airing at Second Reading. It relates to the increase in the size of the fund. Again this is a matter of principle. Perhaps I may briefly go back over the ground. I tried to make the point at Second Reading—I shall not weary your Lordships with what I said then, because it is in Hansard—that the amounts of money which would be called upon as a result of the various levels of collapse would vary. If we reached the stage where the fund was called upon to go up to the maximum amount, I think I showed reasonably clearly—for I believe that the noble and learned Lord, Lord McCluskey accepted the point—that we should have reached such a state of national financial crisis that we would be well into the lifeboat stage, let alone into the operation of the fund. If this were to be the case, the pooling of the fund and increasing it would cause more harm than good because it would drain a certain amount of additional money away from the lifeboat— which would stop people losing money altogether—and allow banks to go into liquidation just when money would be called from the fund.
  I think it can be accepted that if the requirement reached the stage where we had to go up from a call of 0·3 per cent. to a call of 0·6 per cent. matters would be so very serious that it would take very much more than a Statutory Instrument order to increase the size of the fund. I summitted at Second Reading, and I submit again, that if we had reached that stage we should require much more action than a Statutory Instrument order. We should require primary legislation.
  This is a very simple, clear-cut case. The noble and learned Lord said earlier that we do not want to put unnecessary bits and pieces into the Bill. This paragraph is unnecessary; it will not do us any good to leave it in the Bill if we reach the stage where we have to double up on the call. What will then be necessary will be some very strong primary legislation. On that basis, I beg to move.
  Lord JACQUES: This Amendment relates to the net cumulative limit on contributions. This is initially set at 0·3 per cent. and the subsection gives the Treasury power to increase the net limit to 0·6 per cent. of an institution's deposit base. We have already accepted the Bank's representations that there should be a limit on the overall liability to contribute, and have also accepted that there should be a limit to the extent that this liability can be increased by secondary legislation. The exercise of the Treasury's power is subject to safeguards—I would say, excellent safeguards. First, the Treasury must consult the board, on which contributory institutions will he represented. Secondly, the power is subject to the Affirmative Resolution procedure so that it must have the approval of both Houses of Parliament. where again contributory institutions will be able to make their views known. They are quite capable of doing that.
  On present calculations, 0·3 per cent. would produce about …140 million. This is equivalent to the maximum payout on less than 20,000 protected deposits. The board will be under a duty to pay out to depositors as soon as possible, before the liquidator will have been able to pay dividends from any of the assets of the institution; so that the board will need to have at its disposal in the early stages amounts well in excess of the eventual net payout. It is a question of cash flow. Dividends which are paid to the board later must, under Clause 32(2), he repaid to the contributory institutions.
  Of course, we hope that circumstances will not arise in which the 0·3 per cent. limit would be reached even in the case I have outlined above; and still more do we hope that the limit would not need to be increased. But we believe that it would be wrong to ignore this possibility and that the procedure we have proposed gives proper safeguards. I see no reason therefore to remove the right in secondary legislation to increase the limit beyond 0·3 per cent. or to go to less than 0·6 per cent.
  I can see a difference in the position taken up by the noble Lord, Lord Redesdale, and the position which I am taking up, and I find it difficult to explain: but it seems to me to he something like this: there is the small case where the 0·6 per
  1048
  cent. would cover it, but I think the noble Lord went to the other extreme and almost took it for granted that one of the clearers had fallen down, which we dare not contemplate. I think he went too far. I am concerned with those which are just a little above the small ones and I think they should be covered by secondary legislation. but once again I wish to stress the importance of cash flow. It is for the reasons of cash flow that the secondary legislation may be needed in order to increase the amount which is required to meet the losses that have been incurred.
  Lord REDESDALE: There arc two points that I wish to take up with the noble Lord. He raised the question of cash flow, but l do not really accept that point because we were covering the 20,000 and I think at Second Reading we showed that one clearer has, I believe, 20,000 accounts over £10,000. I accept that one a little smaller—perhaps one of the Scottish banks that we were talking about—would have slightly less; but at Second Reading I asked to he given some idea as to what size of institution was envisaged as having to go down. Was it in fact a whole series of the smaller banks all going down simultaneously? If it was, then it would be a major financial crisis such as I have already spoken about and everybody would be affected.
  The other point is this. The noble Lord has said: "Right, we have the chance of an Affirmative Resolution going through Parliament". But that only allows that amount to be either agreed or rejected; it cannot be varied. It is either right or it is wrong, and that is one of the weaknesses. That is why I am saying that if we were in that stage we would need primary legislation, because it needs much more than what has been stated already.
  I do not accept the cash flow situation unless the noble Lord can give us a slightly better idea of what would be required. At Second Reading I rehearsed at some length the situation that so far no depositor had lost money in a British bank. I say it again. So it comes back to the point of whether the fund is really necessary. I do not think it is necessary, but if we are going to have it let us at least keep it sensible and reasonable. All right, we are going to have a fund, so that if

  1049
  something happens action can be taken quickly and there is enough money to cover the situation. I do not accept the noble Lord's argument on cash flow; I do not think it holds water and I wish to press this Amendment.
  Resolved in the affirmative and Amendment agreed to accordingly.
  5.8 p.m.
  On Question, Whether the said Amendment (No.12) shall be agreed to?
  Their Lordships divided: Contents, 100; Not-Contents, 51.

  CONTENTS

  Airedale, L.

  Ebbisham, L.

  Nugent of Guildford, L.

  Alexander of Tunis, E.

  Eccles, V.

  O'Brien of Lothbury, L.

  Allan of Kilmahew, L.

  Effingham, E.

  Orr-Ewing, L.

  Alport, L.

  Elles, B.

  Pender, L.

  Amherst, E.

  Elliot of Harwood, B.

  Polwarth, L.

  Amory, V.

  Emmet of Amberley, B.

  Rankeillour, L.

  Auckland, L.

  Exeter, M.

  Rawlingson of Ewell, L.

  Avon, E.

  Ferrier, L.

  Redesdale, L.

  Balerno, L.

  Glasgow, E.

  Reigate, L.

  Banks, L.

  Glenkinglas, L.

  Robertson of Oakridge, L.

  Barrington, V.

  Gowrie, E.

  Rochdale, V.

  Belstead, L.

  Gridley, L.

  Rochester, L.

  Berkeley, B.

  Hankey, L.

  Romney, E.

  Birdwood, L.

  Harvey of Tasburgh, L.

  St. Aldwyn, E.

  Boothby, L.

  Henley, L.

  St. Davids, V.

  Burntwood, L.

  Hornsby-Smith, B.

  Sandford, L.

  Camoys, L.

  Inglewood, L.

  Seebohm, L.

  Campbell of Croy, L.

  Killearn, L.

  Selsdon, L.

  Carr of Hadley, L.

  Kinnaird, L.

  Skelmersdale, L.

  Carrington, L.

  Kinross, L.

  Somers, L.

  Cathcart, L.

  Lauderdale, E.

  Spens, L.

  Chitnis, L.

  Linlithgow, M.

  Strathclyde, L.

  Clifford of Chudleigh, L.

  Lucas of Chilworth, L.

  Sudeley, L.

  Cockfield, L.

  Lyell, L.

  Swansea, L.

  Cork and Orrery, E.

  Macleod of Borve, B.

  Tanlaw, L.

  Cornwallis, L.

  Mais, L.

  Terrington, L.

  Cottesloe, L.

  Mancroft, L.

  Teynham, L.

  Daventry, V.

  Merrivale, L.

  Trefgarne, L.

  Davidson, V.

  Mills, V.

  Ward of North Tyneside, B.

  De Freyne, L.

  Mowbray and Stourton, L.

  Westbury, L.

  Denham, L. [Teller.]

  [Teller.]

  Willoughby de Broke, L.

  Denman, L.

  Norfolk, D.

  Winstanley, L.

  Donegall, M.

  Norrie, L.

  Young, B.

  Drumalbyn, L.

  Northchurch, B.

  NOT-CONTENTS

  Ampthill, L.

  Henderson, L.

  Raglan, L.

  Aylestone, L.

  Jacques, L.

  Rhodes, L.

  Blease, L.

  Janner, L.

  Ritchie-Calder, L.

  Blyton, L.

  Leatherland, L.

  Sainsbury, L.

  Boston of Faversham, L.

  Lee of Newton, L.

  Segal, L.

  Brockway, L.

  Leonard, L. [Teller.]

  Stewart of Alvechurch, B.

  Collison, L.

  Listowel, E.

  Stone, L.

  Cooper of Stockton Heath, L.

  Llewelyn-Davies of Hastoe, B.

  Strabolgi, L. [Teller.]

  David, B.

  Lloyd of Hampstead, L.

  Taylor of Mansfield, L.

  Davies of Leek, L.

  Longford, E.

  Wallace of Coslany, L.

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

  McCluskey, L.

  Walston, L.

  Gardiner, L.

  MacLeod of Fuinary, L.

  Wedderburn of Charlton, L.

  Gordon-Walker, L.

  Mishcon, L.

  Whaddon, L.

  Greene of Harrow Weald, L.

  Oram, L.

  White, B.

  Hale, L.

  Peart, L. (L. Privy Seal.)

  Wilson of Radcliffe, L.

  Hanworth, V.

  Plant, L.

  Wynne-Jones, L.

  Hatch of Lusby, L.

  Ponsonby of Shulbrede, L.

  Young of Dartington, L.

  Clause 27, as amended, agreed to.
  Clauses 28 to 30 agreed to.
  Clause 31 [Liability of insolvent institutions in respect of payments made by the Board]:
  5.16 p.m.
  Lord ORAMmoved Amendment No.13:
  Page 34, line 13, at end insert—
  ("(8) The provisions of the foregoing section and of sub-section (6) of section 28 hereof shall apply to any scheme which affords protection to transactions prescribed for the purposes of section 2(1) above by regulations made by the Treasury but so that on each occasion where "the Board" is referred to reference shall instead be made to the managers of the scheme or schemes in question.").
  The noble Lord said: I beg to move the Amendment to Clause 31 standing in my name. The need for this Amendment arises in connection with the preparation of a scheme for the protection of loan deposits in retail co-operative societies. Therefore, I think I should declare a modest personal interest since I have a small loan deposit in a retail co-operative society. I hasten to add, however, that the sombre words such as "insolvency", "liquidator", and so forth, that one reads in Clause 31 do not strike any terror in my heart concerning the safety of that modest deposit, because the cooperative movement and its constituent societies have throughout their long history an impeccable record of securing the interest of' members in these matters.
  In the White Paper (Cmnd. 6584) which preceded the Bill there appeared at paragraph 17 an indication that the Government would consult with institutions which might not fit easily into the proposed legislation. It cited credit unions, certain retail co-operatives, municipal or local banks and the Scottish uncertified savings banks. The Co-operative Union Limited entered into such consultations on behalf of its member societies and I must say that the talks went well; I acknowledge the helpfulness of the Treasury officials during the preparation of the scheme. It was to be a scheme under which co-operative societies would not need to be licensed as deposit-taking institutions.
  However, when the Bill appeared and it was possible to examine the scheme for joint stock banks which is to be set up under Part II of the Bill, it was seen to contain this Clause 31 which makes a
  1052
  provision for a relationship automatically to be set up between the failed institution and the protection fund, and it does away with the liability of the failed institution to the original depositor. The Co-operative Union then suggested that, if such an assignment of liability was necessarily included in the Bill so far as the joint stock banks are concerned, it would equally be necessary to make a similar provision in the Bill so far as co-operative societies were concerned—and, moreover, not just co-operative societies. It would, in the view of the Co-operative Union, be necessary to make such a provision for any other scheme by other deposit-taking institutions such as are mentioned in the White Paper.
  It is as regards that matter that the discussions failed to reach agreement and it is for that reason that I submit my Amendment today. I hope it will give my noble and learned friend an opportunity—if for any reason he finds my Amendment unacceptable—to give more attention than seems to have been paid so far to the need for statutory assignment in respect of co-operative societies.
  It is true that, during the course of the discussions, Treasury officials suggested an alternative method of achieving the objective we have in mind—namely, that the fund proposed to be set up by the Co-operative Union would obtain an undertaking from the creditors of the failed society to repay to the fund any dividends received from the liquidator up to the amount of the insolvency payment made by the fund. Although one appreciated the advice that was given, I feel bound to tell my noble and learned friend that I cannot find that to be a satisfactory solution. Indeed, I am advised that, as the law now stands, the fund will not be protected in respect of its recovery from the insolvent society until it has taken legal proceedings and secured the court's authority. Clearly that would be a lengthy, cumbersome and expensive procedure.
  Therefore, in moving the Amendment, I feel bound to ask my noble and learned friend who is to reply, why should the Bill enable joint stock banks to avoid such difficulties, but not co-operative societies? If the alternative method that has been suggested is good enough for co-operative

  1053
  societies and similar bodies, why is it not good enough for the banks—or, to put it the other way round, if Clause 31 of the Bill is necessary for the banks, why is not something similar necessary for cooperative societies? I hope that my noble and learned friend will address himself to those questions.
  I understand that counsels' opinions have been obtained about the need for this Amendment, or something like it, in respect of the law in England and Wales, Scotland and Northern Ireland separately. Those opinions are unanimous in support of the necessity for the Amendment. I also understand that copies of those opinions have been furnished to the Treasury. Therefore, I hope that my noble and learned friend has taken those submissions fully into account in reaching his conclusions. I hope that his conclusions on the basis of those submissions will be favourable to what I am proposing. But, if not, I hope he will take the opportunity to examine the submissions before the Bill reaches a further stage of consideration in your Lordships' House. I shall listen with considerable interest to what he has to say at this stage and shall see what action is necessary in consequence of his remarks. I beg to move.
  Lord McCLUSKEY: I understand, and of course those members of the Committee who have listened to the remarks of my noble friend Lord Oram also understand, the object of the Amendment. However, in the course of his remarks my noble friend spoke of the need for the Amendment and I am certainly less convinced about that. The result which is desired in relation to what is achieved under the Bill by Clause 31, is one which we believe can be achieved without statutory provision. Under existing bankruptcy law it is possible for a creditor of an insolvent institution to assign his rights to someone else. Therefore, the provisions of any scheme which is set up for the protection of depositors could provide that any payments to depositors made under the scheme would be made only if the depositors assigned to the scheme their rights to dividends. Such a contract could of course provide that, if the scheme recovered from the insolvent institution more than it had paid out, it would pay the balance over to the original creditor. As a result, one can achieve
  1054
  under the scheme assignments or assignations and, in terms of the scheme, one can achieve the result that is desired.
  Therefore, apart from saying that it is not necessary to do what the Amendment proposes, there are other objections to what is now put forward. The relevant clauses in the Banking Bill already represent quite a considerable change in the normal procedures of winding up and bankruptcy. That, I would submit, is acceptable in a statutory scheme where all the details are set out in the legislation itself. But we should not regard it as acceptable in a non-statutory scheme. At present, of course, the only candidate in view is the scheme of the co-operatives, but it cannot be ruled out that some other scheme might be devised and the Amendment is wide enough to cover any other scheme. If such a scheme were one to cover deposit-taking transactions exempted under Clause 2, it would automatically be able to take advantage of this clause as amended as proposed by my noble friend. It would not even be necessary for the Treasury to approve the form of the scheme; and, under the Amendment as drafted, the scheme might have virtually nothing in common with the deposit protection scheme set up under the Bill.
  However, having listened carefully to what my noble friend has said, I must confess that I have not myself seen the counsels' opinions to which he referred, and I shall certainly accept his invitation to look at what is put forward to see whether those views share the view that I have urged upon the Committee that it is not necessary to do what is proposed. If, having considered counsels' opinion, and taken the advice of Treasury officials, I form a different view, then of course we shall reconsider the matter.
  Lord ORAM: I am, of course, grateful to my noble and learned friends for the undertaking that he will look at the documents to which I referred. However, before seeking leave to withdraw the Amendment I should like to ask him also to look into the point that I mentioned in my opening remarks—that is, that the satisfaction he said could be achieved under existing law can only be achieved if the fund has taken the matter to the courts. That may not be included in the counsels' opinions, to which I referred, but I hope that he will consider that point as well.

  1055
  As regards the point that any amendment to the Bill would need to take into account not only the Co-operative Union's scheme but any other schemes, of course I entirely agree. I understand that there might be difficulties in that respect. But, I have considerable faith both in the capacity of my noble and learned friend for getting round awkward corners of the law and in the capacity of those who advise him in the Treasury. I believe that, although one needs to recognise that other schemes need to be taken into account, that should not be entirely an obstacle to reaching the proper conclusion. Therefore, as I have said, I shall look forward to hearing from my noble and learned friend about his re-examination of the situation. In the meantime I beg leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Clause 31 agreed to.
  Clauses 32 and 33 agreed to.
  Clause 34 [Control of advertisements for deposits]:
  5.30 p.m.
  Lord REDESDALEmoved Amendment No.14:
  Page 36, line 33, at end insert—
  ("( ) Regulations under this section shall not prohibit the use of the words "licensed for limited banking services" in any advertisement inviting the making of deposits.").
  The noble Lord said: I beg to move the Amendment standing in the name of my noble friend Lord Selsdon. I raised this point on Second Reading. The Amendment covers a number of institutions, including a number of finance houses. The present situation will prevent them using the word "bank" or even the words "banking business". The situation has become very restrictive due to the Bill. I hope that the Minister will not take me amiss on this, but I believe there is a slight misconception underlying how this was worded. We cannot now have such a thing as a bank; we can have only a recognised bank. It is a pity that we cannot just have a bank and that if you are not a bank, you are not a bank; but if you are not a recognised bank, you are not now a bank, which is a rather different situation.
  However, there are different degrees of banking. An argument was advanced for several tiers within any legislation of this kind. I appreciate that the idea was to prevent a secondary banking crisis again. All right, but the situation is now slightly different because under Part I of the Bill we now have a fully operative regulatory system run by the Bank of England. So we have recognised banks and licensed institutions, which are licensed to take deposits. However, I believe that those institutions are granted what is called a full banking licence, but are not allowed to call themselves banks. But in any law case they are allowed to describe themselves as banks. That gives them a certain degree of protection, but by law they are prevented from calling themselves banks.
  Let us try to reach a reasonable compromise. Hence the point of this Amendment. I submit that those licensed institutions which provide fairly full banking services but which do not meet all the criteria laid down in the Bill in order to fulfil the title, "bank", ought to be allowed to continue to trade as they have done; that is, to provide banking services. They are prohibited from using the words "banking business"; they are not allowed to call themselves bankers; but they still issue cheque hooks and, should they prosper, are still allowed to grow to the stage where they can become a fully recognised bank—or they should be allowed to. However, as the Bill stands, that will he virtually impossible.
  Although we accept that we do not want to allow everybody to call themselves a bank, I have put forward a form of words which I believe is reasonable and which allows them to say that they are "licensed for limited banking services", although they cannot call themselves bankers. It is a form of words which limits the description. I believe that that meets the Government's requirement and it is also correct because they provide limited banking services. I do not ask to use the words "banking business". I have never quite understood why that phrase is so much worse than the phrase "banking services", but I am sure the Minister will be able to tell me.
  Consequently, I hope that some consideration can be given to this point. I am afraid that again due to being frozen in up North, I did not check but there is

  1057
  another point I wish to raise later, which perhaps I could just mention now. In advertising, if these institutions are allowed to publish a leaflet, they certainly would not he allowed to display it. I think that there arc one or two areas here to which consideration should be given. It may be that I do not have this quite right; perhaps we can return to it at a later stage. However, I am trying to meet the Government's stricture that we cannot say "banking business". At the same time I am trying to give these institutions a little more freedom, which is only reasonable. I look forward to hearing what the Minister will say in reply.
  Lord JACQUES: In introducing, in response to representations, the concession relating to the use of the words "banking services"—now Clause 36(4)—the Government made plain that they had in mind certain specific contexts where a total embargo on the use of banking descriptions might create genuine difficulties for licensed institutions. These might occur, for instance, in international contexts, such as the finance of foreign trade, in private correspondence with potential or existing customers and with business connections such as correspondent banks. All these contexts are covered by Clause 36(4).
  But the concession was certainly not designed to satisfy institutions which claimed that they rely heavily for their flow of deposits from the public on their use of banking descriptions. The use of the phrase "banking services", even where qualified as proposed in the Amendment, could mislead the public into depositing money with the institution in the belief that it is a bank. Consequently, the Government have made plain that they intend to use the regulation-making power under this clause to ban use of the phrase "banking services" in advertisements for deposits.
  Lord SELSDON: We are all grateful for the concession which the Government made in another place, but I must admit that I am still confused. My confusion is based upon the belief that I thought that the Bill was about protecting depositors; that is, about people who have money or savings which they wish to deposit.
  As I said on Second Reading, we forget that only 50 per cent. of adults have
  1058
  accounts with clearing banks; that is, roughly 35 per cent. in the way of households. What do the remaining people do with their money'? They save it; they invest it in building societies and in other bodies. However, over a period of time many of them have been led to believe that those other bodies into which they place their money are banks or provide banking services. I shall not say that there is something mystical about the word "bank", but to use the word "bank" gives a feeling of confidence.
  I am worried about saying to many people who have deposited their money or who may have cheque books with some of the members of the Finance Houses' Association and who actually treat them as banks—and they provide them with banking services—"Sorry, the body you use is no longer a bank. It is a licensed deposit institution". I have raised this with a few people already and many people do not know what I am talking about. They say "It can't have been a bank yesterday and not a bank tomorrow. Surely it must continue to provide the same services as banking services. Surely if it is allowed, to some extent, to refer to itself as providing banking services, why can't it at least advertise or announce them? "One is worried about the fact that these organisations and institutions may lose business, either now or in the future.
  I declared my own interest on Second Reading, in that the group I work with has interests, investments and owns subsidiary companies in all spheres of banking. Thus, what one side might lose, one might argue, the other side might gain. If members of the Finance Houses' Association or those who would become licensed deposit institutions cannot actually attract depositors by using or making some reference to the words, "banking services", there could be an increasing tendency for polarisation to take place among the clearing banks themselves. There was a case with UDT—on which the noble and learned Lord, Lord Denning, ruled—about what people think a bank is. One cannot define a bank it is almost people's image of it. I would not say that is retroactive legislation, but I cannot help feeling that there is a case here. The noble Lord, Lord Jacques, has pointed out that the Government have made

  1059
  some concessions. I think we would still like to ask for a little more of a concession here.
  Lord JACQUES: The Government are determined that, so far as they are concerned, they will not accept any Amendment which would allow a deposit taking institution to use the term "banking services". In our view that could mislead the potential depositor. One of the purposes of this Bill is to prevent that kind of—not misrepresentation but the kind of advertisement which deceives the public.
  Lord SELSDON: The noble Lord has not taken my point. I was more worried about misleading existing depositors.
  The Earl of GOWRIE: I should like to ask the noble Lord, Lord Jacques, one question. He talks about the potential depositor. He owes it to my noble friend Lord Selsdon to answer his point about misleading existing depositors. What is this class of potentially vulnerable depositor that the noble Lord has in mind? As my noble friend Lord Redesdale said, we cannot document a single case where a depositor has lost money in an English bank.
  I know that the wider intentions of the Bill are not in dispute between us, and I do not want to get on to the wider philosophy of the Bill, but it is damaging to the economy, to the banking industry, if in Parliament we somehow make suggestions that there is a class of potential depositor in some way at risk unless severe legislative provisions are enacted. We must try and use every occasion we can to disabuse people, both here and abroad, that this is our purpose with this Bill.
  Lord JACQUES: I change the words. Instead of "potential depositor" I say "the public". One purpose of this Bill is that the public shall not be misled. We think that they could be misled by the use of "banking services" when such an institution is seeking deposits, and it is that kind of situation that we want to avoid.
  Lord REDESDALE: The noble Lord says that they would be misled. I think
  1060
  he ought to make a case. He has not made one yet. Misled in what way—misled because they provide limited banking services, or because they take deposits? They are entitled to take deposits, whatever the noble Lord may try to say. They are entitled to take deposits if they are a licensed deposit-taking institution. That is the first point. The second is that they have a cheque book, and presumably this does not stop them from having a cheque book. If they have a cheque book, and they are allowed to take deposits, and the licence is limited to certain services, then, all right, at a later stage we can put in a provision such as might be found in the Trade Descriptions Act. It can be laid down that information may be given only in a certain way. We can write in all those provisions later, but the noble Lord ought to give a little on this. After all, in some respects they are allowed to refer to it as a banking service under the Bill, but not in terms of an advertisement. All I say here is that where they provide this service they ought to be allowed to be described as providing a limited licensed service. This is perfectly reasonable. Unless the noble Lord can give me at least an indication that he will consider it, then I shall have to press it. I hope that he will look at this a little more reasonably.
  Lord O'BRIEN of LOTHBURY: Before the Minister replies, may I say a word or two on this particular subject. The noble Lord, Lord Redesdale, has said—and said it several times—that no depositor in the British banking system has lost his money. This is indeed true. However, many depositors in the fringe institutions have had their money, but at the cost of an enormous rescue exercise in the banking system proper. Part of the purpose of this legislation, as I understand it, is to ensure that such a situation does not recur. It occurred in the first instance because, as I said in the debate on the Second Reading, the main banking system over many years was so restricted that fringe institutions grew up around it which did the business which the banks were prevented from doing. Many of those institutions purported to be banks and took deposits while at the same time doing business which was far removed from banking proper. The purpose of this legislation now is to distinguish between such institutions and proper banks. The

  1061
  Government have my full support in maintaining that distinction. I hope they will do so.
  Lord SELSDON: I have certain sympathy with that comment from the noble Lord, Lord O'Brien. The reason for putting down this Amendment was, and I say it again, that half the population do not use recognised banks, or will not use them. I am merely concerned that they should not feel that their current savings, or deposits, or relationships are in any way inferior to what they were before the Bill. I would ask the noble Lord, Lord Jacques, to take account of this as we move on, and I would propose not to move further Amendments that I have under this heading. I would propose that, if my noble friend Lord Redesdale agrees, we should withdraw this Amendment.
  Lord REDESDALE: I am still not happy with this because I think that it perpetuates a number of unfairnesses which this Bill creates, especially in the name section. You cannot be fair to everybody. At this stage I am prepared to withdraw the Amendment although I may reinstate it at another time. I beg leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Clauses 34 agreed to.
  Clause 35 agreed to.
  Clause 36 [Restriction on use of certain names and descriptions]:
  5.48 p.m.
  Lord REDESDALE Lord REDESDALE moved Amendment No.15:
  Page 38, line 1, at end insert ("or its wholly owned non-trading subsidiary.").
  The noble Lord said: I raised this Amendment at Second Reading. It covers two of the clearers. It is a situation in which Lloyds and Barclays are prevented from using the titles they wish to use for their management companies. It means that a limitation will have to be put on the companies doing the operation, or the supervision of the United Kingdom banking arm. It would seem to me to be reasonable that those management com-
  1062
  panics should be allowed to call themselves the banking name without the prefix "management or management services" having to be tacked on at the end. This is because the structure they operate with allowed Lloyds or Barclays to use the full footings when describing themselves as a bank in international trading.
  The noble and learned Lord, Lord McCluskey, at the Second Reading took the point and said that it was something that could be considered in slightly greater depth at this stage of the Bill. These companies have management companies, and I do not see why they have to have this long cumbersome title which confuses employees and institutions. I do not see why these wholly owned subsidiaries have to have this management section tacked on. I should like to see this Amendment freeing them from that and allowing them a cleaner management structure. I beg to move.
  Lord McCLUSKEY: The philosophy here is that we should call a spade a spade—and if a thing is not a bank it should not be called a bank. The Bill already allows for a wholly owned subsidiary of a recognised bank to use the name of its parent bank in its own title in two sets of circumstances, and they are to be found specified in Clause 36(7). Where the subsidiary is itself a deposit taker, then Clause 36(7)(a) specifically provides for the use of the parent's name. Where the subsidiary is not a deposit taker—and that is the kind of case the noble Lord has in mind—then so long as its title makes plain the nature of its activities, it would not come within the scope of the prohibition in Clause 36(1)—for instance, XYZ Bank Computer Services or XYZ Bank Management Limited.
  I should have thought that the noble Lord, who is entirely reasonable in these matters, would recognise that a management company should call itself a management company; and if the Bill accords it the privilege of calling itself the XYZ Bank Management Company, so much the better. He should be grateful for that rather than carp at the Government for requiring it to call its management company a management company. Thus, the Government can see no case at all for allowing a total exemption from the prohibition in Clause 36(1) to a company which does not carry on a banking business.
  Lord REDESDALE: Really!
  Lord McCLUSKEY: I see that point causes the noble Lord some pain, but perhaps he will explain to us how he can justify institutions which are not banks being called banks when other institutions which he is prepared to accept under the terms of the Bill provide some banking services are not to be allowed to call themselves banks. It may he a little like a game of ping-pong, but at the moment the ball is on his side of the net.
  Lord REDESDALE: Perhaps I might ping back at the noble and learned Lord on this point. The management company would be responsible for the United Kingdom operation and, should anything happen to the United Kingdom operation, it would be responsible. Thus, although they are not actually taking deposits, they are managing the bank and I should have thought that that was banking.
  Lord McCLUSKEY: I wonder? All I can say is that I would not. In essence, it has been argued—and it certainly carries conviction—that banking is the provision of banking services. If one is providing management services then one is providing management services. I cannot rehearse these arguments in greater detail. I have done my best and, if I have not satisfied the noble Lord, then I am afraid I never can.
  Lord REDESDALE: I am grateful to the noble and learned Lord for dealing with this matter gain. I am not entirely happy with the situation, but I beg leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  5.53 p.m.
  Lord SELSDON Lord SELSDON moved Amendment No.16:
  Page 38, line 1, at end insert—
  ("( ) A wholly owned subsidiary (within the meaning of section 150(4) of the Companies Act 1948) or any subsidiary of that subsidiary of a recognised bank.")
  The noble Lord said: With the Committee's permission, I will speak at the same time to Amendment No.25 and I begin by warning the noble and learned Lord, Lord McCluskey, that if I do not receive some satisfactory replies to the
  1064
  points I shall make I will press Amendment No.25, without necessarily having obtained support from all sides of the Committee, because I believe I may have discovered a principle of unfairness that I believe it would be right to pursue.
  Lord McCLUSKEY: Before the noble Lord proceeds, perhaps I should tell him that it was our intention that my noble friend Lord Jacques would reply to Amendment No.16 and I would reply to Amendment No.25. While that need not inhibit the noble Lord, he might bear that in mind as he addresses himself to the two Amendments.
  Lord SELSDON: It has been said that a brace of partridges is often heavier than a single pheasant. Amendment No.16 would have made it unnecessary for my noble friend Lord Redesdale to have moved the previous Amendment. I do not necessarily believe this Amendment will be accepted by the Government in that it is quite far-reaching, but it is tabled because there is some concern that the Bill, although principally intended to protect depositors, may limit the expansion, both domestically and internationally, of the bigger British banking groups.
  We are back again on the question: When is a bank not a bank and what is the point of being a bank? The argument goes that, if something is owned by a bank, surely it carries with it the credibility of its owners and its owners would stand fair and square behind it on any major default or major issue. I have tabled the Amendment because of one issue which I wish to raise, and I should declare an interest in that I am about to speak of Thomas Cook, which is currently owned by the group for which I work.
  Where we have a strange anomaly is that Thomas Cook is an international bank; it may not be regarded as a bank in the United Kingdom but it has been a bank for over 100 years and has a banking licence in France and the United States. The Government of the day sold Thomas Cook to the private sector as a travel agency and as a bank, but this legislation would withdraw the banking licence; almost certainly it would remove from Thomas Cook the right to have a banking licence in the United States and France, and I will come to the consequences of that shortly.

  1065
  In its sale, the Government also required that the new owners, who initially were a consortium, should look after the interests of the employees. It is therefore inevitable that, in seeking to oppose legislation that would remove effectively the banking licence from Thomas Cook in the United States and France, one would be pursuing the interests of the employees. Thomas Cook is a strange animal. Its banking licence in the United States is, I am advised, particularly important to it because, without it, it may put in jeopardy to some extent or another approximately 1,000 million dollars of foreign currency business through its travellers cheques. It is fighting as a British-based institution to compete with the larger American groups, many of which would willingly like to take over its business.
  It was a bank, but of course it is not a deposit taking institution. Therefore, under the Bill it will no longer be a bank, and the Treasury and the Bank of England have both made that clear. They have virtually said, "Although the French say you are a bank in France, and you are a bank in the United States, we, the United Kingdom, say you are not a bank, and therefore you will almost certainly cease to be a bank in France and the United States." Once upon a time Thomas Cook was a deposit taking institution. This goes back to the time before the war, and then, after 1939, Thomas Cook's business was appropriated by the Custodian of Enemy Property and shortly after that it ceased to be a deposit taking institution.
  The principle I am advancing is whether it is fair that domestic legislation of this sort should so limit the potential for growth of one of the major companies of its kind in the world which is a bank and which, without banking status in the United States, would lose many advantages, and those points have already been made to the Treasury. The same thing would apply in France, and not wishing in any way to say anything against our French cousins, they have a tendency to exploit every possible loophole which may be to the advantage of their own banking system
  Amendment No.25 would take into account almost only Thomas Cook, and one is really looking at what has been
  1066
  described in the United States at the principle of what people call "grand-fathering" in the United States it is a well-established principle in banking legislation to protect established rights against retroactive legislation. It could be of benefit if we could adopt that in the United Kingdom, but I have been exploring as a total amateur whether Thomas Cook is the only institution that would be so treated under the Bill and whether there is not some case of what one might call "hereditary hybridity".
  Suffice to say that if the legislation goes through without either Amendment No.16 or No.25, Thomas Cook will certainly lose its banking licence in both the United States and France. It might be argued that the firm could make up for this in some way in the States, but I am advised that this would not be the case and and that we would be handing over to our American and French competitors a considerable advantage for the future.
  I have declared my interest in this matter; I am in no way a professional in this respect. I am not quite sure where we go from here. I should like to press Amendment No.25, but I should probably propose withdrawing Amendment No.16, depending on the Government's attitude regarding other institutions and organisations, such as foreign banks and others—and in this case I am widening the whole scope to entitle subsidiaries of subsidiaries of recognised banks to be treated almost in the same way as if they were themselves recognised banks. I should be most grateful to hear from the noble Lord, Lord Jacques. I beg to move.
  6.1 p.m.
  Lord JACQUES: The Bill already permits companies to use a banking name where it is believed that this would be justified and would in no way be misleading. First, the Bill does not prevent an institution which does not take deposits from using a banking name, so long as it is clear from the title that it is not purporting to be a bank; an example would be, "South Bank Laundry". This equally applies to a non-deposit-taking subsidiary of a recognised bank which wishes to indicate the group connection; for example, "XYZ Bank Computer Services". Secondly, the Bill specifically allows a licensed institution which is a

  1067
  wholly owned subsidiary of a recognised bank to use the parent bank's name in its title for the purpose of indicating the group connection.
  The Amendment before the Committee would allow the free use both of banking names and of banking descriptions to virtually any company within a group, regardless of the nature of the company's activities; nor would the company have to use its parent bank's name—it could use any it chose. Thus, under the Amendment its name would not need to indicate either the true nature of the company's activities or the group connection. It would be unreasonable to allow this use of banking names and descriptions to companies within a recognised bank group which might not even take deposits, and restrict severely their use by licensed deposit taking institutions. The latter would have justified grounds for complaint. As it is, during the Second Reading in the Commons the chief Opposition spokesman accused Part III of the Bill of being a charter for the existing banking establishment. The Amendment would make it even more so.
  It remains the Government's view that banking names and descriptions should essentially be confined to recognised banks in order to clear up once and for all the past confusion. The only exception which the Government regard as justified, so far as companies associated with recognised banks are concerned, is where this is necessary to indicate the group connection. Clause 36(7) already provides for this in the case of wholly owned subsidiaries and holding companies, and we see no reason for any further extension.
  Lord SELSDON: The noble Lord, Lord Jacques, has very helpfully described to me the effects of Amendment No.16, which are even more far reaching than I had at first anticipated, and it would not be my intention that they should be so far reaching. I wish to ask a very simple question. If the Bill goes through without the Amendments proposed, will Thomas Cook Bankers be able to go on being Thomas Cook Bankers or will it not? I am advised that if it is not allowed to continue to be so named, all the unfortunate consequences that I mentioned earlier will occur.
  Lord McCLUSKEY: I should like to reply on that point in view of the fact that we were expecting that the position of Thomas Cook would be raised in relation to Amendment No.25, because of the more tightly drawn character of that Amendment. As we understand the position, Thomas Cook Bankers Ltd. is a wholly owned subsidiary of a wholly owned subsidiary of the Midland Bank, with an agency in New York, and is primarily involved in the issue of travellers cheques and bulk trading in notes and coins. As the noble Lord has said, the firm is not a deposit taker either here or in New York, and so under the Bill it would be required to drop the word "Bankers" from its title and to cease using any banking descriptions.
  Having said that, I should point out that there is nothing specific in the Bill which would require the firm to change its name in New York; that situation would depend upon the effect of the law in that city. I understand that it is claimed by the company that the loss of the word "Bankers" from its title would affect its international operations by reducing its prestige in the minds of its trading partners overseas, but we should have thought this rather unlikely since the name "Thomas Cook" has a worldwide reputation in its own right, as does the quality of its services. It does not seem that the word "Bankers" is material in
  this respect. However, in relation to New York, surely it is likely that the immediately relevant factor here would be not so much the deletion of the word, "Bankers" from the title, but that Thomas Cook would have no deposit taking status under the Bill. In any event its business in the United States could be conducted— and this is an important point—on the basis of a money transmissions licence, as is the business of American Express.
  The noble Lord is perhaps wrong in what he said relating to France—that Thomas Cook Bankers (France) Ltd. is another member of the Cook family which takes no deposits in the United Kingdom. It has a deposit taking branch in Paris, and it is not to be expected that the French banking licence will be affected in any way by the change of name. The noble Lord did not develop the hybridity aspect, but I shall certainly consider what he said in that regard to see whether there is any point of hybridity which seems to arise.
  Lord CARR of HADLEY: The noble and learned Lord has not really addressed himself fully to the commercial reality of the situation. If Thomas Cook did not at present have the word "Bankers" in its title, perhaps it would never have needed to introduce it. The noble and learned Lord was quoting American Express as an example where it was not necessary for such an organisation to have the words "bank" or "bankers" included in its title, but it is a quite different situation where a firm has such a word in its title and has to withdraw it. I cannot help feeling that if after all these years Thomas Cook in the United States or in France suddenly has to change its name and withdraw the familiar word "Bankers" from it, many members of the public in both countries—though no doubt not the sophisticates in the field—will believe that there has been an actual change of status in the Thomas Cook business and in its backing, and perhaps they will be that much less willing to do business with the firm than would otherwise be the case.
  This is a matter to which the Government should address themselves a little more. I cannot speak for my noble friend Lord Selsdon, but perhaps the Government can say that they realise that there is a problem here and that they will give a further opinion on it at a later stage. I do not know how my noble friend would react to that. I cannot help feeling that the commercial reality and the commercial difficulty which Thomas Cook faces has not yet been fully appreciated by the Government.
  6.10 p.m.
  Lord BIRDWOOD: My noble friend has just made a point which I would have loved to make and was exactly what I was going to say, but I want to make two further points. I feel that this Committee should examine with considerable care the element of precedence in the clause to which this Amendment pertains. We are in danger of petrifying a number of commercial entities, and surely this can be no good thing. The other point I want to make is that anything which, in commercial terms, reduces the speed of response that the clearers can make is to be deplored. Already the clearers are in danger of becoming monolithic, but they have taken massive steps to ensure
  1070
  that they have high speeds of response. Anything which slows this down is to be deplored, and unless this Amendment or at least the Amendment that derives from it, No.25, is accepted, I consider that that slowing down will take place.
  Lord GLENKINGLAS: May I add one very short word to what my noble friend on the Front Bench has said about the commercial realities of the situation? The travel industry as a whole, of which Thomas Cook is an important part, is perhaps one of the most competitive types of industry which exist, and I have absolutely no doubt at all that if you have to withdraw the word "bankers" from your description in New York or Paris, then a great deal of use will be made of this by the opposition, however fair or unfair it may be, and therefore a great deal of damage may be done.
  Lord CAMOYS: I must declare an interest in that I work for another clearing bank group than that referred to by my noble friend Lord Selsdon, but I should again like to emphasise this point about commercial reality, having worked for American Express—and I want to be very fair to them. I have no doubt at all that the commercial reality of this situation is extremely serious, and I beg the Government to listen very carefully to what has been said.
  Lord REDESDALE: I should like to make one other point which I in fact raised on Second Reading but on a slightly different matter. I said that I thought the Government were being a bit blinkered in their attitude (and it stems from something which I am going to raise later) in the use of the word, "bank". It is all very well to say that only deposit taking institutions are banks, but I submit that this is not the way it is in the big financial world—and that means outside the United Kingdom. Presumably this Bill is going to provide some protection to some depositors and is going to give a degree of recognition. All right, that is acceptable to the banks; but if the cost of doing this is to be that it is going to damage our balance of payments situation by harming a number of our organisations operating overseas, it seem to me a great pity. The Minister poured scorn on the phrase "investment bankers". This is a term which is used widely in America.

  1071
  It is used in the whole of the North American continent; and it is used, of course, in a lot of other countries. It is said that these institutions can call themselves what they like overseas but they must not call themselves by that name here. This again means that that sort of company will be damaged. All I would do is add my plea that before we damage a number of institutions for little good we ought to give it much more careful consideration.
  Lord McCLUSKEY: Certainly the Government will consider the terms of the debate and the arguments which have been put forward, but the Government are firmly of the view that banking names should be confined to recognised banks, and if one starts to make exceptions and perpetuate anomalies, one begins to create problems. I wonder whether, while the Government are considering the arguments, noble Lords opposite might consider whether or not, given the fact that the Bill will not have any legal effect outside the United Kingdom, there is some alteration or restructuring which may be done in order to preserve the name, if it is permitted, in the United States; that is, to retain the word "bankers" despite the fact that it becomes no longer usable in the United Kingdom.
  There is, of course, the point that if one preserves this particular anomaly and allows Thomas Cook to call themselves bankers when they are not a recognised bank, then others will come along wanting to set up the same kind of institution or a similar kind of institution, or having the same relationship with a parent or grandparent, and will say that there is discrimination in the Bill because they cannot use the term which has been allowed to the subsidiary which existed on 9th November 1978.
  Lord SELSDON: I suffer from two disadvantages: I am neither noble and learned nor noble and gallant, but I have taken ignoble (if that is the word) learned advice, which is contrary to that which the noble and learned Lord, Lord McCluskey, has given to me. I am advised that almost certainly Thomas Cook would lose in the United States, and that means that it would lose membership of banking institutions, that it would lose associate membership of the New York
  1072
  clearing house, that it would be unable to invest in US Government securities directly with them rather than through brokers, and that there would be a loss of access to the inter-bank lending market. It is a question of who is recognising whom. I think everyone would agree that, under the terms of the Bill, in the United Kingdom Thomas Cook would not be a recognised bank; but, surely, legislation introduced into this country which affects (unwittingly, perhaps) commercial interests on this scale in the United States and in France is worth amending. I would obviously propose to withdraw Amendment No.16, but I should like to return to this matter when we come to Amendment No.25 because I believe that under that Amendment the only company affected would be Thomas Cook, because it is a dated Amendment, giving the date when the Bill was issued.
  Lord McCLUSKEY: Before the noble Lord sits down, I wonder whether he could make something clear for me. Is he saying that the consequences that he mentioned at the beginning of his intervention would follow simply because the name was changed, or would follow from something other than a change in the name?
  Lord SELSDON: No; it would, I am advised, follow from the fact that Thomas Cook would no longer be a bank in the United Kingdom, not a recognised bank. From this, I am told, the name would be put in jeopardy in the United States; and because it was not a bank, the parent company, it would therefore lose these rights in the United States and in France. It is a matter of opinion, but the reason for putting down Amendment No.25 is because I believe that it would affect only Thomas Cook; it would in no way jeopardise or affect other aspects of the Bill, or other people, so I believe.
  Lord McCLUSKEY: The reason I asked that was that Clause 36 is concerned only with the use of names, rather than with the actual character of the institution. But perhaps the noble Lord might want to think about that further and deal with it when we come to Amendment No.25.
  Lord SELSDON: I beg leave to withdraw Amendment No.16.
  Amendment, by leave, withdrawn.
  Lord REDESDALE Lord REDESDALE moved Amendment No.17:
  Page 38, line 3, leave out ("and")
  The noble Lord said: We are well into the question of definition, and 1 now come to Amendment No.17. I would be grateful if we could take No.18 with it, because No.17 paves the way for No.18. The object of the Amendment is to restore to those branches of banks which have already called themselves banks here, and which are recognised as banks overseas, the right to retain "bank" in their title. If I may permit myself a pun after the one which was used before about the South Bank, there are a number of banks here. There is the Banque du Rhone, and I wonder which side of the South Bank that one is. However, this Amendment seeks to do this only when the bank itself is of such a size and status that it can satisfy the Bank of England that it meets in full the minimum standards for recognition in its parent country. In other words, it treats the bank and its branch quite sensibly as one entity, and does not require the branch on its own to meet the full criteria.
  There are a number of banks here which are affected. In another place an Amendment was moved to exclude banks, and it was limited because of the directive to EEC banks to call themselves banks if they were called a bank in their own country. This Amendment restores a degree of fairness to the situation. If I may do so, I should like to speak at the same time to Amendments Nos.27, 28 and 29 because I believe that one can take these two points together. It affects this group of banks which have been challenged. From an article written in the Banker recently, I believe that there are 30 banks who would probably lose the right to call themselves a bank should this legislation come in. The purpose of these Amendments Nos. 27, 28 and 29 was to prolong the period in which they could perhaps seek to increase their operations in this country to the point where they would be recognised. I feel that the increase of time from 12 to 18 is only fair.
  I do not want to go much further at this stage, but there is the point that, if these banks were to lose the status of the name "bank", there would be a conflict with the reciprocity of the requirements of other countries. The Swiss, for
  1074
  example, require a degree of reciprocity between sovereign States under which these banks establish branches in the other country. I look foreward to hearing what the noble and learned Lord has to say on this. I beg to move.
  Lord McCLUSKEY: Although I may he wrong, I think I detect a certain confusion. We are talking here about names, and there is reference to status as well. I think it may be that some confusion is creeping into the argument. But let me try to reply to Amendment No.17—and to No.18 which, I agree, should be taken with it for the moment. The Government have always accepted that branches of overseas institutions should he able to use in the United Kingdom a banking name by which their head office is registered in its country of origin, provided that the name is suitably qualified. This was reflected in a provision contained in the Bill as introduced and which was removed by the noble Lord's honourable friends in another place, by the Opposition, on the ground that it discriminated against the domestic institutions in the licensed sector. That left the Government with the problem of obtempering their obligations under the EEC Directive. Accordingly, at Report stage, the Government sought to reinstate—and succeeded in doing so— the substance of the same provision, but in respect only of EEC licensed institutions to which the Directive applied.
  What the proposed Amendment seeks to do is to restore the concession in respect of certain third country institutions; but it is much wider than the provision which was deleted earlier. It would allow those overseas countries the free use of banking descriptions and it would not require them in any way to qualify their names. It would also oblige the Bank of England to make a difficult determination about the range and quality of an institution's services provided abroad. It would be somewhat inconsistent also with that provision on EEC licensed institutions in Clause 36(8) to which I referred. The result is that the degree of freedom allowed under the Opposition's Amendment would do that which was criticised in another place: it would discriminate against our own British institutions, and the Government cannot accept it. However, as I said earlier, the Government remain of the opinion that an overseas

  1075
  licensed institution ought to be able to use in the United Kingdom its banking name provided that its status is made plain. That would apply not just to the banks referred to in the article in the Banker but to the Commonwealth banks to which the noble Lord, Lord O'Brien, made reference earlier.
  If noble Lords opposite and the Opposition generally are now agreed that the Government policy is the right one, that the overseas licensed institutions ought to be able to use in the United Kingdom their banking names providing the status of the institution is made plain, then what the Government can do is to bring forward at Report an Amendment which would extend to third country licensed institutions the concession now allowed to EEC licensed institutions. But the trouble is that the Government are faced with opponents who are going round in circles—and we are becoming dizzy with it. If the Opposition would now tell us that they have settled on a particular solution and that that would satisfy them, then I should be happy to recommend that it be brought forward at Report.
  Lord REDESDALE: I do not think I have gone quite full circle. I may have got off a few stops before arriving at the destination. I believe that this Amendment provides the Bank of England with a greater degree of discretion than was allowed for earlier. Therefore, I should be happier to stay with this Amendment than to go back to the Amendment which the noble and learned Lord said that he would propose to restore the Bill to its original state. It says in Amendment No. 17:
  "… and provided that it can satisfy the Bank that it meets, in full, in its country of incorporation, the minimum criteria for recognised banks in Part I of Schedule 2 to this Act".
  Therefore, that is the area which prevents me from having gone full circle on this point.
  Lord McCLUSKEY: I did draw attention to the problem that would face the Bank if it had to make this kind of inquiry or if this kind of inquiry had to be made and the Bank had to be satisfied. As the noble Lord himself will realise from looking at the banks listed in the
  1076
  Banker as likely to be affected by the present provision, there is a wide spread. There are banks in Pakistan, Oman, Teheran, Korea, and Cyprus; there are the Jamal Trust Bank, the Korea First Bank, the New Nigeria Bank, the Punjab National Bank. the Somali Bank and so on. There are a good many of them. It would create substantial problems.
  Furthermore, the effect of this Amendment would be to create a third tier of deposit taking institutions. One would have licensed banks and licensed deposit-taking institutions and this third tier of deposit taking institutions which, although belonging to the licensed sector, would appear from their names to be recognised banks; so that they would then have a foot in each camp. The absence of any indication as to their status as licensed deposit takers and the ability to make free use of banking descriptions would discriminate against the domestic licensed institutions. That would run counter to the policy of the Bill and therefore I must repeat that the Government resist this Amendment and ask the Opposition to ponder about the wisdom of accepting what I have proposed as being the best that the Government are willing to allow—although Parliament decides.
  Lord REDESDALE: I am grateful to the noble and learned Lord for going over the ground on that. I readily agree with the noble and learned Lord that it is a difficult situation. I do not particularly wish to go along with him on his proposed Amendment and he does not wish to go along with me on mine as it stands. Therefore, I propose at this stage to beg leave to withdraw the Amendment.
  Amendment, by leave withdrawn.
  [Amendments Nos. 18, 19 and 20 not moved.]
  6.30 p.m.
  The Earl of GOWRIE The Earl of GOWRIE moved Amendment No. 21:
  Page 38, line 19, leave out ("necessary") and insert ("expedient").
  The noble Earl said: The Bill, as we have been discussing, introduces the concept of "recognised banks" and provides that deposit takers other than "recognised banks" may not in general

  1077
  describe themselves as banks, even though they undertake a range of banking services. This is why we have had considerable trouble with nomenclature in this Committee stage because nomenclature of course is closely associated with function. The Bill does not seek to prevent non-recognised banks from carrying on the banking services that they presently offer. It therefore recognises that there are anomalies and the noble and learned Lord, Lord McCluskey, has done this. The Bill recognises circumstances may arise in which non-recognised banks may wish to describe themselves as offering banking services. We on this side, as has been made clear already, think the much simpler way of handling all this would be to continue to use the words "bank" and "banking". Nevertheless, we see that the Government recognise the difficulty in their own Bill and under Clause 36(2) we have a limited exception for the purpose.
  As examples of such circumstances which could lead to an exception, we may instance a non-recognised bank as suing on non-payment of a cheque. In the pleadings it would have to say that it was a bank and was in a position to offer banking services. Similarly, we would have a comparable case if a non-recognised bank sought to claim a banker's lien.
  We feel that the Government need not have found themselves in this position in the first place if they had been clearer on their nomenclature; but we recognise that this exception is welcome. What I submit in this Amendment is that it does not really go far enough. We feel that as drafted Clause 36(2) is unsatisfactory from the point of view of an unrecognised bank which might wish to exercise under the enactments of the Bill its privileges as an institution which carries out recognised banking services; in other words, let us call it for the sake of convenience a "common law" bank. By virtue of paragraph (b) of subsection (2) one of the criteria for exemption from subsection (1) is that the use of the expression "bank" or "banker" is necessary—and "necessary" is the word in the Bill—for the purposes of complying with or taking advantage of the enactment in question.
  It seems to us that these words are misconceived: a person is surely bound to
  1078
  comply with, or entitled to take advantage of, any such enactment by virtue of being a "bank" or a "banker", not by virtue of using that expression, as my noble friend Lord Selsdon said and as in a recent famous judgment the noble and learned Lord, Lord Denning, appeared to confirm, if I understood the judgment correctly. One is a bank if people use one for banking services and think of one as a bank. The use of the expression may be desirable or convenient for the purpose of complying with or taking advantage of any such enactment; but it can never surely be necessary for that purpose.
  There is another objection to paragraph (b) of subsection (2). It seems to us to imply that a person cannot come within the exemption afforded by that subsection unless that person is in law bound to comply with or entitled to take advantage of the particular enactment. If this is the effect of paragraph (b), it will place some of the institutions which become "licensed institutions" in a most invidious position because of the real difficulty as exemplified, I am advised, in a recent case, United Dominions Trust v Kirkwood, of being quite certain (in the absence of a decision by the court) that a given institution is or is not a "common law" bank. This difficulty will not disappear when the Bill becomes law. Accordingly, if a licensed institution wished to exercise or to claim to be entitled to exercise, in all good faith, any of the statutory privileges or common services of a "common law" bank it would not be able to do so without risking an infringement of Clause 35(1) and therefore incurring criminal liability.
  It is therefore clear that some institutions may take advantage of the exception in subsection (2) but it is not clear which those institutions are. If an institution in good faith claims to take advantage of that exception which the Government have written into their Bill but nevertheless as things turn out claims wrongly, it now for the first time is subject to criminal sanctions. I accept that it is a rather technical argument, but all this flows from the use of the word "necessary" and, accordingly, we should like to suggest that we substitute for the word "necessary" the word "expedient". I beg to move.
  Lord McCLUSKEY: I shall certainly study what the noble Earl has said; in fact, I shall need to do that. If the noble Earl rises to reply, perhaps he will confirm that his reference to Clause 35(1) should have been to Clause 36(1). I see that he confirms that. I should reply briefly to say this. The wording of the Amendment in its context here would in effect destroy the object of the policy on banking descriptions, since there are a wide range of circumstances including the promotion of its business, where it might be expedient for a licensed institution to claim that it was entitled to take advantage of or comply with a statute. That is the kind of abuse which we are attempting to prevent. The present provision confines the use of such expressions to circumstances where it is necessary and thereby prevents an institution from gratuitously using the phrase.
  Also a considerable problem arises on the question, who judges expediency?— if one allows that particular word to come into the Bill. The purpose of subsection (2) of Clause 36 is to enable the bank or banker to use the expression "bank" or "banker" in circumstances which are not related to the purposes of the Act. That is made clearer than I have made it if one looks at the wording on page 38 of subsection (2). A bank will be able to take advantage of any relevant provision of law or custom, and the particular statutes that are of importance in this context are the Cheques Act which gives protection to bankers in relation to defective cheques, and Section 54(2) of the Income and Corporation Taxes Act 1970. The concession which is enshrined in subsection (2) of Clause 36 only relates to circumstances where it is necessary for the institutions to use the expression. If one introduces the word "expediency" one opens this up very much wider and makes a much greater inroad than the noble Earl recognised in presenting his argument in favour of the Amendment.
  The Earl of GOWRIE: I said that my remarks were somewhat detailed and technical; and, indeed, so in a way they were because we were rather worried about a technical difficulty that might arise. My brief was based on an opinion by learned counsel. I hope that the noble and learned Lord is not merely using a form of words when he says that he will look at my remarks because they are
  1080
  made with appropriate legal advice. We are bothered by something here; but since he said he would look at this I am happy to beg leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  6.39 p.m.
  The Earl of GOWRIE The Earl of GOWRIE moved Amendment No. 22:
  Page 38, line 21, at end insert—
  ("( ) Nothing in this Part of this Act or in the proceeding Parts of this Act affects the determination of any question whether a licensed institution or other person is a bank or banker for the purposes of any Community obligation or under any Community instrument.").
  The noble Earl said: With the leave of the Committee, I should like to discuss Amendments Nos. 22 and 23 together. Clause 36(2) provides a limited exception, as we have said, to the general restriction in Clause 36(1) on the use of the words "bank" and "banker". A bank, not being a "recognised bank", a common law bank, may take advantage of that exception in order to comply with or take advantage of certain provisions of law or custom. Clause 36(3) identifies those provisions of law or custom. We welcome this but we have a doubt. Does the exception that we have been discussing extend to the European Communities legislation? We wonder whether an EEC Directive or regulation would be beyond question comprised in the list set out in Clause 36(3).
  Nor is it simply an academic question: for example, the Fourth Company Law Directive of the EEC regulates the form and content of company accounts but excludes the accounts of banks. There is a separate draft directive now under consideration relating to the accounts of banks. Might a United Kingdom bank, not being a recognised bank, say it is a bank in order to comply with or take advantage of the European legislation? We think it should be able to do so but the point is not certain, and if the institution cannot do so then it could be at a competitive disadvantage. It could be excluded from the provisions of the banking directive and might be compelled to comply with the provisions of an inappropriate directive not directly applicable to banks. I beg to move.
  Lord McCLUSKEY: In the Government's view, the two Amendments Nos. 22 and 23 are unnecessary. Clause 36(2) makes plain that for purposes other than the purposes of the Bill itself the word "bank" is not to be taken as meaning "recognised bank". Community obligations are included within the description of, and I quote—
  "purposes other than those of this Act".
  They are also covered by the existing definition of
  "relevant provision of law or custom",
  which is contained in subsection (3) of Clause 36, so in the Government's view these Amendments are quite unnecessary.
  The Earl of GOWRIE: The Government may take that view. I think certainly it is logical, but I personally see rocks ahead. I think that probably this is the kind of thing one would have to return to after the Bill had been enacted, in the light of European directives as they arise. would say that there might be some probable trouble ahead here, but in the meantime I beg leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 23 and 24 not moved.]
  Lord SELSDON Lord SELSDON moved Amendment No. 25:
  Page 39, line 41, at end insert—
  ("( ) Subsection (1) above does not prohibit the use by any wholly owned subsidiary (within the meaning of section 150(4) of the Companies Act 1948) or any subsidiary of that subsidiary of a recognised bank of a name under which
  the subsidiary was carrying on business on the 9th November 1978.").
  The noble Lord said: This is the Amendment to which I referred in connection with Amendment No. 16. It is one I should like to press because the noble and learned Lord has not managed to give any reassurance that the banking business of Thomas Cook in the United States and in France will not be adversely affected. I think the way that this Amendment is drafted is far, far tighter than Amendment No. 16; and since I believe. or am advised, that if the Bill goes through in its present form Thomas Cook (Bankers) Limited will have to change its name in the United Kingdom with severe effects on overseas business, I should like to press this Amendment.
  Lord McCLUSKEY: I can follow the example of the noble Lord. We have of course discussed this very fully on the previous occasion when we were looking at the other Amendment to which he spoke, and I think there is no great value in repeating the arguments at this stage. For the reasons I gave in relation to Amendment No. 16, I would invite your Lordships not to accept this Amendment.
  Lord SELSDON: I should like to press this Amendment.
  6.44 p.m.
  On Question, Whether the Amendment (No. 25) shall be agreed to?
  Their Lordships divided: Contents, 78; Not-Contents, 42.

  CONTENTS

  Abinger, L.

  Drumalbyn, L.

  Masham of Ilton, B.

  Alexander of Tunis, E.

  Elles, B.

  Monson, L.

  Allan of Kilmahew, L.

  Elliot of Harwood, B.

  Morris, L.

  Amherst, E.

  Elton, L.

  Mottistone, L.

  Amory, V.

  Emmet of Amberley, B.

  Mowbray and Stourton, L.

  Ampthill, L.

  Ferrier, L.

  Norrie, L.

  Avon, E.

  Glenkinglas, L.

  Northchurch, B.

  Balerno, L.

  Gowrie, E.

  Nugent of Guildford, L.

  Birdwood, L.

  Hampton, L.

  O'Brien of Lothbury, L.

  Brougham and Vaux, L.

  Harvey of Tasburgh, L.

  O'Neill of the Maine, L.

  Buxton of Alsa, L.

  Henley, L.

  Orr-Ewing, L.

  Caccia, L.

  Hornsby-Smith, B.

  Polwarth, L.

  Carr of Hadley, L.

  Killearn, L.

  Rankeillour, L.

  Carrington, L.

  Kinnoull, E.

  Rawlinson of Ewell, L.

  Cathcart, E.

  Kinross, L.

  Redesdale, L.

  Chorley, L.

  Lauderdale, E.

  Rochdale, V.

  Colville of Culross, V.

  Linlithgow, M.

  Rochester, L.

  Cork and Orrery, E.

  Long, V.

  Romney, E.

  De Freyne, L.

  Lyell, L. [Teller.]

  St. Davids, V.

  Denham, L.

  Macleod of Borve, B.

  Seear, B.

  Denman, L.

  McNair, L.

  Seebohm, L.

  Selsdon, L. [Teller.]

  Strathcona and Mount Royal,

  Trefgarne, L.

  Sherfield, L.

  L.

  Tryon, L.

  Skelmersdale, L.

  Sudeley, L.

  Tweedsmuir L.

  Somers, L.

  Swansea, L.

  Vernon, L.

  Strathclyde, L.

  Tanlaw, L.

  Ward of North Tyneside, B.

  Westbury, L.

  NOT-CONTENTS

  Aylestone, L.

  Hatch of Lusby, L.

  Peart, L. (L. Privy Seal.)

  Bacon, B.

  Henderson, L.

  Pitt of Hampstead, L.

  Blease, L.

  Houghton of Sowerby, L.

  Raglan, L.

  Boston of Faversham, L.

  Jacques, L.

  Rhodes, L.

  Brockway, L.

  Janner, L.

  Segal, L.

  Collison, L.

  Leonard, L. [Teller.]

  Stone, L.

  David, B.

  Listowel, E.

  Strabolgi, L. [Teller.]

  Davies of Leek, L.

  Llewelyn-Davies of Hastoe, B.

  Taylor of Gryfe, L.

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

  McCluskey, L.

  Taylor of Mansfield, L.

  Gaitskell, B.

  MacLeod of Fuinary, L.

  Wallace of Coslany, L.

  Gordon-Walker, L.

  Milner of Leeds, L.

  White, B.

  Goronwy-Roberts, L.

  Morris of Borth-y-Gest, L.

  Wilson of Radcliffe, L.

  Gregson, L.

  Northfield, L.

  Wynne-Jones, L.

  Hale, L.

  Oram, L.

  Young of Dartington, L.

  Resolved in the affirmative, and Amendment agreed to accordingly.
  [Amendment No. 26 not moved.]
  Clause 26, as amended, agreed to.
  [Amendments Nos. 27 to 29 not moved.]
  Clause 37 agreed to.
  6.54 p.m.
  Lord SEEBOHM Lord SEEBOHM moved Amendment No. 30:
  Before Clause 38, insert the following new clause:
  Regulation of Interest rate quotation
  —In granting recognition under section 3 of this Act the Bank shall certify whether a bank provides, as a substantial part of its banking services, current account facilities and finance in the form of overdraft, in sterling, for members of the public and bodies corporate.
  (2) Where a bank is certified as providing the services specified in subsection (1), sections 52 and 53 and Part V (other than s. 56) of the Consumer Credit Act 1974 (entry into credit or hire agreements) shall not apply to agreements enabling a person to borrow from that bank on an account on which interest is calculated and charged not more frequently than quarterly on the outstanding daily balance on that account.
  The noble Lord said: I again declare my interest in having been nearly 50 years in Barclays Bank. In fact, I still am employed by them—just. The subject of this Amendment is very similar to that of one we discussed at great length about five years ago: in fact, on 2nd May 1974. The point is that, under the Consumer Credit Act, current account loans and overdrafts, if agreed in writing, are treated on the same footing as hire
  1084
  purchase agreements. The borrower has to be given a quotation, which includes exact details of the amount and rate of interest payable, and, under Section 60, regulations are to be issued which will prescribe the form and content of agreements. What these will be, we do not yet know.
  But the quotation of interest rate costs is not practicable for current account loans and overdrafts. They are calculated on a day-to-day basis, they are charged in arrears and they are charged on the net balance. In the six months which is the normal period after which interest is charged, you can have many changes in base rates, in money market rates, so that any quotation of an accurate amount or rate is quite impossible to give in writing. So it seems to me that the implementation of the Consumer Credit Act, if it comes, will be quite impossible to comply with.
  As this matter was so fully discussed previously, I do not think I need go into any great length or detail today. But perhaps it would be pertinent to state that there must be something of the order of 20 million current account holders in this country, and they are the people who will be inconvenienced. I believe that my best way of dealing with this question is to recall to your Lordships what the noble Lord, Lord Jacques, said in winding up the discussion on the Amendment which I moved on 2nd May 1974. It was fairly brief, and he said:
  "All institutions which had current accounts would have to be given the same facility of

  1085
  offering separate current account loans. Therefore the door would be opened much wider; and while we have good reasons for giving the concession in the case of overdrafts, because they may be created inadvertently, we can see no reason for granting a concession regarding a current account loan. This is something which is negotiated".
  That was a clear misunderstanding, because although overdrafts are occasionally taken inadvertently, there is basically no difference between what the noble Lord referred to as "negotiations", and which we refer to more as "making arrangements", for a current account loan and for an overdraft. One is simply stated in the form of an amount, and the other gives a limit within which the customer can operate. But the terms are normally the same.
  The noble Lord went on to say:
  "We believe that if we were to open this door it would then be opened very wide indeed, because one might get the position where some institutions who did not grant overdrafts but who are at present, and would be in the future, granting personal loans, could say, 'Deposit £1 with us and open a current account '—and then they would give a current account loan, and because of the exemption of current account loans they would be able to get outside Part V".—[Official Report, 2/5/74; col. 244.]
  The whole point of the Banking Bill is that registered banks are now the only people who can operate current account loans and overdrafts. Therefore, that door which so worried the noble Lord in the last debate five years ago is now firmly closed, and I can see no reason why this Amendment should not be passed.
  Mr. Telford, who, as your Lordships may remember, was for 10 weeks the manager of the Dover branch of Knight's Bank, could explain much more dramatically than I the horrible situation which would arise for a poor branch manager should this clause ever be implemented. I know that time is getting on and I shall be very brief, but I believe that there is more in this, and in other things in this Bill, than meets the eye. I believe very strongly that there is a danger signal here and that if we go on chipping away at the flexibility and the old customs of the City, which are based on trust and flexibility more than anything else, we shall sooner or later find that the City loses its paramount position as the financial centre of the world. It will be a sad day for me anyway, if I am still alive, when the saying that one minute
  1086
  in London equals one hour in any other financial centre in the world ceases to be true. I beg to move.
  Lord O'BRIEN of LOTHBURY: Is it in order for me to make a few remarks before the Minister replies to my noble friend Lord Seebohm? Those of your Lordships, who were here for the debate on the Second Reading of this Bill, will be aware that I then spoke strongly in support of the Amendment which he now proposes, and which he then put forward in general terms. I should like to reaffirm my support for what the noble Lord wishes to be done. It would be possible for the Government to say that this matter is extraneous to the purpose of the Bill and that it should not be brought into our discussions upon it. I hope, however, that the Government will not take that line.
  As I said during my speech in the Second Reading debate, I regard the Consumer Credit Act as an Act which contains many imperfections. One of those imperfections—and it is very serious—is the way in which the Act brings normal bank overdrafts within its purview and requires banks to go in for a lot of bureaucratic documentation which they do not now have to deal with. It would be very serious if this were to happen.
  Nowadays we have to think about what the requirements of the EEC will be. When they look at our consumer credit legislation, they are certainly inclined to follow its tenor in the regulations which they eventually produce. I hope that they will have greater wisdom when it comes to doing this job. I am told by my advisers who are participating in the discussions that there is no intention to require the calculation of an annual percentage rate of charge in respect of overdrafts. If we in this country allow that to persist and to be implemented, we shall be at a serious competitive disadvantage compared with our sister banks in the Community.
  Once a major piece of legislation has been passed, it is not easy to find time to amend it. We have a God-given chance, by means of this Bill, to do just that, since the Bill provides us with the definition of "a bank", the lack of which made it impossible to do justice to banks in the Consumer Credit Act. I think that we should take this opportunity so that when the Consumer Credit Act is brought into

  1087
  force this serious imperfection will not be perpetuated. Therefore I hope very much that the Government will pay heed to what my noble friend Lord Seebohm wishes should be done.
  7.3 p.m.
  Lord JACQUES: I can say from first hand experience that the point which has been raised by the Amendment was given very thorough consideration when the Consumer Credit Bill was before the House. To exempt the overdrafts and loans on current account of recognised banks alone would be contrary to the philosophy of that Act, for it avoids exemptions on an institutional basis. It would arouse opposition from licensed deposit-taking institutions which may provide overdraft facilities. Indeed, I have already received a few letters from finance houses; they objected to this Amendment before its consideration by the Committee. That is an indication of the controversy which lies behind the Amendment. For the first time it discriminates on an institutional basis. If you are a certain kind of bank, that is all right, but if you are not a certain kind of bank it is not all right. That is contrary to the philosophy of the Act.
  Under the Amendment, not all recognised banks would be able to take advantage of this exemption. The Bank of England is required to specify those which provide current account facilities and overdrafts as a substantial part of their services. Inevitably there would be hard cases. On the important principle of avoiding discrimination between institutions and, so far as possible, treating all consumer credit transactions alike, overdrafts and loans on current account have been left within the scope of the Act. However, in view of the representations made by the clearing banks that the documentation provisions would put an end to the present simplicity and flexibility of the overdraft system, a provision was made in Section 74 for the Director-General of Fair Trading to make determinations exempting overdrafts where he considers that this is not against the interests of the debtors. So the Director-General of Fair Trading was given very full powers under the Act to try to meet the wishes of the banks and keep the overdraft system flexible.
  1088
  I understand that the banks have expressed concern that Section 74 is inadequate to meet their problems. There is clearly some uncertainty in their minds as to how this important section will work in practice. I can assure the banks that the Office of Fair Trading is ready to hold consultations with them on this matter. The Government are hopeful that these preliminary consultations will remove much of the concern of the clearing banks, but my right honourable friend the Secretary of State for Prices and Consumer Protection will be ready to arrange further meetings with his Department if these should, in the event, prove to be necessary.
  It goes without saying that the Government do not wish to see an end to the flexible system of overdrafts as we know it in this country. Our difference with the banks is not one of principle; on this there is nothing which divides us. The difference arises on the question of interpretation, and in particular on how Section 74 can best be operated in the interests of consumers and bankers alike. The Government believe that the section can be operated so as to achieve this end and trust that in further consultations with the banks a mutually satisfactory arrangement can be achieved.
  In view of the Government's clear determination to make a serious attempt to resolve the position fairly and satisfactorily, I hope that the mover of this Amendment will withdraw it. If he does not, I hope that the House will say that there are very good grounds in this case for supporting the Government.
  Lord SEEBOHM: On the question of the institutions, may I say that I cannot accept the noble Lords argument. The rule has already been completely breached by Section 16 of the Consumer Credit Act, which specifically exempts consumer credit agreements where the creditor is a local authority or a building society. Those are two institutions which I should have thought were already excluded. This Amendment simply puts it in the court of the registered bank; it is not creating a new institution. I do not think it is good enough to wait for what another officer may or may not agree to. There is no reason why that should happen. It seems to me that this proposal is entirely logical. It is a very serious

  1089
  matter. Indeed, to me it is the most serious matter in the Bill.
  Lord REDESDALE: I was grateful when the noble Lord, Lord Jacques, smiled as we started our discussion, because I remember that he made those points all that time ago. And that is just the point—all that time ago, in 1974. The Act has still not been implemented because many of its sections are incapable of being implemented. If the noble Lord, instead of saying that talks will take place, could give a firm undertaking that the situation will change, then one could go along with him rather more. For the noble Lord to turn round and say, after all these years, that we are going to have talks is a change of tune, but it is not quite strong enough a change of tune. May I remind him again of the evidence which was given to the Wilson Committee by the Trustee Savings banks, for this clearly spells out the inadequacies of the current legislation.
  Lord JACQUES: The noble Lord has got it wrong. The delay is entirely in keeping with what the Government have said. We have not been in a hurry to get the banks to follow the Consumer Credit Act in the case of overdrafts. We have been lenient. We have been holding back, hoping that we might obtain complete agreement. We have not acted inconsistently in any way. We have acted wholly consistently because the banks

  CONTENTS

  Abinger, L.

  Elliot of Harwood, B.

  O'Neill of the Maine, L.

  Alexander of Tunis, E.

  Elton, L.

  Polwarth, L.

  Allan of Kilmahew, L.

  Exeter, M.

  Rankeillour, L.

  Amherst, E.

  Ferrier, L.

  Rawlinson of Ewell, L.

  Amherst of Hackney, L.

  Gowrie, E.

  Redesdale, L.

  Amory, V.

  Hampton, L.

  Rochdale, V.

  Ampthill, L.

  Hanworth, V.

  Romney, E.

  Auckland, L.

  Harvey of Tasburgh, L.

  Seear, B.

  Avon, E.

  Henley, L.

  Seebohm, L. [Teller.]

  Balerno, L.

  Hornsby-Smith, B.

  Selsdon, L. [Teller.]

  Brougham and Vaux, L.

  Killearn, L.

  Skelmersdale, L.

  Buxton of Alsa, L.

  Kinross, L.

  Somers, L.

  Caccia, L.

  Kissin, L.

  Strathclyde, L.

  Carr of Hadley, L.

  Linlithgow, M.

  Strathcona and Mount Royal,

  Carrington, L.

  Long, V.

  L.

  Cathcart, E.

  Lyell, L.

  Sudeley, L.

  Chorley, L.

  McNair, L.

  Swansea, L.

  Colville of Culross, V.

  Morris, L.

  Tanlaw, L.

  Colwyn, L.

  Morris of Borth-y-Gest, L.

  Tryon, L.

  Cork and Orrery, E.

  Mottistone, L.

  Tweedsmuir, L.

  Denham, L.

  Mowbray and Stourton, L.

  Vernon, L.

  Denman, L.

  Norrie, L.

  Ward of North Tyneside, B.

  Diplock, L.

  Northchurch, B.

  Young of Dartington, L.

  Drumalbyn, L.

  Nugent of Guildford, L.

  Elles, B.

  O'Brien of Lothbury, L.

  could carry on in their own sweet way as they did before, so long as there was no action taken. I cannot understand why the noble Lord thinks that, because there is a delay, it is against my argument; I would suggest that it is entirely for it. We want to settle this in a fair way to the banks, in a fair way to the consumer and also in a fair way to other institutions. If this Amendment is carried, that will not be done.
  Lord SELSDON: I do not think anyone would accuse the noble Lord, Lord Jacques, of lacking spirit, but it is almost a question here of sacred cows. There seems to be a conflict of interest between the Consumer Credit Act and the Amendment. I think it is in the interests of both the consumer and the bank that this Amendment should go through. Objections can reasonably be countered, particularly since this Bill has now defined, against my own better judgment, a recognised bank and others. I should have thought there could be no reason for delay and I would urge the noble Lord to press this Amendment.
  7.11 p.m.
  On Question, Whether the said Amendment (No. 30) shall be agreed to?
  Their Lordships divided: Contents, 72; Non-Contents, 41.

  NOT-CONTENTS

  Aylestone, L.

  Hale, L.

  Peart, L. (L. Privy Seal.)

  Bacon, B.

  Hatch of Lusby, L.

  Pitt of Hampstead, L.

  Blease, L.

  Henderson, L.

  Raglan, L.

  Boston of Faversham, L.

  Jacques, L.

  Rhodes, L.

  Brockway, L.

  Janner, L.

  Segal, L.

  Collison, L.

  Leonard, L.

  Stedman, B.

  David, B. [Teller.]

  Listowel, E.

  Stewart of Alvechurch, B.

  Davies of Leek, L.

  Llewelyn-Davies of Hastoe, B.

  Stone, L.

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

  Lloyd of Hampstead, L.

  Strabolgi, L. [Teller.]

  Gaitskell, B.

  McCluskey, L.

  Taylor of Mansfield, L.

  Glenamara, L.

  MacLeod of Fuinary, L.

  Wallace of Coslany, L.

  Gordon-Walker, L.

  Milner of Leeds, L.

  Wilson of Radcliffe, L.

  Goronwy-Roberts, L.

  Northfield, L.

  Wynne-Jones, L.

  Gregson, L.

  Oram, L.

  Resolved in the affirmative, and Amendment agreed to accordingly.
  Clauses 38 to 42 agreed to.
  Clause 43 [Evidence]:
  7.19 p.m.
  Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 31:
  Page 47, line 1, after ("evidence") insert ("and, in Scotland, shall be sufficient evidence").
  The noble and learned Lord said: I beg to move this technical Amendment which is simply to take account of the law of corroboration in Scotland. I beg to move.
  Clause 43, as amended, agreed to.
  Clauses 44 and 45 agreed to.
  Lord RAWLINSON of EWELL Lord RAWLINSON of EWELL moved Amendment No. 32:
  After Clause 45, insert the following new clause:
  Application of Law Reform (Contributory Negligence) Act, 1945
  The Law Reform (Contributory Negligence) Act 1945 applies to all cases in which the negligence of a bank has to be considered to establish a liability upon that bank.
  The noble and learned Lord said: I beg to move Amendment No. 32, but in order to do that 1 must refer to Amendment No. 47 in the name of my noble friend Lord Colville of Culross, to insert "and amend" after "repeal" in the Long Title. As it is the first time I have spoken on this Bill, I declare an interest as a non-executive director of a merchant bank. The Amendment I am moving is an Amendment which is purely technical and legal, in the sense that it is to afford
  1092
  bankers a defence which they had in law but which they have not now, owing to the passage of the Torts (Interference with Goods) Act 1977. Your Lordships will see that Amendment No. 33 immediately following this Amendment, in the name of my noble friend Lord Colville of Culross, deals with exactly the same subject. It is, I believe, a better Amendment than the one which I am now moving, and so I would be quite content if the noble and learned Lord is going to say he does not like No.32 but likes No.33; but as he is shaking his head it looks as though he does not like either.
  This is an Amendment to remove an unjust and undesirable anomaly, which is one thing I would have thought the noble and learned Lord would like to do. Unintentionally, I believe it was, though I cannot be sure, the 1977 Torts (Interference with Goods) Act removed a defence which was available to a banker when sued in negligence, and a defence which is available to others; therefore, it ought to be, in my submission, restored. Banking law imposes, and properly ought to impose, heavy obligations on a banker. The banker must be liable for paying out a forged cheque, although a perfect forgery, and can be faced with claims for negligence in collection of a cheque. But the situation now is that a banker cannot cross-allege negligence, whereas bankers in the EEC and in the United States of America are not liable unless they have been negligent. I make no claim for the skill of the drafting here, but what I hope the Government will accept is that this anomaly should be put right.
  Where a bank has paid out on a cheque purportedly drawn on one of the bank's customer's accounts, and in fact it has not been drawn by the customer but has

  1093
  been drawn by fraud or trick, the customer makes his claim for damages for conversion of the cheque, the face value of the cheque, and a claim for monies had and received in respect of the proceeds. But often the negligence of the true owner, or the plaintiff in those proceedings, has played a very substantial part in facilitating the fraud. Prior to 1945 and the Law Reform (Contributory Negligence) Act, the defendant, whether paying or collecting, was unable to rely upon negligence of the customer plaintiff, though he may have materially contributed to the bank paying out on a fraudulent cheque. One can imagine the circumstances of managing an account, the control over a cheque book or authority given to employees. But prior to 1945 that was alleviated by the courts holding that a customer was bound to exercise reasonable care in drawing to prevent the banker from being misled, and in forgery it was the duty of the customer to disclose to the bank his knowledge of the forgery as soon as it had occurred and as soon as he knew of it. It was held that there was a continuing duty on either side to act with reasonable care to ensure the proper working of the account.
  Of course, there is a difference in regard to the paying bank, where the customer and the bank have a contractual relationship. Therefore, the courts were reluctant to introduce a wider concept of contributory negligence for the paying bank. But with the collecting bank, where it has been said there is an army of true owners, there is no contractual relationship, and therefore statutory protection was given to a certain extent by Section 82 of the Bills of Exchange Act 1882 and Section 4 of the Cheques Act 1957. The question turned on whether the bank was in good faith and without negligence. In 1945 came the Contributory Negligence Act, with the concept that where two parties are at fault, with the plaintiff failing to take ordinary care of himself and his property, then each is liable to contribute. In a claim for conversion the question was which of the two innocent parties suffering from the sword of a third should pay, and the answer was that the loss should be divided in such proportion as is just between them. That is, if the plaintiff had been negligent himself he gets reduced damages.
  In their 18th Report the Law Reform Committee, of which noble Lords were members, in respect of the conversion of a cheque recommended that the question should be considered in the context of banking law. They accepted that there was a strong case for admitting contributory negligence as a defence. In 1971 in the case of Lumsden v London Trustee Saving Bank Mr. Justice Donaldson applied the 1945 Act, where this point had been expressly considered with regard to contributory negligence, and he held that the drawer of a cheque owes a duty of care towards the collecting banker. So that was the position, and that made us in harmony with the position in the EEC, in France, Germany and Holland, where negligence depends also upon the plaintiff and you can have the contribution from him.
  Then, after that, came the Torts (Interference with Goods) Act 1977, which was implementing the Law Committee's recommendation with regard to liability for conversion, detinue and other interference with goods. But Section 11, which I submit is the difficulty, provided that contributory negligence is no defence in proceedings founded on conversion or intentional trespass to goods. There was no reference, therefore, to the 1945 Act, nothing about cheques. It was hardly referred to at all in all the debates either in another place or in your Lordships' House. But the effect has been to destroy the principle which had been in existence up to then which afforded the banks some limitation of their liability and permitted the use of the defence of contributory negligence. I believe that that effect was unintentional, and if that is so this is the right time to put it right. I hope the noble and learned Lord will deal with it on the merits. This Amendment is not going to lay the whole of this Bill wide open for Amendments or introduction of other matters. It is merely, putting right something which I think was overlooked and which is in fact causing considerable injustice, because the banks at the moment are getting increasingly large claims in respect of which a plaintiff has often been guilty of gross want of business care, has given extensive or sole authority to employees to issue cheques in large amounts without safeguards and without independent checks. Defalcations can go on for many months, although this could

  1095
  easily be prevented by ordinary business prudence. Even in those circumstances now, after the 1977 Act, the banks are not entitled to rely on the plaintiff's own negligence to reduce the bank's liability.
  I would say that the principle has been that a banker's liability since 1882 has depended on whether the bank has been negligent; and that must be right. Having regard to the Contributory Negligence Act 1945 it would be anomalous if the defence of contributory negligence did not exist for a banker although it does for everyone else. The case of Lumsden shows that it did exist, and the existence of the defence of contributory negligence puts us in harmony with other EEC laws, which is part of what this Bill is about. Therefore, in my submission, we should take this opportunity to put it right, and this is what this Amendment seeks to do. If the Government are going to put forward an alternative we are, of course, willing to accept it, or indeed the alternative suggested by my noble friend Lord Colville, who will move the next Amendment. However, I hope that we shall not be met with any explanation that this will widen the scope of the Bill. It is, in fact, taking the advantage that Parliament ought to take to correct the mistake that Parliament itself has made, to put the position back to what it was and give to the bankers this defence which they ought to have. I beg to move.
  Viscount COLVILLE of CULROSS: I think that it would be convenient if I were to speak to my Amendment at this stage because it deals largely with the same matter and it would be silly to have a separate debate. However, the ambit of my Amendment is slightly narrower than that of my noble and learned friend.
  Let me first set the scene. I take to my bank a cheque which somebody has paid me and pay it into my account. What I am in fact asking my bank to do is to collect, as agent for me, the cheque which has been drawn by my debtor B on his own bank. If the money is debited on my debtor B's account in his own bank, but the cheque was forged or in some other way defective, he can sue my bank in conversion in the way that my noble and learned friend Lord Rawlinson of Ewell has said. I think that that is
  1096
  right. The question then is: if it is partly Mr. B's fault that the forgery was able to occur, should my bank be able to reduce the damages that it has to pay by proving contributory negligence against Mr. B? At present, the answer is: not in England and Wales, as a result of the 1977 Act about which my noble and learned friend has talked, and for the reasons that he gave. It is worth filling in a few of the gaps that he left in the story.
  The action is in conversion and that was a tort which was invented by the courts and, as I understand it, it originally carried strict liability in common law. That would have meant that an innocent handler, such as my bank, through whose hands the property had passed, had no defence. That was thought to be unfair and Parliament came to the rescue. In fact it started a little before 1882–I think in 1876–but in 1882 the matter was consolidated in the Bills of Exchange Act to which my noble and learned friend referred, and it is now enacted in Section 4 of the Cheques Act 1957, which states:
  "Where a banker, in good faith and without negligence—(a) receives payment for a customer of"—
  I shall say "a cheque"—
  "or (b) having credited a customer's account with the amount [of the cheque] receives payment thereof for himself; and the customer has no title, or a defective title [to the cheque], the banker does not incur any liability to the true owner of the [cheque] by reason only of having received payment thereof".
  That is a dreadfully complicated piece of legal phraseology, but it means that, in the scene that I have set, my banker has a defence if he proves—and it is up to him to prove—that he acted in good faith and that he did not act in a negligent way. If he cannot do that he is completely liable.
  Those Acts, curing the trouble, applied not only to England and Wales, but to Scotland too. Then came the Law Reform (Contributory Negligence) Act 1945 to which my noble and learned friend has referred, which states:
  "Where any person suffers damage as the result partly of his own fault and partly of the fault of any other person … the damages recoverable … shall be reduced to such extent as the court thinks just and equitable".
  "Fault" is widely defined. It would certainly cover a person suffering the damages of his own negligence.

  1097
  The question then arose: did it cover the contributory negligence in a case of conversion by the banker? That Act applied to Scotland too. My noble and learned friend then mentioned Lumsden's case, which answered that question: yes, the banker could rely on contributory negligence. There was a New Zealand case saying much the same thing in relation to conversion in a different context. Before the Lumsden case was decided, the Law Reform Committee, as my noble and learned friend has said, started looking at this subject and it reported in 1971. It advised that, in general, contributory negligence should not be a defence in an action for conversion and it gave excellent reasons for that in paragraphs 48 and 81 of its report. But in paragraph 101 it dealt specifically with banking and said:
  "It is arguable that, in as much as the bankers' liability is by the relevant statutory provisions linked with negligence,"—
  "negligence" is specifically mentioned in Section 4 of the Cheques Act—
  "there is a stronger case for admitting contributory negligence as a defence in this particular context, but whether and to what extent it should be so admitted are essentially problems of banking law".
  In the whole of its report it noted the result of the Lumsden case in footnotes, so it was well aware of that case.
  Then in 1977 we passed the Act which reversed the decision in Lumsden and so now there is no partial defence by way of contributory negligence in England and Wales for the banker—it is back to all or nothing—but, of course, the 1977 Act applied only to England and Wales and not to Scotland. There has been no banking legislation meanwhile. There is in prospect, as I understand it, no other banking legislation. Therefore, the banking context for amending the law which was recommended by the Law Reform Committee has not so far occurred nor is it likely to occur.
  However, this is a banking Bill. Surely it is fair and proper that the rules should be as they were decided to be by Mr. Justice Donaldson in the Lumsden case—that is, fair to both sides, because one apportions the fault according to how much it is the responsibility of the respective parties. In the Lumsden case it was
  1098
  so largely the bank's fault that it only got off 10 per cent. of the liability.
  Apart from the unfairness and the fact that we probably made a mistake in 1977, there is a further reason. Not only are these defences available abroad, as my noble and learned friend has said, but the situation in Scotland is relevant. In Scotland there neither is nor ever has been such a thing as conversion. It does not exist in the law of delict. I tread very carefully on this ground in view of the extreme knowledge of the noble and learned Lord, Lord McCluskey, and I just hope that I have got it right.
  I suggest that, certainly so far as Parliament is able to influence the matter, we ought not to bring about intentional differences between the banking law north and south of the Border. And, the situation is that that is exactly what we have done by virtue of the 1977 Act. In Scotland the bank collecting a cheque as an agent was not, and I think is not, liable at all if the bank has acted in good faith. That is the common law situation in Scotland. In those circumstances it is at least arguable that neither the Bills of Exchange Act 1882 nor the current provisions in the Cheques Act 1957 have any effect whatsoever on the law of Scotland, and are simply otiose. I say that it is at least arguable.
  What, however, is further arguable is that on the common law definition that I have just spelt out the way to attack a banker is to claim lack of good faith, or mala fides. As I understand it, this is not what one would put as a matter of face value on that phrase. Lack of care and caution in Scots law is called "culpa" and that, of course is "fault". However, we can have circumstances where the person owes such a particular duty of care, because the operation in which he is engaged is particularly sensitive to fraud or something like that, that the lack of suitable care constitutes mala fides. In those circumstances, you would of course have a fault, and you would have a fault on the part of the person upon whose account the cheque was drawn if he allowed the forgery to take place; you would have a fault upon the part of the bank if it did not have due care. In those circumstances, I would envisage that the Law Reform (Contributory Negligence) Act 1945 would, in certain

  1099
  circumstances, be applicable in Scotland, so that it would be counterclaimed—if that is the right word, which I doubt—against the person upon whose account the forged cheque was drawn.
  In those circumstances, we would have in Scotland the law as it was enunciated for England and Wales in the Lumsden case, though, in fact, I do not believe that it has ever been before the courts in Scotland. However, if that is right, we have diametrically the opposite position north and south of the Border as a direct result of passing the 1977 Act. My Amendment would apply only to England and Wales because they are the only places where the 1977 Act applies. Therefore, I would suggest that there is no need to make a provision specifically disapplying this clause to Scotland, contrary to what happens to the rest of the Bill. However, I add those remarks because I suggest that this is a narrow point and one which we ought to put right at the first possible opportunity.
  Lord DIPLOCK: As a member of the committee upon whose report the Torts (Interference with Goods) Act is based, I should perhaps explain how it came about that in that Act—and I am quite certain that it was inadvertent—the law as it previously was in relation to the liability of the collecting banker for receiving forged or fraudulent cheques, was altered. The committee was set up by the noble and learned Lord the Lord Chancellor for the purpose of considering wrongful dealing with goods. The law in England was in a mess because, for historical reasons, there were three different courses of action—often alternative—which one could lay and for which the remedies were quite different according to which one one chose. That was the problem with which we were confronted; it was mainly that of dealing with goods.
  However, it so happens—again because of the historical origin of the common law when mercantile law was received into the common law— that a cheque was one of the goods which you could convert. You were treated as converting the paper on which the cheque was written, but its value was the face value of the cheque. That, of course, was a pure legal fiction. That fiction was mitigated by the Bills of Exchange Act 1882 which, in effect, while
  1100
  still leaving the wrongful dealing with a cheque by the collecting banker within the category of conversion, nevertheless made negligence the gist of the action. When our committee reported—or perhaps I should say more accurately, when our committee wrote the report—we made a recommendation directed to conversion of goods whereby we said" Abolish one of the courses of action; leave the others: conversion, trespass of goods; but rationalise the position as to remedies so that you can get whatever is the most appropriate remedy, never mind which course of action you have taken."
  Among the minor recommendations we recommended—and this related to dealing with goods—that contributory negligence should not be available as a defence. As regards this technical conversion by bankers, the position in law at that time was unclear. It was not known; there had been no case to decide whether in this action for conversion of a cheque by a collecting banker, of which negligence was the gist, the Contributory Negligence Act enabled you to apportion the blame and so limit the damages.
  That being the unsettled state of the law at the time we wrote the report, we said that it was more appropriate that that problem should be dealt with in a review of banking law, rather than through the general law of conversion and wrongful dealing with goods. When that report had been written the case of Lumsden, to which reference has been made, was decided in the commercial court. It decided that contributory negligence was available as a defence for the collecting banker who had collected a fraudulent or a forged cheque. It is true that it was a decision of a court of first instance and was made by a very distinguished judge of the commercial court. It was made in 1971, between the date we wrote the report and the date the report was presented to Parliament.
  It is right to say that over the years between 1971 and 1977 the rightness of that decision was not questioned. I, myself, have no doubt that it was right. Therefore, at the time that the Torts (Interference with Goods) Bill came before the Houses of Parliament, the law was settled and there was certainly no recommendation by the committee on whose report it was based that the law as regards

  1101
  collecting bankers' liability for cheques should be altered. In the course of the debates, both in this House and in another place, no suggestion was ever made that Section 11(1) would affect the law as regards bankers or alter the existing law, because, so far as dealing with goods is concerned, the existing law was preserved by Section 11(1) of the Act. This slipped through quite unnoticed without it being appreciated that the existing law was inadvertently being changed.
  Fortunately, that Act came into operation either at the beginning of 1978 or perhaps a little earlier—I have forgotten which—and not much harm has been done. It is fortunate that an opportunity now arises to correct a mistake —what was clearly a mistake — a misunderstanding, about the effect of Section 11(1) of the Act. I would urge the Committee to take the opportunity which is now presented of undoing the harm of which, by mistake, both this House and the other place have been guilty.
  7.50 p.m.
  Lord McCLUSKEY: I am indebted to those of your Lordships who have spoken, and in particular to the noble and learned Lord, Lord Diplock, for so much background. Despite the disadvantage of not being an English lawyer, I think I understand the points that have been put forward, but my position, speaking for the Government, is that the Government do not regard this Amendment as acceptable. I am really speaking about the second Amendment, the one standing in the name of the noble Viscount, Lord Colville of Culross, because the other one goes very much wider and would apply to the paying banker as well as the collecting banker, and I do not think that that is the one that had the express support of the noble and learned Lord, Lord Diplock. Certainly we would want time to assess carefully the full implications of an Amendment as widely drawn as the one standing in the name of the noble and learned Lord, Lord Rawlinson of Ewell.
  I have to leave aside for the moment the question of the Torts (Interference With Goods) Act 1977 and what happened in relation to that as it passed through both Houses of Parliament as a Bill. So far as this matter is concerned, the view of the
  1102
  Government is that this Amendment is quite inappropriate to this Bill. It is not fair to describe this Bill, as the noble Viscount did, as a banking Bill. Of course it is a banking Bill in one sense, but it is a Bill concerned with the establishment of a supervisory system for deposit taking institutions. It is not a Bill concerned with reviewing the whole matter of banking law.
  This part of the Bill is concerned only with fairly minor matters which have some relation to that general purpose. Indeed, the later Amendment No. 47 standing in the name of the noble and learned Lord, Lord Rawlinson, recognises the need to amend the Long Title in order to make this point. The point is seen by the Government as quite a complicated one which needs further consideration. I understand that, following the observations of the Law Reform Committee, the implications of the Torts (Interference with Goods) Act 1977 in relation to banking were carefully thought about.
  The memorandum which came to me from the Senate, and indeed the arguments today, suggest that the Lumsden case, which decided that a plea of contributory negligence might be available to a collecting banker in some circumstances, might have been overlooked. But I understand that this was not the case. I understand that the Lord Chancellor sought to follow the advice of the Law Reform Committee that has already been referred to; that is, that, in general, contributory negligence should not be recognised as a defence bearing in mind the other recommendation of the Committee, which has also been mentioned, that the particular aspect of contributory negligence in relation to a collecting bank should be looked at in a general review of banking law.
  Against that background, the Government's view is that we should not, having in a sense heard only one side of the argument—that of the bankers and lawyers, and without consultation with all the other interested parties—overturn that judgment. One would expect there to emerge a quite different opinion from those who have a different interest; an interest in the opposite direction. Particularly those in commerce and industry. The general body of commerce might well take an opposite view to that which has been urged today. The point which has been

  1103
  raised is one facet of a general issue frequently seen in civil law where there is a choice between, on the one hand, provisions which are finely tuned to the individual fault and circumstance of the parties, and are consequently expensive in operation, and on the other hand provisions which can on occasion cause injustice, but which on the whole are beneficial because of their cheapness and simplicity in operation. While one can understand fully the logic and force of the argument in favour of the first alternative, there are arguments in favour of the second.
  It appears to the Government that the matter should be looked at in the context of a general review of banking law and not in the context of this Bill, which is concerned with something quite different. I appreciate that in saying that I shall disappoint the noble and learned Lord, Lord Rawlinson, who asked that I should deal with the matter on the merits. I wish I could simply deal with it on the merits, but that is just the problem. So far, and today, we have really heard only the bankers' and lawyers' side of the argument, and in order to deal with it on the merits we really ought to consult those commercial interests who might have a different submission to make.
  It may be, to talk of the difference between Scots and English law—and of course there are many, and one would not seek in this Bill to remedy all the differences in the banking law, or the effect of the common law on banking on both sides of the Border—that at the end of the day, having heard arguments on both sides, that the proper course would be to amend Scots law to bring it into line with the law obtaining south of the Border. Although I accept entirely the analysis of the position in Scotland which the noble Viscount gave, I do not think it follows from that that one should change the law south of the Border. The other conclusion might in fact be the right one. I appreciate that I am not giving much comfort to those who have spoken in the debate, but it is my duty to state the Government's position on this matter. In the light of that, and in the light of the fact that the matter ought to be looked at in a general review of banking law, I would ask your Lordships not to press this Amendment.
  1104
  There is one other point I want to make because it arises out of something that the noble and learned Lord, Lord Rawlinson, specifically said. He said he hoped he would not hear from me that acceptance of this Amendment would open the door to other Amendments which are not related to the central purpose, or purposes, of the Bill. The trouble with the associated Amendment No. 47 is that it does just that. If that Amendment were to be carried later on, then of course one could see people queueing up with other miscellaneous provisions being matters that they had hoped to put into the Bill, and coming forward and seeking to put them in it at a later stage. That would be very unfortunate.
  Lord RAWLINSON of EWELL: That is a disappointing reply from the noble and learned Lord. I felt, because he is such a skilful debater and so persuasive an advocate, that he did not very much believe in his own case when he gave that reply to the Committee. All we are asking is to get the law back to what it was before a mistake was made by Parliament. We are not asking for something new or revolutionary, so that all the banking institutions have to be consulted about it. All we are asking is that a mistake made should be rectified. Everybody accepts that it is a mistake. You have heard the noble and learned Lord, Lord Diplock.
  Section 11 of the 1977 Act went through without anyone going into the merits of it. No one consulted anyone about it. It just went straight through with hardly any debate anywhere about it. All we say is that Parliament ought to put right this matter when they have made a mistake. I hope that the noble and learned Lord will go back and think again about this. It is a limited point, and it is correcting something for the bankers that we have got wrong and which we ought to put right. I hope he will do that. In that hope, and because I know that he is a fair and sensible man who would want to do right, I ask leave to withdraw my Amendment in the belief that he will have a deep think between now and the next stage of the Bill. I beg leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  8 p.m.
  Viscount COLVILLE of CULROSS Viscount COLVILLE of CULROSS moved Amendment No. 33:
  After Clause 45 insert the following new clause:
  Defence of contributory negligence.
  In any circumstances in which proof of absence of negligence on the part of a banker would be a defence in proceedings by reason of section 4 of the Cheques Act 1957, a defence of contributory negligence shall also be available to the banker notwithstanding the provisions of section 11(1) of the Torts (Interference with Goods) Act 1977.
  The noble Viscount said: I have something to say in moving this Amendment but I can advise the noble and learned Lord, Lord McCluskey, that I shall be withdrawing it without him having to rise to his feet. The noble and learned Lord said that we should hear the other side. What was the other side doing in Scotland between 1945 and the present day when, so far as I am aware, there has been a defence in contributory negligence open to the bankers? Has the commercial public in Scotland been up in arms about this appalling prospect before them? What evidence is there that anybody has said anything which criticises that state of the law?
  Come south of the Border. Since Mr. Justice Donaldson's decision in 1971, which the noble and learned Lord, Lord Diplock, said has been accepted by lawyers as being right in law, what has commerce said about it as being wrong in commerce up to the time when it was changed in 1977? The noble and learned Lord, Lord McCluskey, has not produced one instance of anybody complaining about that. Nobody has heard a word of complaint and there is no reason to suppose it is not entirely acceptable, and I should have thought it was perfectly fair.
  Now the noble and learned Lord says that because we wish to attempt to put right what appears to have been a mistake, we should consult the other side of commerce, which makes no sense at all. I do not intend to press this matter; I shall move the Amendment so I can immediately withdraw it, having said that I do not think the noble and learned Lord can make that point, particularly speaking on behalf of a Government who have a habit of putting in one or two little miscellaneous points at the end of Bills. If the noble and learned Lord wants me to conic back on Report with a catalogue of them to show
  1106
  how totally different they were from the subject matter of the rest of the Bill, I will do so. I could give him two now from the Housing Acts if he wishes to know about leasehold reform and positive covenants running against the subsequent owners of land. The Government do it and I think we should do it on this occasion, but, just in case there is any mistake, let us do it next time. I beg to move. Having said that, I beg leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Clauses 46 and 47 agreed to.
  Clause 48 [Interpretation]:
  Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 34:
  Page 52, line 34, at end insert—
  ("(2) Any reference in this Act to any provision of Northern Ireland legislation, within the meaning of section 24 of the Interpretation Act 1978, includes a reference to any subsequent provision of that legislation which, with or without modification, re-enacts the provision referred to in this Act.")
  The noble and learned Lord said: This is a technical Amendment which takes account of a possible ambiguity in the Interpretation Act. I beg to move.
  Clause 48, as amended, agreed to.
  Clause 49, agreed to.
  Clause 50 [Short title, commencement and extent]:
  Lord REDESDALE Lord REDESDALE moved Amendment No. 35:
  Page 53, line 3, at end insert ("and in the case of The Central Trustee Savings Bank Limited, such day shall not be later than eighteen months from the first day appointed.").
  The noble Lord said: Let us hope that the noble and learned Lord, Lord McCluskey, is in a more constructive frame of mind, will end his period of stonewall batting and will come out and have some nice shots into open cover. This Amendment concerns the Trustee Savings banks, a point I raised on Second Reading. The point is simple and is rather like the one I raised in connection with the building societies. I believe the

  1107
  Government should make sure that the Trustee Savings banks are brought into the scheme as soon as is reasonably possible. "Reasonable" is the word I have used, and reasonable the Amendment is, because, as with the Amendment about building societies, it would give the Trustee Savings banks 18 months from the first appointed day to come within the ambit of the Act, otherwise they would lose the exclusion they are being granted.
  The Trustee Savings banks wish to come into the scheme—they would have liked to come in right at the beginning—but a few technical points must be covered. There are the requirements they have to meet, but apart from that the main onus lies on the Government to assist them to become fully recognised third force banks.
  Lord McCLUSKEY: I am going to be constructive, but not yet. I understand that the two Amendments, Nos. 35 and 37, are associated; both deal with the Central Trustee Savings Bank Limited. The intention of the first, No. 35, is to bring that bank within the scope of the Bill within 18 months of the day the Bill is brought into operation. The Amendment to Schedule 1, it appears to us, would bring it within the scope of the Bill from the outset. It is not clear to me whether these Amendments are alternatives or whether the Amendment to Schedule 1 is designed to be consequential to the Amendment to Clause 50, but to show the spirit of construction I can indicate at this stage, without taking up further time, that I should be perfectly content to accept Amendment No. 37, which it appears to me would do all that the noble Lord wants, and in that event it would not be necessary for him to press Amendment No. 35.
  Lord REDESDALE: The question is whether the Trustee Savings banks can come within the Bill straight away. Would that be the affect of Amendment No. 37?
  Lord McCLUSKEY: Both Amendments deal with the position of the Central Trustee Savings Bank Limited, as I understand it, and neither is dealing expressly with Trustee Savings banks otherwise. The Central Trustee Savings Bank is a wholly owned subsidiary of the Trustee Savings Banks Central Board,
  1108
  which was established in 1973 to provide banking services to the individual Trustee Savings banks. For instance, it employs short-term funds deposited with it by individual Trustee Savings banks in the money market and acts as a clearing house for transfers between Trustee Savings banks. It also provides banking services to some other parts of the Trustee Savings Bank group; for instance, the unit trust and insurance companies. It appears to us that the Amendments are expressly concerned with the Central Trustee Savings Bank Limited, and therefore if I accept the second of the two Amendments I shall have done all that the noble Lord can possibly want. Maybe he has something else in mind, but I do not believe these Amendments are apt to cover anything more than the scope I have indicated.
  Lord REDESDALE: I aimed to bring the whole of the Trustee Savings Bank movement within the ambit of the Bill, and by citing the body mentioned in the Amendment my intention was to bring in the whole of the movement. If the noble and learned Lord is saying that I have failed to bring in the whole movement, I should be grateful if he would clarify the point.
  Lord McCLUSKEY: I have consulted with officials and I am advised that I am right; namely, that the Amendments do not bring in the whole movement but are related simply to the body referred to in them.
  Lord REDESDALE: Obviously the noble and learned Lord has a smug answer on this occasion, in which case I beg leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Clause 50 agreed to.
  Schedule 1 [Exceptions from prohibitions in section 1]:
  8.9 p.m.
  Lord REDESDALE Lord REDESDALE moved Amendment No. 36:
  Schedule 1, page 54, leave out line 7.
  The noble Lord said: This Amendment is consequential, at least to a degree, on an Amendment we passed earlier. I beg to move.
  Lord McCLUSKEY: I do not want to require the Committee to divide again, although I do not see this as exactly consequential upon Amendment No. 1. In fact, I think the noble Lord, Lord Redesdale, would acknowledge that if both Amendments were given effect to, some tidying up would be required. The principle of the matter was voted upon at an earlier stage and Amendment No. 1 was carried. So on that basis I would not oppose the present Amendment.
  I wish to take the opportunity to say that the noble Lord, Lord Boyd-Carpenter, kindly told me that he is unable to be present now. At an earlier stage there was some discussion of the provisions of the Post Office Act relating to directions. The provisions which bear upon this matter are contained in the Post Office Act 1969–Chapter 48–and are contained in Section 11 which relates to directions of a general character (as the noble Lord rightly recollected) but there are additional provisions in Section 41 and Schedule 2 relating to matters rather more specifically connected with the banking activities. The side-note to Section 41 reads:
  "The Post Offices' liabilities as banker to be matched by cash and liquid assets."
  The appropriate Schedule (Schedule 2) relates to that. I wish to put that information on the record merely so that anyone who was interested in the earlier debate can see what the Act contains.
  8.12 p.m.
  Lord REDESDALE Lord REDESDALE had given Notice of his intention to move Amendment No. 37:
  Page 54, leave out line 9.
  Lord McCLUSKEY: Does the noble Lord not intend to move this Amendment? Perhaps he has to carry out further work in order to include the Trustee Savings Bank movement generally, but I should have thought that he would wish to move Amendment No. 37 in order to get his first bird with his first shot.
  Lord REDESDALE: The noble and learned Lord is extremely gallant. I accept his offer, and I beg to move the Amendment.
  Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 38:
  Page 54, line 25, at end insert ("or the Credit Unions Act 1979").
  The noble and learned Lord said: With the enactment of the Credit Unions Bill 1979 credit unions will be subject to the supervision of the Chief Registrar and therefore can be excluded from the provisions of the Bill. Credit unions in Northern Ireland are similarly excluded. This is what will be achieved by the Amendment. I beg to move.
  Schedule 1, as amended, agreed to.
  Schedule 2 [Minimum criteria for deposit-taking institutions]:
  Lord SELSDON Lord SELSDON moved Amendment No. 39:
  Page 56, line 8, leave out ("two") and insert ("more").
  The noble Lord said: I rise to move the Amendment standing in the names of my noble friends and myself. It is a relatively simple Amendment, and to deal with it should take hardly any time at all because, noting that the noble and learned Lord now has more support among officials than he does from Members of his own Benches, I am sure that he will be willing to concur with us. Schedule 2, paragraph 3 recognises that although five criteria are required to determine the status of a recognised bank, the Bank of England may at its discretion reduce that number. Of the five criteria listed as the Bill stands, the first two cannot be waived by the Bank, but it may waive one or two of the remainder, though not all three. That is to say that institutions seeking recognised bank status will normally be expected to fulfil all five of the criteria, but in the case of a specialised institution it may suffice, though at the Bank's discretion, if the first two and at least one of the remaining three criteria are fulfilled. The Amendment simply says, "Stick to the first two, but give the Bank greater discretion on the remainder". I beg to move.
  Lord McCLUSKEY: I accept that what the noble Lord says would be the effect of the Amendment, but the result would be that to satisfy the one criterion

  1111
  for recognition of a wide range of banking services an institution would need, at the Bank's discretion, to supply only the two basic services of taking deposits and extending credit. This would make little sense of the concept of a wide range of services. In practice it would have little significance because it is not to be expected that the Bank would disregard all three of the services in paragraphs (c) to (e) of the sub-paragraph. However, the difficulty is that it would be wrong—if we were to accept the Amendment—to lead potential applicants to suppose that they might satisfy this criterion on the basis of such a restricted range of services as mentioned in paragraphs (a) and (b) of the sub-paragraph only. From that point of view, and bearing in mind the fact that even in the presentation by the noble Lord, Lord Selsdon, it was admitted that the proposal would not make any practical difference as he sees it, I would ask him not to press the Amendment.
  Lord SELSDON: It would in fact make no practical difference. The point of pressing this is that in my view an unnecessary piece of legislation would be added, and the noble Lord has pointed out earlier today that the Bank of England is a very discreet body and is most competent at exercising its discretion. However, I do not wish to press the Amendment, and so I beg leave to withdraw it.
  Amendment, by leave, withdrawn.
  Schedule 2 agreed to.
  Schedule 3 [Transitional licences]:
  Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 40:
  Page 59, line 35, at end insert—
  ("PART II
  TRANSITIONAL GRANT OF RECOGNITION
  8. The provisions of this Part of this Schedule apply to an institution which—

  (a) on 9th November 1978 was, and at the time of its application for recognition continues to be, either a company within the meaning of the Companies Act 1948 or any other body corporate having its place of central management and control in the United Kingdom; and

  (b) does not, apart from this Part of this Schedule, qualify for the grant of recognition.

  9. Notwithstanding anything in section 3(3) of this Act, the Bank may grant recognition to
  1112
  an institution to which this Part of this Schedule applies (whether or not it would otherwise qualify for the grant of a licence) if the Bank is satisfied—

  (a) that the institution carries on, and has since 9th November 1978 continuously carried on, a deposit-taking business but that the whole or substantially the whole of that business is and has been carried on outside the United Kingdom; and

  (b) that, with the exception of the criteria in paragraph 2 of Schedule 2 to this Act, the criteria in Part I of that Schedule are fulfilled with respect to the institution; and

  (c) that the criteria in paragraph 2 of Schedule 2 to this Act would be fulfilled with respect to the institution if the reference in sub-paragraph (1) of that paragraph to the provision of a wide range of banking services were not limited to the provision of that range of services within the United Kingdom.").

  The noble and learned Lord said: I spoke to this Amendment at an earlier stage when the related Amendments were accepted. I beg to move.
  Schedule 3, as amended, agreed to.
  [Amendment No. 41 not moved.]
  Schedule 4 agreed to.
  Schedule 5 [The Deposit Protection Board]:
  Lord REDESDALE Lord REDESDALE moved Amendment No. 42:
  Page 63, line 10, leave out from beginning to ("and") in line 11 and insert—
  ("(a) to cause accounting records to be kept in accordance with the provisions of section 12(2) and (3) of the Companies Act 1976, subject to the modification that for references to the company there shall be substituted references to the Board and that for references to directors there shall be substituted references to members of the Board;").
  The noble Lord said: I wish to give Amendment No. 42, along with Amendment No. 43, a quick airing to see what reaction I can get from the noble and learned Lord. The Amendment is fairly self-explanatory, and I expect that I might be told that it is not necessary. However, the same argument applies here as that which applied to the Amendment I raised on the question of accountants and of having a more positive definition of what is required. Here we are considering the records that are to be kept, and I believe that the Amendment, together with Amendment No. 43, would help in the

  1113
  preparation of accounts and would make the situation a little clearer. I beg to move.
  Lord McCLUSKEY: I certainly accept that the provisions in the Schedule relating to the Board's accounts are not elaborate, but they are sufficient to ensure proper accounting. It is the Government's hope and expectation that the deposit protection scheme will have to be activated only infrequently, if at all, and in these circumstances relatively simple provisions in the Bill relating to accounts would seem to be appropriate. In another place my right honourable friend the Minister of State said during the Committee stage that he did not think it necessary to go into this kind of detail, and we see no reason to change our position on that. The provisions of the Companies Act 1976, which would be imported by the Amendment, are of course appropriate for companies, but they are unnecessary in the case of the highly restricted powers and duties of the Board which are set out in detail in the legislation. In the light of what I have said, I hope the noble Lord will not feel it necessary to press this Amendment or the related one.
  Lord REDESDALE: I am a little disappointed because I feel that, once again, we are just letting it go by default. However, the hour is late and I will withdraw the Amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 43 not moved.]
  Schedule 5 agreed to.
  Schedule 6 [Consequential amendments]:
  Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 44:
  Page 64, line 24, after ("means") insert ("the Bank of England").
  The noble and learned Lord said: With leave, I should like to speak to Amendments Nos. 44 and 45 together. Section 5 of the Agricultural Credits Act 1928 and Section 9 of the corresponding Scottish Act in 1929 allow a farmer to create a charge on farming stock and other agricultural assets in favour of a bank. The English Act requires the Minister of Agriculture to approve banks
  1114
  for these purposes; in Scotland, the relevant definition refers to note-issuing banks. The opportunity has been taken to standardise these definitions, to include recognised banks, Girobank, the Trustee Savings Banks and licensed institutions. Although the contingency may be remote that the Bank of England would wish to loan money to farmers in this way, it is undesirable that it should be statutorily barred from doing so. These Amendments remove that statutory bar, and the Bank of England has requested them. I beg to move Amendment No. 44.
  Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 45:
  Page 64, line 33, after ("means") insert ("the Bank of England").
  Schedule 6, as amended, agreed to.
  Schedule 7 [Enactments repealed]:
  Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 46:
  Page 70, line 6, column 3, at beginning insert—
  ("In Schedule 1, the paragraph amending section 432(1) of the Companies Act 1948.").
  The noble and learned Lord said: This is a technical Amendment which repeals the paragraph in Schedule 1 to the Companies Act 1976 amending Section 432(1) of the Companies Act 1948. Section 432 of the 1948 Act is itself repealed by Schedule 7 to the Bill, and therefore the reference in the 1976 Act is rendered obsolete. I beg to move.
  Schedule 7, as amended, agreed to.
  In the Title:
  Lord REDESDALE Lord REDESDALE had given Notice of his intention to move as Amendment No. 47:
  Line 10, after ("repeal") insert ("and amend").
  The noble Lord said: I rise just to give notice, as my noble friends did, that we shall be coming back to this at a later stage of the Bill. I do not intend to move this Amendment now.
  House resumed: Bill reported with Amendments.

  EEC 11th REPORT: STATE AIDS FOR STEEL
  8.24 p.m.
  Lord TREVELYAN Lord TREVELYAN rose to call attention to the 11th Report of the European Communities Committee on State Aids for Steel (R/1135/78) (HL 69); and to move for Papers. The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. The 11th Report of the Select Committee on State Aids for Steel discussed some rather involved questions of importance to the European steel industry in the present severe depression in the steel market. Over the past few years, the Commission has introduced a number of measures in order to try to improve the position of European steelmakers, by raising prices and restricting output, but the action taken between 1975 and 1977, such as quarterly programmes of recommended outputs, largely failed to counteract the effects of the recession.
  In December 1977, the Council of Ministers therefore adopted a more comprehensive set of measures, generally known as the Davignon plan, involving stronger price control and the introduction for the first time of measures to restrain imports of steel from third countries. Fifteen agreements were made with supplying countries, providing for volume restraint and agreed price levels. The Commission felt itself unable to go much further in introducing measures to strengthen the market, and the success of the plan therefore depended largely on the ability of the producers themselves to impose discipline on the market by adhering to minimum prices and restraining output, though the Commission was given some powers of enforcement.
  The intention was that the short-term measures in the Davignon plan should be supplemented by a longer term restructuring of the industry to increase its competitiveness, involving the reduction of the capacity of the European industry, which, it was calculated, would have about 25 million tons of excess capacity in the early 1980s. It is, I understand, the view of the British Steel Corporation, with which the Select Committee agrees, that restructuring should be carried out on the level of the Member States and of
  1116
  individual steel enterprises. They do not consider it profitable that the Commission should draw up a detailed plan of restructuring to which firms in all Member States would be required to conform. The Commission, however, comments that the restructuring of the European steel industry not only involves the modernisation of installations but to a high degree requires consideration. Restructuring measures on a national or individual firm basis would, in their opinion, endanger the balance. Accordingly, the Commission place at the European level.
  Surely there is no need for a head-on collision on this point. Individual countries must be responsible for the detailed restructuring of their steel industry, but it must be designed with reference to the Commission's general plan for ensuring the balance of supply and demand. The Committee accept that indiscriminate subsidies by Member States' Governments could impede the restructuring process, and therefore agreed with the principle and aim of the Commission's draft decision on State aids. They had, however, strong objection to the Commission's earlier proposals, which they felt involved discrimination between private and public undertakings, would give the Commission as great a measure of control over the British Steel Corporation's operations as that exercised by the British Government, and could slow down the restructuring programme by creating an additional layer of official control over the Corporation's action. They therefore supported the Corporation's opinion that it was not appropriate to seek to extend the Commission's powers at this stage for the sake of a European restructuring programme which had yet to be drawn up.
  At this point, the Council of Ministers showed itself ready to compromise on the most objectionable features of the Commission's proposal. In particular, they now decided that there must be no discrimination between undertakings, especially as regards the system of ownership, public or private, or in the method of assessment of aid, whether of national, regional or local origin. The United Kingdom's representative noted the statement of the Commission on these lines, but entered a reservation on the legal

  1117
  position. The Commission was instructed to draw up new proposals consistent with the Council's statement of principles. Sub-Committee B of the Select Committee has considered the new proposals with the aid of members of the Department of Industry. The Committee's views have been expressed to the Minister of State as follows. It was pleased to note that the new draft decision goes a considerable way towards meeting the criticism against its predecessor. The fact that it deals only with specific aids to the steel industry, and not with regional or general aids, greatly reduces the scope of the draft decision and avoids some of the problems that the Select Committee pointed out in its report. The Sub-Committee was pleased to learn that the draft decision no longer discriminates unfairly between publicly-and privately-owned steel undertakings. To this extent, it is consistent with the resolution of the Council of Ministers of 19th December 1978 and is an improvement upon the previous draft decision.
  The Sub-Committee is, however, concerned at the extension of the Commission's powers that appears to be entailed by Article 6 of the new draft, which would give the Commission powers to require the repayment or other withdrawal of aids which have been granted but which are contrary to the provisions of the draft decision. This seems to be a considerable extension of the powers in respect of State aids that the Commission currently possesses under the Treaty of Paris, notably by virtue of Article 88, which provides for a procedure for appeal to the European Court.
  The Sub-Committee is also concerned that many of the objections to the previous draft, although avoided by the present draft, might be reintroduced by a further measure covering general and regional aids to the steel industry, since Article 1(2) of the draft decision appears to contemplate a separate régime under Articles 92 and 93 of the Treaty of Rome, covering general and regional aids. I may add that the Sub-Committee had considerable doubts whether Articles 92 and 93 of the Treaty of Rome can be applied to the steel industry in the light of Article 232 of the same Treaty. But one can be over-legalistic in this matter.
  However, in their 11th Report the Select Committee stated that they agreed
  1118
  with the principle and aim of the Commission's proposals on State aids; namely, to ensure that they do not distort competition or conflict with the restructuring of the steel industry. The Sub-Committee acknowledges that the aims of the present draft decision remain the same. They therefore urge the Government to ensure that the powers given to the Commission do not go beyond the terms of Article 88 of the Treaty of Paris; and that the decision does not prejudice the future consideration of further proposals on regional and general aid to the steel industry.
  We understand that the Government, throughout these negotiations, have endeavoured to ensure that the Commission does not extend its powers beyond those contained in the Treaty of Paris and that it does not encroach upon the policy and operation of the United Kingdom's system of regional and general aids. It is to be hoped that the talks now being held between British officials and the Commission will be able to find a way of drafting this decision which will overcome the remaining objections, and that the Council will be able to agree on a draft on 3rd April, the date fixed by the Council for further consideration of this matter. I beg to move for Papers.
  8.33 p.m.
  Baroness ELLES: My Lords, we are grateful to the noble Lord, Lord Trevelyan, for introducing the 11th Report on State aids to the steel industry. I should like also from these Benches to thank all those who took part in formulating the report and making it available to your Lordships. As usual, I think it is true to say that it maintains the very high standard that we now expect from the Select Committee on European Community affairs. As the noble Lord has informed the House, the draft decision contained in R/1135/78 which was the subject on the Order Paper as being superseded by another draft decision, R/4627/79, which has met some of the objections raised during discussions of the original draft. In particular I should like to draw attention to the difficulty in the definition of "State aid". There has now been some recognition of the fact that the original definition of what is State aid has had to be looked at again, mainly because of the nationalised industry, the British Steel Corporation. How, really,

  1119
  can there be a clear line between what is ordinary working capital engaged in restructuring and what is plain subsidisation to prop up an ailing industry?— both at the expense of the British taxpayer.
  From the Annual Report of the British Steel Corporation for 1977/78, the financial requirements are to the extent of £875 million for 1978/79, borrowings of £3,000 million at 1st April 1978, and a permitted borrowing limit of up to £5,500 million. This is the measure of the kind of capital involved. How much of this is State aid; and how does it come into the definition contained in the decision? Some of it may be justified but do we know what the borrowing limits are in other member States? There should be some form of comparability between what is called State aid in other member States. That is not made clear in the report, neither did I see evidence called to this effect.
  In free capital markets there is not the same difficulty in identifying private investment and State support. Therefore, it would be helpful to know what conclusion the Government have come to in this particular aspect. I do not expect to have an answer tonight from the noble Lord, but I think that there should be some statement from the Government as to how they see this particular problem, particularly if there is to be no distortion of the market not only within the United Kingdom but within the Community. What we are concerned with in this question of the steel industry is the need for action on a Community level, and, if so, what sort of action, to assist the ailing steel industry both in this country and in other European Community countries to adapt so as to meet world-wide international competition. The problems facing the United Kingdom steel industry are similar to if not identical with those of other member States. The Davignon plan to which the noble Lord, Lord Trevelyan, has referred was supported by Her Majesty's Government, as far as I can make out from evidence in the report before us, as a means of mitigating a pretty unhealthy situation. The main factors, minimum prices within the Community and price guidance for imports from third countries, as well as successful negotiations by the European Community with third countries as to quantities,
  1120
  have gone some way to mitigating the situation.
  It would be helpful if the Government would confirm that they are grateful to Commissioner Davignon for the work that has been done in view of the "knocking" that the Community is getting at the moment. Certainly, from the evidence available, both orally and by fact and result, it seems that the Davignon plan has contributed to at least stopping some of the ill effects affecting the steel industry at the moment. But these are short-term measures to meet what is an underlying long-term problem. The Davignon plan, a short-term measure, should not be regarded as a long-term measure. Some drastic steps must be taken if we are to put our own house in order. We see from the 1977/78 Annual Report of the British Steel Corporation that it has declined in production from something like 18 million product tons in 1973/74 to 13·4 million product tons by 1977/78. That is a reduction of about one-third of steel but with a reduction of only about 23,000 employees—something about 10 per cent. of the employees in the British Steel Corporation.
  It is not therefore surprising that we have a low productivity rate both in relation to other member States but also in relation to third countries such as Japan. Taking the hours worked per tonne of crude steel, for France it is 10; for the Federal Republic of Germany, 8; for Belgium, 6; and for the United Kingdom in 1978, 16·5, as opposed to 14·9 in 1976. We are the only country in the list of member States which has actually increased its manpower in relation to the amount of crude steel being produced. That is not a good record for the United Kingdom. Of course, I admit that sometimes statistics may be faulty or misleading, but these nevertheless indicate the way things have been going in this country as compared with those in other member States.
  Faced with a decrease in percentage terms of world production from about 25 per cent. to 20 per cent., due partly to developing countries now entering world markets and at the same time within the Community having something like 40 million tons of over-capacity, how is the Community to deal in the long term with this problem? Are we to continue to

  1121
  prop up with taxpayers' money—it was something like £443 million last year to meet the losses of BSC; and something like £300 million is apparently estimated this year—an industry which will not be able to work to full capacity and extent and meet the demand for its products?
  It is already a fact that the European Coal and Steel Community had something like £700 million in low interest loans, housing loans, research grants and so on. The European Community has assisted very considerably the steel industry over the past few years since we joined the Community. If the industry is to be restructured, which is one of the proposals and purposes of the draft decision, how is it to be done, who is to control it, and—the crucial point—who is to pay for it? Above all, what we must not forget is this. What will be the future of those whose jobs will be at risk if there is no restructuring as well as the future for those who are made redundant in the course of restructuring? These are both major problems which must be involved in this general proposal.
  It has been proposed that the contribution towards restructuring should be made by member States by means of levies being paid over to members of the European Community. At present, as I understand it, we pay something like £8 million to £9 million a year; if we are to envisage the European Community proposal, the figure I understand now will he something like £11 million. However, although we happen to be one of the main beneficiaries under ECSC loans and grants—I believe the figure is something like 34 per cent. of the total—it was somewhat surprising to see in the European Community Bulletin 12/1978 reference to the fact that, in order to finance restructuring measures, the Council noted that eight delegations agreed, subject to completion of national parliamentary procedures, to a contribution from member States amounting to 32 million European units of account. I would ask the Minister whether there is any significance in the fact that only eight delegations agreed, and whether by any chance we happened to be the ninth, the one that disagreed? It does not state which particular member State that was.
  The other aspect of the decision which is of some concern is the use, as the noble Lord, Lord Trevelyan, referred, to Articles 92 and 93 which deal with regional aspects. No doubt the Minister
  1122
  will be dealing with the legal aspects of this matter; but it will surely be necessary, if there is to be a comprehensive and effective steel industry in Western Europe, at least to co-ordinate development and closure plans so that current and future needs can be forecast. It is not something which can be done haphazardly. I do not say that the Commission should have the power to decide; this must be left to individual market forces. Nevertheless, it is inconceivable that one can close down a plant in one part of the country and not affect as a whole the steel industry in other member States.
  The Commission have shown understanding on the side of industrial development, but we are of course facing rapid progress and development in technology and industry and a great deal of competitiveness in world markets. Unfortunately, of course, human beings do not change so rapidly and easily and we cannot disregard—and neither must the Commission disregard—considerations affecting human and social matters, such as moving house, changing job and changing type of job; and, above all, in the training of men who are leaving the steel works there should he urgent consideration of the kind of employment that they are going to take up. We sec so many training schemes being put forward but not the end result of whether there arc going to be any jobs at the end of the day. This is a crucial element.
  While there must be the minimum of interference in decision-making processes regarding closures and capital investment, measures must be to some extent taken in line with those being taken by other member States. If there is to be any criticism of this report—and I do it very hesitatingly—it is that nothing is mentioned about the steps being taken in other member States; but since the report is about Community decisions, they must be relevant in the overall context of the development of the steel industry. Further, there seems to be a certain lack in the report of evidence concerning the private sector of the steel industry which is, after all, a major part of it. There seems to be rather too much emphasis on the Government role and the British Steel Corporation, and not so much information as to how these measures will affect the private sector. That does not mean to say that the report as a whole has not been

  1123
  extremely useful in order to provide a basis for this discussion tonight.
  Whatever measures are taken in this country and other member States, they simply cannot be done in isolation. They must all have the same objective of making the steel industry in the member States of Europe as a whole competitive in the world markets in the future if we are to save the jobs of our own people in this country and return once more to a better economic state in the United Kingdom.
  8.47 p.m.
  Lord TANLAW: My Lords, we too are grateful to the noble Lord, Lord Trevelyan, for this opportunity to discuss the Select Committee's excellent work in their report before us. It might also be suitable to take an opportunity for myself —if one has not been made before—to pay tribute to Jean Monnet, who died on Friday last week. We should recall and put on record that it was his determination and breadth of thought that led up to the Schuman declaration and the Coal and Steel Community which was created in 1950. I feel sad that today, 30 years later—admittedly in an election year—I have to ask the Government for some reassurance that they are not going to listen to the voices that are encouraging the Government to remove us from that Community of which Jean Monnet is referred to as the founding father. Furthermore, it might almost be worth asking for reassurances from the Opposition that they will not add steel to the list of companies which they intend, if successful in the election, to denationalise.
  Uncertainties of this kind make it very difficult to plan and restructure an industry which has to span the next five or 10 years—a very critical period in its life. I remind myself, and perhaps other noble Lords, of the difficulties that the Committee had in finding regulations that were suitable for the different countries involved in the steel plans which were discussed by the Committee. One should consider that only three months ago France appointed Government Chairmen to take over the two largest steel companies, which account for three-quarters of the market. Germany is slightly different, in that the steel industry is privately owned except for the third largest company,
  1124
  which is 75 per cent. publicly owned and accounts for 10 to 12 per cent. of the total German market. In Italy the situation is different again. Sixty per cent. of steel production is controlled by the Government. It is 70 per cent. publicly owned with a 30 per cent. private participation. In Belgium the situation is different again. The Government have been putting a lot of money into the steel industry, which is privately owned at the moment, but it is only a matter of time before the Government take a considerable stake in the largest company.
  For a start, one is seeing the steel community—if one can call it that—in Europe undergoing major changes in which the Governments of member countries of the Community are taking an active interest. They are therefore fully concerned with the restructuring for the future because they have primarily to provide the finance. At this stage I think I should declare an interest, in that I am an outside director of a steel fabricating company in the private sector: I shall make reference to this again shortly.
  The report before us really covers the three main points which the first two speakers have already covered, but I should like to touch briefly on the short-term problems of the industry, which is seeking to maintain base prices and also to limit production under the Davignon plan. I am advised that this plan is not operative at the moment because natural market forces have lifted up prices and the base prices have been exceeded; and therefore the Davignon plan is acting as a sort of safety net. I am not sure that everyone stuck to the Davignon plan for the short period it was in operation, but at least it is there, with a semi-agreed limit by which individual countries can "cheat", so to speak. It is there as the protection again serious abuse by any single member country, which could throw out the whole pricing structure of Europe.
  In the longer term, the restructuring of the industry cannot be done in isolation. Unfortunately—and I do not wish to refer to this again—during an election year people indicate that we in this country can do things differently from what is happening in Europe, because it is better or because the Europeans are inefficient or do not understand our problems, and so on. We have in steel a universal

  1125
  problem throughout the world, in which the various governments and industries, in private and public sectors alike, are facing the same kind of problems, difficulties and experiences. Therefore, one cannot take major decisions on restructuring for the future in isolation, because in the medium as well as the long term that can only end in disaster.
  This, I think, is where the Committee did considerable good work in trying to bring together the different interests in the countries involved to provide, if you like, some ground rules as to how we were to restructure. But that brought us again to one of the main areas of contention which were mentioned by the first two speakers—the definition of what amounts to State aid. It is quite unrealistic for the Commission, under its first draft before the Council, to demand the full powers of control with which it wishes to provide itself and to question almost every aspect of the day-to-day policy of the British Steel Corporation. I believe the feelings of the British steel industry have been conveyed to the Commission quite forcefully, and I understand that there are now before us revised proposals which are somewhat less unpleasant than the first ones, though they still do not satisfy either the Government or the steel industry in this country.
  These are areas for negotiation, I believe, and here one should try to look forward optimistically in the hope that a solution can be found and accepted by all the countries involved. I think there is a tacit recognition, rather similar to the Davignon plan, that whatever regulations are agreed will never be used but kept in the locker, so to speak; and market forces will again dictate how the countries and the industries in them will operate.
  One point did not come out in the report, but perhaps it was there tacitly. The question, not only for the British steel industry in this country but for any country which has a nationalised or the equivalent of a public sector steel industry, is, are you speaking to the Government or to the industry when discussing the subject of steel? This is an area which needs some clarification if possible. I think that clarification can come, and that the steel industry itself should be able to have some form of autonomy so that it can discuss with its competitors across
  1126
  the Channel, as an industry and not as a government spokesman.
  In my view, there are lines of confusion in that an industry wants to do one thing and says one thing and tries to create a long-term restructuring policy such as we are discussing tonight. At the same time, the Government are also putting forward their views, and there is a grey area which can lead to misunderstanding —unnecessary misunderstanding—when working out a long-term policy. In particular, when civil servants speak they can only speak with their masters' voice. We are, as I say, in an election year and the Government may change. Therefore, is the whole policy of the steel industry going to change with a change of Government or will a policy be worked out which the steel industry itself will have to stick to, no matter what Government are in power?
  I feel that these areas are not clarified and they arc not going to be assisted in many ways during the course of an election campaign when various slogans and exaggerations are used. I hope that during this election year members of all political Parties will be careful in their choice of words when dealing with the steel industry and when they are talking about what they intend to do with its future. I feel this could have a considerable detrimental effect if these lines of policy are not clarified at an early stage in the election campaign.
  On a slightly more parochial level, I should like to speak with experience as an outside director of a steel fabricating company in the private sector. The reason I have this job is simply because I am not a steel man. The steel industry has suffered from many problems and one of them, in my belief, is that they have been too inward-looking for far too many years and do not talk to other people unless they are steel men. I feel that only now are they waking up to some of the huge financial problems before them—problems of redundancy and restructuring —and they have to look outside the industry for that kind of further assistance. That is why I think there may be an area of confusion in Government thinking. For example, when a Government give a contract to a steel fabricating company I assume that is a form of assistance or, if you like, State aid; but if that same

  1127
  Government through their government department fail to pay for the work that has been done, this creates untold difficulties in an industry which is already suffering from severe financial problems at the moment. Those problems are critical as to whether a company can go on or whether it goes under.
  In the particular case of which I have knowledge, my own company has outstanding claims for more than £1 million. It is only a small company, and these sums are outstanding from the Department of the Environment. They have been outstanding for more than one year, and if these claims are not paid the whole future of the company is in danger. I do not think that my company is in any way different from many others which work for the Government. When it comes to discussing aid, I mention this only as one example, that there are occasions, possibly quite unintentional, when Government policies or policies for payment within Government Departments are not aiding the industry but actively destroying it because every steel fabricating company that fails to continue in business in these critical years means that there is one more customer that the Britsh Steel Corporation has lost. I mention that in passing: it is my only real experience of the industry, and it is not a very happy one.
  Finally, I want to touch briefly on a point mentioned in section 23 of the Introduction, which the noble Baroness, Lady Elles, mentioned in her speech tonight. I refer to the problem of developing countries putting on to the market products and steel plate which they have manufactured through their local and indigenous industries, often at very reduced prices. This will affect the future marketing of Community steel products and steel plate. But there is an area on which the noble Lord, Lord Trevelyan, or the noble Lord, Lord Jacques, may be able to assist. If the Community countries can make larger contributions than they have done in the past in World Bank loans—and the United Kingdom has not always subscribed to the extent that other member countries have done in making these loans—it will make available a form of finance for developing countries to be able to use Community, and indeed, British, steel products more successfully
  1128
  than they have done before. If the sterling content of a World Bank loan is taken up by a consuming country, then we have a right to say that they must use their sterling in purchasing British steel products.
  In the past, we have tried tied loans but we have kept away from these World Bank loans, because they were not tied. I believe that further investigation could be made into this, because by the United Kingdom subscribing more fully than it does to World Bank loans the sterling content of those loans could be used and channelled by the consuming country into British steel products, or British steel plate. There is no need for the Government to give an answer tonight, but this is an area that has not been fully explored as a means of improving and increasing the marketability of British steel products. On that note, I should like to end, because of the lateness of the hour.
  9.1 p.m.
  Lord DRUMALBYN: My Lords, I am happy to have the opportunity of following three most interesting speeches. I was very interested in the suggestion of the noble Lord, Lord Tanlaw, for an inter-member State steel organisation consisting of the steel enterprises themselves. I would only say that I hope it will he completely free of Governments and of the Community itself. I really wonder why this has not happened already. Perhaps there are too many different sectors within the steel industry, and it may be necessary to have a series of smaller bodies organised within the main assembly or association. I was very surprised to hear, as we are tonight talking about State aids to the steel industry, the noble Lord, Lord Tanlaw, talk about State aids by the steel industry to the Government, by advancing to them for a year or more funds for the Government to use. It is extraordinary how things work in both directions.
  This draft decision is a short-term measure to deal with a particular situation in the steel industry. It is expressed, if approved, to apply until 31st December 1981. It is also capable of amendment with the unanimous assent of the Council. so that after approval, it could, if need be, be amended, to extend beyond that day, if I understand it correctly. The situation with which this draft decision has to deal

  1129
  arises out of excess world capacity, slow growth, stagnant demand, fierce price cutting in world markets and losses by almost every producer in the Community, at a time when many plants in member States need modernisation and some plants need to be taken out of production entirely. Modernisation means investment, which in time of loss-making may well need State aid.
  Among its short-term measures, the Commission has already imposed mandatory minimum prices for some sectors of the industry in the ECSC, together with minimum import prices backed by default anti-dumping measures and agreements to restrict the volume of imports negotiated with the main suppliers outside the ECSC. These measures seem to be working well and the Commission, as my noble friend Lady Elles has said, and Viscount Davignon in particular, deserve great credit for this. I do not for a moment disagree that, although prices may he above the minimum level at the moment, the minimum level of prices may have been cut from time to time, such is the pressure of salesmanship.
  Of course, State aids may vary in character and amount from member State to member State and the Commission has a duty to ensure fair competition within the Community. Accordingly, some degree of control seems to be needed to ensure that producers in one member State do not gain an unfair advantage over others, whether in the same or another member State. The snag is that Article 4 of the Treaty of Paris expressly forbids State aids to particular enterprises. Presumably, the terms of the Treaty can be varied to meet an unforeseen situation. Whether or not this situation should have been foreseen at the time of the making of the Treaty is irrelevant, but clearly the consent of all parties is required.
  The main trouble over this instrument arises out of Article 6 of the draft decision. That requires that the Commission be informed of any plans to grant or alter aids in three sets of circumstances, and forbids member States from proceeding with the aids without the Commission's approval, which may be given either unconditionally or subject to conditions. If the Commission does not either approve or disapprove within two months of receipt of the notification, the member State may go ahead.
  1130
  The main sets of circumstances are aids in support of investment, temporary aids which form an integral restructuring programme and which are designed to enable undertakings and plants to continue in operation, and emergency aids to keep an undertaking going pending a decision about the future. These are quite different in character from regional aids which are non-discriminatory as between one enterprise and another and one problem and another. These are designed to deal with the location of industry within each member State and they are dealt with in Article 1.2, to which I shall return. The Treaty requires investment intentions involving more than a certain level of investment, which I believe to be 5 million European units of account for each product, to be notified to the Commission —so the Commission already has this information—and empowers the Commission to express an opinion on them which is not binding on the member State or on the enterprise concerned. The new power to sanction State aid or even to veto it if, in the opinion of the Commissioner, it is not compatible with the orderly functioning of the market—which seems to be as near as we can get to a definition—is a very considerable departure from the Treaty. This is the real difficulty with which we have to deal.
  The draft decision is in effect a holding operation, pending the issue of further general objectives. I do not want to discuss what happens after these short-term measures have been taken. The last general objectives were issued in October 1976, at a time when world market conditions were changing considerably for the worse, although the measures taken by the Commission, to which I have already referred, led to some improvement in 1978, and the market is more stable.
  While the draft decision is to cease to have effect at the end of 1981, by which time the Commission will have to reckon with the Assembly as well as with the Council, by then, no doubt, the Commission will have issued revised general objectives with a view to the restructuring of the steel industry. The power to veto or modify State-aided investment projects, though expressed as temporary, seems to be likely to provide a precedent. It could easily be extended to all investment in steel production, whether or not it is

  1131
  State-aided. We have to be very watchful. Indeed, it might serve as a precedent for the restructuring of other industries in the longer term, so it needs very great consideration.
  Your Committee found that the short-term measures proposed for State aids were widely accepted, but the Committee was inclined to the view that restructuring should be carried out—as my noble friend Lord Trevelyan, who opened the debate, has already said—at the level of member States and of individual State steel enterprises. We said in paragraph 24, and I think it is worth quoting:
  "Indeed, they"—
  that is, the Committee—
  "do not believe that the Commission itself would wish to draw up a detailed plan of restructuring to which firms in all Member States would be required to conform".
  The Commission may come to that view. It does not seem to be wishing this to happen at the moment, but this needs to be watched.
  As my noble friend Lord Trevelyan has already said, some improvements in the draft decision have been made since the report was drafted. In particular, I understand the British Steel Corporation's cause to fear that the Commission would have the power of approval or veto over the content and timing of all the Corporation's investment schemes has been modified. It was based on the fact that the British Steel Corporation derives all its funds either from the State or from loans which have been approved by the Treasury.
  I noticed that, included among the loans, there were loans from the ECSC itself and the European Investment Bank. The Commission had originally indicated its intention to decide itself how much of such funding should be treated as aid. I understand that the British Steel Corporation will now be left to decide for itself whether, and how far, any particular project is State-aided and to notify the Commission accordingly—perhaps through Her Majesty's Government; I do not know. I shall be grateful if the Minister will confirm that State aid could include, for example, loans at preferential rates, or the waiving of interest for an opening period, as sometimes happens. I think that it has to be borne in mind that a capital reconstruction scheme might
  1132
  also involve aid, direct or indirect. These are matters which we shall have to meet when we come to them.
  Because of the enormous increase in costs of renewal and modernisation, even the step-by-step approach which the British Steel Corporation is adopting involves expenditure, as my noble friend Lady Elles has said, of some £500 million a year. But such levels of investment are, I am sure, needed in this country if the British steel industry is ever to regain viability. We cannot afford not to make them.
  As for other steel enterprises, to the extent that their plants need modernisation it is very difficult to see how they can find the necessary funds for it without State aid at a time when virtually the whole of the steel industry in Europe is operating at a loss. As has already been made plain, Article IV of the Treaty of Paris bans all such aids, though Member States have been giving aids in various ways—I understand, by subsidies, or coking coal, or otherwise. However the architects of the Treaty of Paris did seek to provide a loophole in Article 95 to meet unforeseen circumstances, and this is referred to in paragraph 18 of your Committee's report. The draft decision purports to rely mainly upon that Article. However as the noble Lord, Lord Trevelyan, has said, your Committee expressed doubts in paragraph 19 as to whether the Article gives the powers which the Commission seems to think it does.
  Your Committee was still more doubtful about the Commission's original attempt to treat regional development grants and loans in much the same way as direct State aid to specific projects. The Commission based its attempt on Articles 92 and 93 of the Treaty of Rome. I would only say this: these Articles deal with State aid which distorts, or threatens to distort, competition by favouring certain undertakings or the production of certain goods. As I have already said, regional aid is by its nature general, not specific; it is designed to encourage investors to engage in any kind of production in nationally designated areas, generally speaking in areas of more than average unemployment, though in this country the Government exercise their influence to steer the development in the desired directions.

  1133
  Quite apart from the question of the propriety of importing into one Treaty the provisions of another, it hardly seems appropriate to deprive investors in one particular production activity of advantages available to all other investors, irrespective of nationality, in all types of production. I hope the noble Lord will confirm that this is the view of Her Majesty's Government. I shall only say in passing that this is not a minor matter for British steel-making. Claims for regional grants made by the British Steel Corporation alone in 1977 and 1978—the two years combined—amounted to just over £160 million. Of course if the EEC would replace this with Community regional grant, so much the better.
  The original draft Directive has been amended and Article 1, paragraph 2, still appears to exclude regional and general aid from the provisions of Article 6 of the draft decision. But—and I would stress again what the noble Lord, Lord Trevelyan, has said—rumour has it that the Commission intends to issue to Member States a circular indicating that, where aid is given to the steel industry in application of a general or regional system, the compatibility of that aid with the orderly functioning of the Common Market—and those are the words used—will be subject to appraisal by the Commission on the basis of Articles 92 and 93 of the EEC Treaty. This provision seems to be right outside the scope of the Treaty of Paris. I would ask the Government to tell us what is the state of play on these matters.
  On 19th December last year the Council passed its resolution inviting the Committee to amend its draft decision in terms of the resolution. I need not go further into that because my noble friend Lord Trevelyan has already dealt with it. Suffice it to say that the Commission responded with a revised draft on 3rd February 1979.
  There are two other matters on which I should like briefly to touch. The Commission has not disregarded the social penalties of modernisation. It does not seek to control what Article 3 calls,
  "aid to defray normal costs resulting from partial or total closure of steel plants".
  All they ask is to be notified at six-monthly intervals of aid decided on—
  1134
  not spent—in the previous six months. As my noble friend Lady Elles has indicated, these are most sensitive matters—especially redundancies—and the noble Baroness mentioned retraining and taking timely action—as, for example, at Bilston, if one may mention a topical matter— to see that before the period of notice runs out, further employment is provided in the area or nearby for those who will become redundant. The Commission rightly recognises that these matters must be left to Member States and to individual enterprises. I believe that the Commission actually contributes to the cost, and perhaps the noble Lord can confirm that.
  There is one other provision on which the Commission might be asked to think again—namely, the provision that if a Member State gives aid contrary to the terms of Article 6, paragraphs 1, 2 and 3, the Commission may require the repayment or the withdrawal of the aid. That is a sanction. There must be some sanction, but there is no such power in the Treaty of Paris. If a Member State fails to notify the Commission of a plan to grant aid or if it disregards an adverse decision, or if it fails to wait for two months before going ahead, the right course is surely for the Commission to take it to the European court, as provided in the Treaty.
  The Commission's proposal just does not fit the circumstances of a nationalised industry. If the British Steel Corporation identifies an instance in which aid is given to it, how can it repay it? Unless and until the industry is making a surplus how can the Government withdraw it? I hope the British Steel Corporation will be able to smooth out any differences that may arise with the Commission. In any case, the provision is permissive; it says the Commission "may" impose the sanction. It would be very unwise either for the British Steel Corporation to defy the Commission or for the Commission to antagonise the British Steel Corporation.
  To sum up, the British Steel Corporation has to be allowed to carry out its restructuring programme, but the programme needs to be coordinated with the work of other States. The Commission has to be allowed, in its turn, to do its duty of seeing that no one member State acts in such a manner as to undermine the

  1135
  orderly functioning of the Community by unfair methods. That is what the Treaty of Paris is all about. But the Community will fare much better if member States work together with the Commission and if neither provokes the other. Voluntary co-operation is far more effective than dictation on the one side and resistance on the other, and produces much better results. As I said, this is a short-term measure to give a breathing space to each member State for restructuring. The Commission would do well to encourage all member States to observe the spirit of the measure, and I hope they will do so.
  9.23 p.m.
  Lord VAIZEY: My Lords, I should like to join with other Members of the House in thanking the noble Lord, Lord Trevelyan, and his Committee for presenting this interesting and valuable report. We in Sub-Committee C are meeting with Sub-Committee B tomorrow morning in a joint venture, and therefore this debate has been singularly well timed from the point of view of those of us who are particularly interested in the social aspects of the consequences of the Treaty of Paris. After a good deal of experience with Sub-Committee C, I read the report with something of the sense of whether this is another Community decision about which its friends ought to despair, since we have been spending quite a lot of time upstairs in Sub-Committee C dealing with such important matters as the size of windows on agricultural tractors, which does not seem to me to be central to the harmonisation of Europe, whereas it does seem to me that the future of the steel industry and of the people who work in it is central to the European economy.
  I was interested to hear the noble Lord, Lord Tanlaw, say that this report shows —and I think it is a correct observation—that the Davignon plan is not yet fully working itself out, for the reasons he gave. I suspect, in reading this report and the background material which is supplied with it, and thinking over the whole problem, that there is a pretty simple answer why the Davignon plan is going to be uphill work. It so happens that some years ago I was asked to write the history of the British steel industry by the late Lord Melchett, who was then
  1136
  chairman of the British Steel Corporation. This had for me one great benefit, in that I was able to read the archives of the British steel industry, such as survived. Included in the archives were the archives of the European steel cartel. The British steel industry joined the European steel cartel in the 'thirties. Before that it had a certain degree of observer status.
  The Treaty of Paris, for all the high-flown sentiments which now surround it, had its origins quite simply in the old-fashioned steel cartel formed by the German industry and around which the rest of the European industry was organised. It was taken over by Hitler during the war, and after the war it was revived and restructured and eventually became the Treaty of Paris. I mention that in passing because it is highly significant as regards the way in which the Commission is carrying out its duties in the steel industry at present.
  The proposals which are put before Europe, and which are commented on in great detail in State Aids for Steel and which the noble Lord, Lord Drumalbyn, has dealt with in some degree of detail, are precisely the kinds of detailed control of a contracting industry which are highly characteristic of the cartel which was operating before the war. The type of people who operate these controls are, of course, not the type of people who would be the great entrepreneurial geniuses, the great Jean Monnet and so on, whom one would expect to restructure the European steel industry in its present exceptionally difficult world circumstances.
  Therefore, I am not at all surprised that, in paragraph 20 of the report, the Committee castigates the Community for pursuing uniformity for the sake of uniformity, or that the British Steel Corporation in its evidence referred to a highly-regimented system of production quotas. We cannot ask an animal suddenly to change its pattern of behaviour after something like 60 or 70 years of pretty continuous existence since the Germans set it up at the beginning of the century.
  I should like to ask briefly how far we can expect in relation to the Davignon plan, when it comes up for discussion—and as regards which this particular item is a holding operation—a radical restructuring of European steel and what sort of

  1137
  restructuring will it be? I ask that because it is of great significance to the United Kingdom. We are, at present, as your Lordships' House knows full well, spending a substantial part of our limited resources on the agricultural programme. In return for that I think that the United Kingdom has a legitimate interest in asking for European assistance in the restructuring of the British steel industry.
  The noble Baroness, Lady Elles, was perfectly right to point out the degree to which the British steel industry has slid behind our European partners—if I may say so, that is not something new, because precisely the same complaint was made in the 1920s and 1930s about the British steel industry—and the extent to which aid is already being given and will need to be given if the restructuring is to be successful. If we thought hard about what is to be done in the British steel industry and if we followed the recommendations of the British Steel Corporation and the plans which are, with Government agreement, already being worked out, we have no doubt whatsoever that what we shall see is virtually a desolation of whole areas, particularly in the north of the country, Soctland and Wales. We shall be speaking in terms of a loss of about 100,000 jobs. If I may say so—and I speak subject to confirmation—I think that that is something of the order of the magnitude of the restructuring that has gone on in the European agricultural industry. Therefore, we are talking about a substantial structural change in what has traditionally been a very major British industry which we joined the steel cartel before the war in order to safeguard.
  It is no use blinking the fact that, if we are talking about the loss of jobs for something like 100,000 men, the sum that we ought to be thinking of getting from Europe is not £1 billion, but more like £2·5 billion, or two and a half times our present annual subscription to the European club. Unless the Davignon plan actually includes aid and help of that kind for the restructuring of the British industry it is not conceivable that there can be a significant restructuring of the European industry. if there is no significant restructuring of the European industry, I believe that the future of the whole European steel industry will be called into question.
  1138
  If we look at the pattern of production in the United Nations' figures for the last 50 years, we see quite clearly—and it is mentioned in the report—that the pattern of production is moving to the Third Word countries, to countries like Korea and Brazil and other countries throughout the Third World. If the European Commission is not prepared to take a radical and substantial look and to bring forward serious plans for the reconstruction of the European steel industry, I would suspect that in 20 years' time there will not be a European steel industry left.
  9.31 p.m.
  Lord JACQUES: My Lords, first, I join with the noble Lord, Lord Tanlaw, in paying tribute to the initiative and the work of M. Monnet, leading up to the Treaty of Paris. He will, of course, go down in history as a great European. The Government as well as the House are grateful to the noble Lord, Lord Trevelyan, and his Committee for the work which they have done on this particular subject and for the report which they have submitted to the House and which has given us a basis for debate. It is up to the standard of the work of the European Select Committee; I do not think that I could possibly put it any higher for the standard is so high. The report and the debate has raised a number of important issues on the Commission's draft proposals to control State aids for the steel industry. They have also paid tribute to the worthwhile nature of the anti-crisis measures. I wholeheartedly endorse those tributes. The anti-crisis measures are helping to restore stability and discipline to the steel market.
  There is no disagreement between us and the Commission on basic steel objectives; we are both looking for an efficient, competitive, productive and profitable industry with capacity in line with demand. But present projections suggest that, at least for the next five or six years and perhaps longer, there will be a serious imbalance in the European steel industry. Available markets show no signs of growing sufficiently to match existing capacity together with that arising from new projects to which producers are firmly committed. The anti-crisis measures were thus drawn up to give the industry the necessary breathing space in which the necessary restructuring could be carried

  1139
  out. The Commission has not yet specified its restructuring proposals, but has drawn up a series of general objectives against which the activities of individual companies may be assessed. It is now seeking agreement to a slightly modified form of the draft Decision set out in Document 4627/79, which it regards as in line with these objectives and proposals. The Government understand this aim but in discussion with the Commission and other member States on the proposed decision have sought to ensure the retention of control over the extent and speed of restructuring in the United Kingdom. Recent events in France have shown the wisdom of the Government's step-by-step approach to restructuring and their insistence that no action be taken on closures without proper consultation with the TUC steel committee and the local workforces.
  Although we want to work together with our Community partners in tackling the massive problems of the steel industry, it must remain the Government's policy to do this within the provisions of the treaties. The Minister of State for the Department of Industry made this very clear when he spoke on this subject at the Council of Ministers last December. He has also explained to the Council the extent of the restructuring which has already been achieved and how this is being carried through. It is right therefore that in this House we should look very critically and carefully at any proposals, in whatever form, whose effects amount to treaty amendment.
  Noble Lords are aware that at the December Council of Ministers the Council resolved that a conclusion on the Commission proposals to control State aids would be reached as soon as possible and by 1st April at the latest. At the Foreign Affairs Council on 5th March this deadline was effectively extended to 3rd April when the Council next meets. In the time leading up to this date, bilateral discussions are taking place between British officials and the Commission to see whether there is any way of reformulating the draft decision so as to overcome the legal difficulties which noble Lords and the Government see contained in it. However the latest draft of the Commission's proposals still lacks a sound legal foundation.
  1140
  The Government's fundamental legal objection to the decision is that its contents more properly warrant amendment of the Paris Treaty, because they alter the balance of power between the institutions of the Community and the member States. The decision sets out criteria by which aids may be considered compatible with the Common Market, and under these criteria the Commission seek to authorise the giving of finance or aids by member States although these criteria are not derived from the Treaty of Paris. By requiring prior notification and enabling the Commission to approve such aids, the decision would alter the balance between the Community institutions. Article 3 of the Treaty of Paris makes it clear that institutions of the Community shall act within the limits of their powers; therefore, Article 95 of that Treaty cannot be used to alter the constitutional structure of the Community organs. Such a change properly requires formal amendment of the Treaty, which is covered by Article 96 of the Treaty of Paris. This provides for a special conference of member States and for formal notification by all member States in accordance with their respective constitutional requirements, of any amendments before they are put into effect. Parliament would thus have an opportunity to consider all the implications.
  While Document 4627/79 no longer seeks to make regional and general aids for the steel industry subject to Articles 92 and 93 of the Treaty of Rome, it is drafted in such a way as to imply that these Articles could be applied to activities covered by the Treaty of Paris. The Commission has indicated that it proposes separately to seek prior notification of regional and general aids by having recourse to these Articles. The Government take the view that this is unacceptable because these aids are covered by Article 67 of the Treaty of Paris. They cannot therefore be covered by the Rome Treaty provisions because Article 232 of that Treaty lays down that the provisions of the Paris Treaty establishing the European Coal and Steel Community shall not be affected by the provisions of the Rome Treaty.
  The Government attach considerable importance to our freedom to offer regional assistance and have made it clear that any attempts to curtail this

  1141
  freedom are unacceptable for reasons of both principle and practice. In any case, any attempt to introduce prior Commission approval for the giving of regional aids would be very difficult to implement in practical terms, particularly so far as regional development grants are concerned.
  To sum up the Government's position, I should again stress that we share basic objectives for the steel industry with other member States and the Commission. We believe that the United Kingdom must be free to proceed with restructuring in the light of the circumstances in our own industry, taking full account of wider economic and social implications. We consider it important that common policies are established strictly within the provisions of the two treaties. Creeping assimilation of the provisions of the two treaties by backdoor means is not acceptable to us. Thus, I hope your Lordships will agree that, without important changes in the text of the decision to overcome our legal objections, the United Kingdom must regretfully continue to withhold its assent.
  A number of questions have been asked and, so far as I am able, I will answer them. I am pleased to advise the noble Baroness, Lady Elles, that the ninth member State which objected to the 32 million units of account contribution was not the United Kingdom. I can tell the noble Lord, Lord Tanlaw, that we are very mindful of the way in which aid, whether directly from ourselves, in the form of loans directly from ourselves or from the Community or from the World Bank, can lead to increased demand for the products of the iron industry and especially the steel industry. We have that especially in mind, but we shall nevertheless take account of the point he made.
  The noble Lord also raised the question of opportunities for the British Steel Corporation to voice its views within Europe. There are good opportunities for this. The BSC is a member of Euro-SA, which is an association of Community steel producers which meets with the staff of the Commission frequently and, as necessary, with Commissioner D'avignon directly. The noble Lord, Lord Drumalbyn, raised a number of points. For example, he wanted to know what was the state of play with proposals to regulate regional and general aid to the steel industry. The
  1142
  Government's understanding of the Commission's current intention is much as the noble Lord indicated; no formal proposals have however yet been put to the Government. He also raised the question of preferential rates on loans. The answer is Yes, in principle; where finance is provided on less than commercial terms, it is likely to be regarded by the Commission as containing an element of aid. With or without a State aid decision, the prospective restructuring of BSC's capital will involve consultation with the Commission. Lord Drumalbyn also raised the question of the contribution of the Steel and Coal Community to closure costs. The answer is, for individuals, 50 per cent. of income support measures; and for new employment, loans at favourable rates of interest to new enterprises in steel redundancy areas. My Lords, that covers all the questions to which I have answers. We will look at the Official Report and if there are answers which should be given and which I have not given, they will be communicated to those noble Lords who raised the issues.
  9.43 p.m.
  Lord TREVELYAN: My Lords, this has been an interesting debate. We were interested to hear the careful exposition by the noble Lord, Lord Jacques, of Government policy, which we shall study very carefully and I think our position is substantially in accord with that of the Government. I hope very much that further negotiations by officials of the Department with the Commission will enable an agreement to be reached. I must tell the noble Baroness, Lady Elles, that it is perfectly true that we could have gone over wider ground, but I am sure that there will be many opportunities for further examination of the Community's steel industry. Meanwhile, the Select Committee has done its proper job of scrutinising the policy of the Commission. I beg leave to withdraw the Motion.
  Motion for Papers, by leave, withdrawn.

  SOCIAL SECURITY BILL
  Returned from the Commons with certain of the Lords Amendments agreed to, and with the remaining Lords Amendment agreed to with an Amendment; the said Amendment to be printed.
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  DEFENCE EXPENDITURE 1978
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  CENSUS 1981: ENUMERATORS
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