Sitting of 26 February 1980

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

BRITISH RAILWAYS BILL (By Order)
Orders for Second Reading read.
To be read a Second time upon Thursday 6 March.

ORAL ANSWERS TO QUESTIONS
  SOCIAL SERVICES

    Family Income
    Mr. McCrindleasked the Secretary of State for Social Services if he is satisfied that the indexation of benefits assists in the minimisation of the poverty trap.
    Mr. Ralph Howellasked the Secretary of State for Social Services if, in order not to aggravate the so-called "why work?" problem, he will take steps to ensure that no more child support is given to non-working families than to those who work.
    The Minister for Social Security (Mr. Reg. Prentice): I recognise that the levels of benefit are an important factor in any consideration of work incentives. But if, for example, we were to increase child benefit by £1.70. so as to produce the same level of child support for a person who is at work as one receiving unemploy-
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    ment benefit, the cost would be £950 million a year. Such resources are not available.
    Mr. McCrindle: Does not that mean that, while there is a powerful case for increasing some of the long-term benefits by an amount equivalent to the rise in the cost of living, there is, equally, a case for increasing such benefits as short term unemployment benefit to a rather lesser extent, so as to act as an incentive to those receiving that benefit to take some of the jobs that continue to be available?
    Mr. Prentice: We recognise the importance of the interaction between benefits, tax and low wages. We are keeping these matters under review. I cannot be drawn any further on this subject at present.
    Mr. Howell: Is my right hon. Friend aware that those not in work receive at least £5.70, and in some cases as much as £9.35, for teenage children, while those in work receive only £4? Does he agree that that is one of the principal causes of the "why work?" problem which the Government are pledged to solve? Will he give an assurance that he will institute a uniform child benefit at the earliest possible opportunity?
    Mr. Prentice: I cannot anticipate what may happen about child benefit. Clearly, in principle, we all wish to see it raised a good deal. The general problem has to be attacked in several ways. One is the raising of tax thresholds, on which a useful start was made in the Budget last year.
    Mr. Kilroy-Silk: Is not the Minister aware that his Government's refusal to increase child benefit is deplored by the majority in Britain, especially those who are most poor and needy? Will he give an assurance that child benefit will be increased to its true level in real terms?
    Mr. Prentice: The hon. Gentleman cannot expect me to anticipate anything that may be announced in a few weeks' time.
    Mr. Budgen: Does not my right hon. Friend agree that if, at the next Budget, the Government decide not to index the tax system through implementing the Rooker-Wise amendment, there will be a substantially reduced case for indexing child benefit? If Rooker-Wise is not implemented, and the indexation of child

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    benefit occurs, will not the poverty trap be made worse?
    Mr. Prentice: That is an interesting supplementary question. I cannot anticipate the Budget Statement for two reasons. First, I do not know what is in the Budget and, secondly, even if I did know I would not be allowed to say so.
    Mr. Rooker: Instead of listening to his hon. Friends behind him calling for a decrease in benefits to alleviate the poverty trap, will the Minister pay attention to the early-day motion sponsored by his hon. Friend the Member for Hornchurch (Mr. Squire) outlining methods to solve the poverty trap?
    Does the right hon. Gentleman realise that that motion has been signed by 29 Conservative Members of Parliament and calls for child benefit to be raised?
    Mr. Prentice: Every hon. Member is in favour of raising child benefit as fast and as far as resources will allow.

    Child Benefit
    Mr. Dubsasked the Secretary of State for Social Services what recent representations he has received requesting an increase in child benefit.
    Mr. Maxtonasked the Secretary of State for Social Services when he expects to make an announcement on the increase of child benefit.
    Mr. Marlowasked the Secretary of State for Social Services if he will make a statement on child benefit levels.
    Mr. Ernie Rossasked the Secretary of State for Social Services what representations he has had from organisations regarding the level of child benefit; and how many of these organisations requested that the indexation of this benefit be restored.
    Mr. O'Neillasked the Secretary of State for Social Services what representations he has received requesting an increase in child benefits.
    The Secretary of State for Social Services (Mr. Patrick Jenkin): I have had a number of representations. Any change in the levels of child benefit will be announced at the appropriate time.
    Mr. Dubs: Can the Secretary of State confirm that he has received many representations not only from Labour Members and Labour Party organisations, but from his own side? Will he take particular note of the Conservative Women's National Advisory Committee, which has also asked him to press for an increase in child benefit? Will he therefore give some assurance to the House that these representations will be taken note of?
    Mr. Jenkin: I am grateful to the hon. Gentleman for his solicitude for Conservative women. I can assure him that I pay the greatest possible attention to what they say to me.
    Several Hon. Members rose—
    Mr. Speaker: Order. I propose to call first those hon. Members whose questions are being answered.
    Mr. Maxton: is the Secretary of State aware that there will be considerable anger among my constituents who are suffering hardship from the inflation that has been caused by the Government's policies and who are failing to get the increase in child benefit that they require to keep up their standard of living? It is not good enough for the right hon. Gentleman to say that the announcement will come later. The announcement is required now.
    Mr. Jenkin: The only way in which people in this country can maintain and improve their standard of living is by increasing the output which the country as a whole produces. There is no way in which any Government can guarantee for our people the maintenance, let alone the increase, of their standard of living.
    Mr. Marlow: Does my right hon. Friend agree that over the last few years the cost of living for families has gone up at least as rapidly as the cost of living index as a whole? Does he further agree that families are among the least well off groups within the community? Would he personally like to see child benefit go up so that it is at least in line with the rate of inflation?
    Mr. Jenkin: I understand and applaud my hon. Friend's concern for the position of families. I can assure him that the Government have a lively concern for the relative position of families with and

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    without children. However, he cannot expect me to announce, ahead of the due date, what we may be able to do about the increase in child benefit.
    Mr. Ross: Does not the Secretary of State accept that it is his responsibility, not the responsibility of the Chancellor of the Exchequer, to state exactly by how much child benefit should be increased in order to restore its real value?
    Mr. Jenkin: The hon. Gentleman may not be fully familiar with the procedure in relation to the announcement of the November upratings of social security benefits. He will know that for instance, for many years it has been the custom for the Chancellor in his Budget Statement to announce the increase in pensions. There will be an announcement at the due time about child benefit.
    Mr. O'Neill: The right hon. Gentleman must surely appreciate that parents, who have already been burdened with VAT increases, are looking for an announcement as early as possible with regard to child benefit because they want to be able to budget for the rest of the year. Is there no assurance that can be given on this point at this time?
    Mr. Jenkin: I have already made it clear in my letter to the right hon. Member for Salford, West (Mr. Orme) that the Government do not feel it right to make an increase in child benefit this April. Now that child tax allowances have been wholly phased out, and there is a direct interaction between the amount of child benefit and the amount of the child dependency additions for short-term benefits and for supplementary benefit, it makes every sense to increase the child benefit in November, at the same time as other social security benefits, and to make the consequential adjustments in the child dependency additions at the same time. I can assure the hon. Gentleman that an announcement will be made about the uprating of child benefit at the due time.
    Mr. Paul Dean: I welcome my right hon. Friend's announcement that the appropriate time for the increase in child benefit is in November. Will he bear in mind the pleas that have been made from both sides of the House that a substan-
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    tial increase in child benefit can do much to help parents climb out of the poverty trap and also to encourage work and wealth production?
    Mr. Jenkin: I can give my hon. Friend the assurance that the Government have both those considerations very firmly in mind.
    Sir Brandon Rhys Williams: Does my right hon. Friend agree that, with the amalgamation of child tax allowances and child benefit, child benefit is now part of the tax system just as much as it is part of social security? Will he ask the Chancellor, in considering his Budget Statement, to review the social priorities that apply in the selection of tax concessions, because there are certain classes of recipient of benefit in the income tax system which I believe society as a whole would not put ahead of mothers, given the present state of inflation?
    Mr. Jenkin: My hon. Friend has pursued these matters with great tenacity over many years and has aroused the admiration of all his colleagues. I think that he would recognise that child benefit, whatever may have been its origins, is a cash transfer from the public to the private sector, whereas a tax allowance is a way of allowing a man to keep more of his own income. As to the decision which a Government face in making proposals to the House, the key question is that either would have an effect on the public sector borrowing requirement. Every 10p increase in child benefit costs £56 million in a full year and the Chancellor considering his tax allowances or the Government as a whole considering the level of child benefit must have regard to the requirement to keep the PSBR under control.
    Mr. Freeson: Is the right hon. Gentleman aware that the language that he has just used is not the same language that he used when in opposition, and neither is it the language of the Conservative Party manifesto before the general election? I should like to put a specific point to him. Does he agree that any increase in child benefit, presumably announced at Budget time, should at least allow for raging inflation? Does he agree that to do that there would have to be an increase next November of more than 25 per cent. on present trends? Is he

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    aware that there has already been a net loss of about 20 per cent. in the real value of child benefit since it was last increased, and there will be a great deal more between now and next November?
    Mr. Jenkin: I honestly do not believe that the right hon. Gentleman expects me to answer questions as to quantum of the child benefit now. That is an announcement which will have to be made at the appropriate time.
    Mr. Peter Bottomley: Will my right hon. Friend draw, and bring to the attention of his Cabinet colleagues, a graph showing the increase in earnings and pensions and the decrease in the level of child support—either combined child tax allowances and family allowances or child benefit—since 1955?
    Mr. Jenkin: I shall certainly take careful note of what my hon. Friend says. However, it is fair to put on record that child benefit remains of greater value to most basic rate taxpayers than child support in recent years by way of child tax allowances and family allowances or child benefit.
    Mr. Ashley: Does the Secretary of State recall that the Royal Commission on income distribution said that there are more poor children than there are poor pensioners—4½ million as against 3¾ million—and that nearly 45 per cent. of families with three children or more are living in poverty? Is not that a reason for now paying a larger child benefit to large families rather than the case which he has put?
    Mr. Jenkin: It all depends on what one means by poverty. The case that has been advanced by Professor Townsend and others is that poverty must always be looked at solely as relative poverty—
    Mr. Kilroy-Silk: Of course.
    Mr. Jenkin: The hon. Gentleman says "Of course." But the implication of that is that if the standard of living in the country as a whole doubled over a period of years, with no relative change in the position of different groups, exactly the same number of people would be in poverty at the end of that period as there was at the beginning. I happen to regard that proposition as absurd.
    Miss Richardsonasked the Secretary of State for Social Services what reply he has sent to the Conservative Women's National Advisory Committee regarding its request for an increase in child benefit.
    Mr. William Hamiltonasked the Secretary of State for Social Services what reply he has sent to the Conservative Women's National Advisory Committee on its request for an increase in child benefit.
    The Under-Secretary of State for Health and Social Security (Mrs. Lynda Chalker): My right hon. Friend has conveyed to the Conservative Women's National Advisory Committee his appreciation of its contribution to the discussion on the role of child benefit.
    Miss Richardson: That is what I would call a dusty answer. I am sure that every Labour Member and obviously a lot of Conservative Members, judging from the previous question, must welcome the support of the Conservative Women's National Advisory Committee with regard to child benefit. Will the Secretary of State take time off, and take his right hon. Friend the Prime Minister by the hand, to meet the Conservative Women's National Advisory Committee so that, as women to women, it may try to persuade her of the necessity to raise this important benefit for the family?
    Mrs. Chalker: I am sure that my right hon. Friend has noted the remarks of the hon. Member for Barking (Miss Richardson). He will no doubt act on them in his own special way.
    Mr. Hamilton: Since the Government have always claimed to direct resources to those who need them most, how can the hon. Lady, or any member of the Government, defend the giving of enormous juicy carrots to those earning £22,000 a year while at the same time clobbering families with children whose situation has been made worse by the increase in school meal and school transport charges? How can the hon. Lady defend that inequity?
    Mrs. Chalker: I assure the hon. Gentleman and other hon. Members that we have taken careful note of the needs of families. We are well aware of the needs

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    of children. The House must await the statement of my right hon. and learned Friend the Chancellor of the Exchequer.
    Mr. Waldegrave: Does my hon. Friend accept that part of the Conservative Women's National Advisory Committee analysis which says that recent Governments, of whatever party, have so organised the benefits system that they have engineered a shift of resources away from families and towards single people?
    Mrs. Chalker: We have taken careful note of that fact over a period of time. It has not only happened over the last year, but over a number of years. It will be brought to the attention of my right hon. and learned Friend the Chancellor of the Exchequer.
    Mr. Orme: Will the right hon. Lady write to the Conservative Women's National Advisory Committee giving it her previous statements on child benefit detailing her support for an increase in child benefit, and will she state whether she has now changed her mind?
    Mrs. Chalker: I assure the right hon. Gentleman that the Conservative Women's National Advisory Committee is well apprised of all statements made on this issue in the past. It is also aware of our views on the question of raising child benefit.

    Pensions (Life Expectancy)
    Mr. Flanneryasked the Secretary of State for Social Services what is the average length of life after receiving the State retirement pension of (a) women and (b) men.
    Mr. Prentice: On the basis of the current mortality rates in Great Britain, the expectation of life of a woman at her pension age of 60 is 20 years, and that of a man at his pension age of 65, 12 years.
    Mr. Flannery: Does the Minister realise that these vulnerable people in the community, who work all their lives, 'ire now suffering dreadfully due to the policies of his Government? Services are being cut in many ways. The meals on wheels service, home helps and so on, are now difficult to obtain. Has the Minister any plans on the subject of increases in prices, fuel bills, and so on? Has he any plans to review the matter, and to
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    ensure that those people are helped in a proper manner?
    Mr. Prentice: No. Sir, I do not accept that statement. The rates of pensions and other main benefits were increased more than the cost of living last November. I accept that pensioners are suffering from inflation. We should all do our best to pursue counter-inflation policies, particularly, in relation to the current level of wage demands.
    Mr. Bowden: Is it not sheer hypocrisy for the hon. Member for Sheffield, Hillsborough (Mr. Flannery) to talk about destroying the value of the pension, when in five years, the Labour Government cut by half the value of pensioners' savings? Will my right hon. Friend now pay special attention to giving additional help to very elderly pensioners?
    Mr. Prentice: With regard to any adjustment of rates, we must await the Budget Statement. I agree with my hon. Friend in the earlier part of his question. That is why I underlined the importance of counter-inflationary policies in my answer to the first supplementary question.
    Mr. Foulkes: Is the Minister aware that, because of a miscalculation, pensioners received an increase rather less than the increase in average earnings? They have been done out of a week's pension by the Government. What will the Minister do about that? There is a legal responsibility on the Government to do something. Is it not time that the Secretary of State started obeying the law?
    Mr. Prentice: There is no legal liability to make a good a shortfall of that sort. However, if Labour Members are to argue that it should have been done, they had better count the cost, and decide where they would make the cuts in Government spending elsewhere.
    Mr. Farr: Is my right hon. Friend satisfied that the added-on element for a pensioner who remains in work is still fair and equitable?
    Mr. Prentice: That matter is tied up with the whole question of the earnings rule, and it is the objective of the Government to phase out that rule as soon as practicable.
    Mr. Carter-Jones: Will the right hon. Gentleman agree that the quality of life is as important as the length of life for the elderly? Will he consider giving greater priority to the care of the growing number of frail, elderly people in our community?
    Mr. Prentice: The community should give the greatest possible priority to frail, elderly people. That is why I am glad that in the last 10 years or so the provision of personal social services by local authorities to the very elderly and disabled people has more than doubled.

    Shawbury Community School
    Mr. Iain Millsasked the Secretary of State for Social Services if he will make a statement on the proposed closure of the Shawbury community school in Coleshill.
    The Under-Secretary of State for Health and Social Security (Sir George Young): I understand that the children's regional planning committee and the Birmingham city council are considering the closure of Shawbury school. Before it can be closed, they will need to seek my right hon. Friend's approval to the appropriate amendment to the regional plan.
    Mr. Mills: Is my hon. Friend aware of the extreme concern, expressed locally, about the change in national policies and the withdrawal of community school services, and the particular nature of the problems caused to the staff due to the linking of their employment with tied homes?
    Sir G. Young: We are alive to those problems, but until we hear from the regional planning committee, my right hon. Friend cannot say whether the West Midlands needs the places. On the broader question, alernative methods have been found for looking after those children, which in many ways are better than community homes with education. I support that trend.

    Hospitals (Derbyshire)
    Mr. Whiteheadasked the Secretary of State for Social Services how many representations he has received about the closure of hospitals in Derbyshire by the area health authority.
    The Minister for Health (Dr. Gerard Vaughan): In the last six months I have received 63 letters or telegrams and a deputation, led by the hon. Member, about the Derbyshire area health authority's hospital closure proposals.
    Mr. Whitehead: Is the Minister aware of the outrage in Derbyshire about the area health authority's decision to close five of those hospitals? Will he accept that that is largely due to over-spending because of the rate of inflation and the doubling of VAT? Will he give an undertaking to the House that, when his Department next discusses resource allocation for Derbyshire with the regional health authority, he will make it clear to the region and to Derbyshire that the provision of a comprehensive Health Service, by the re-opening of those hospitals, should be a first priority?
    Dr. Vaughan: I do not accept the first statement. Following my meeting with the deputation on 28 January, I wrote immediately to the chairman of the area health authority, asking him to look again at some of the closures, particularly the closure of Etwall. He replied that he still regards it as necessary. I have now written again, asking what other economies might be made in order to reopen Etwall as soon as possible. I shall keep the hon. Member informed.
    Mrs. Faith: Is the Minister aware that local people are grateful for his intervention in favour of Etwall but that they are still in favour of the staff sit-in at the hospital and the fact that the hospital is still being picketed? Does he realise that they are hoping for more intervention from the Minister, even at this late stage?
    Dr. Vaughan: I understand the hon. Lady's concern, and I share it. She may be pleased to hear that there have been no staff redundancies as a result of cash limits.
    Several Hon. Members rose—
    Mr. Speaker: Order, before I call the next speaker, I remind the House that the question refers only to hospitals in Derbyshire.
    Mr. Pavitt: Will the Minister place in the Library copies of the correspondence relating to hospitals in Derbyshire with the regional health authority and copies of the 62 letters that he has received, as

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    guidance to hon. Members who may have similar problems?
    Dr. Vaughan: Those are personal letters between myself and the chairman of the hospital authority. It would he improper to place them in the Library without first consulting him. I shall look into the matter.
    Mr. Moyle: If the procedure in regard to these hospitals does not turn out to be as the hon. Gentleman believes, does he agree that a community health council could oppose a closure as a means of getting it on to the desk of the Secretary of State? If community health councils are abolished, as the Government believe might happen as a result of their consultative procedures on "Patients First ", what method does the hon. Gentleman suggest for raising these matters with the Secretary of State?
    Dr. Vaughan: Once again, the right hon. Gentleman is trying to pre-empt the discussions that are taking place on "Patients First". He has done that consistently in the Committee on the Health Services Bill. It is not the right way to proceed.

    Mr. A. J. Gardham
    Mr. Spriggsasked the Secretary of State for Social Services why Mr. A. J. Gardham, a constituent of the hon. Member for St. Helens. has been refused benefit by the local staff of his Department in spite of repeated and regular medical certificates indicating that his constituent is unfit for any kind of employment.
    Mr. Prentice: Claims to sickness benefit and invalidity benefit are decided by independent adjudicating authorities, which are not bound to accept the opinion of any doctor as conclusive. Neither the insurance officer nor the local tribunal was satisfied that Mr. Gardham was incapable of work, and invalidity benefit was therefore not payable.
    The Supplementary Benefits Commission has decided that Mr. Gardham must register for work in order to obtain supplementary benefit.
    Mr. Spriggs: Is the right hon. Gentleman aware that Mr. Gardham suffers from a serious cardiac illness? Will he accept that to say that he is fit to sign on for light work is to offer him an opportunity that is not available? There are no light
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    jobs to be had. Is the right hon. Gentleman aware that we have hundreds of disabled people registered for work that they cannot obtain?
    Will the right hon. Gentleman accept that I could not recommend my constituent to appear before the local appeals tribunal because I have no faith in the chairman, who is receiving professional fees, to make a decision on behalf of the Department?
    Mr. Prentice: The decision that the adjudicating authority had to make was whether Mr. Gardham was capable of work. He may be ill but still be considered capable of work. I am surprised that the hon. Gentleman followed his supplementary question with an attack on the chairman of the local appeals tribunal. He is doing a difficult job and deserves our support.
    Mr. Spriggs: On a point of order, Mr. Speaker. In view of that most unsatisfactory reply, I shall seek to raise the matter on the Adjournment.

    Retirement Pension
    Mr. Bowdenasked the Secretary of State for Social Services what representations he has received about the frequency of payments to those in receipt of the State retirement pension.
    Mr. Patrick Jenkin: I refer my hon. Friend to my speech in the debate last Tuesday.
    Mr. Bowden: Does my right hon. Friend agree that a great deal of worry and uncertainty has been created for pensioners through recent publicity? Will he put that right as soon as possible? Further, will he confirm to the House that, if there is any question of fortnightly payments to pensioners, one week will be in advance?
    Mr. Jenkin: I gave a very clear assurance, in the debate last Tuesday, to pensioners and all those in receipt of social security benefits that it would remain open to anyone who wished to do so to draw those benefits over the post office counter. It is a sad fact that many people have been told, quite erroneously, that benefits were to be paid into bank accounts. That never was true. There never was any such proposal, and I am happy to make that clear.

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    I also made it clear in the debate on Tuesday that the proposal in the study by officials was that benefits should, in general, be paid fortnightly. I also made it clear that, if that were to be done, one week would be paid in advance and one in arrears.
    In the light of the debate, and considering what was said on both sides of the House, the Government are considering how and whether to carry the matter forward.
    Mr. Orme: Will the right hon. Gentleman tell the House what impression he received from representatives of sub-postmasters after the lobby last Wednesday? Secondly, will he confirm that the general desire is for weekly payments? Finally, when will the right hon. Gentleman make a statement to the House?
    Mr. Jenkin: I had a full and valuable exchange of views with representatives of the National Federation of Sub-Postmasters. I believe that they recognise the value of the assurances that I gave in the House. I recognise the strength of feeling that they represented about what they had seen as a threat to their livelihood. I gave a clear undertaking in the House that the Government would do nothing to threaten the network of sub-post offices across the country. I am happy to repeat that.
    The Government are considering how to carry forward the study that has been undertaken with the advice of Sir Derek Rayner. We are taking the fullest account of views expressed from all parts of the House. I cannot say when we shall be able to make a statement, but I recognise the great desire that we should make our intentions clear as soon as possible.
    Mr. Eggar: Is my right hon. Friend aware that representatives of the National Federation of Sub-Postmasters were heartened by their meeting with him last Wednesday and welcomed his assurances?
    Mr. Jenkin: I am most grateful to my hon. Friend.
    Mr. Mikardo: Since the right hon. Gentleman is looking for ways to reduce the cost of paying out benefits, will he note that in the largest sub-post office in the East End, every morning the sub-postmistress receives from Newcastle on
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    average 60 pension books, each in a separate envelope, separately addressed to her, sealed and posted? Does the right hon. Gentleman agree that Sir Derek Rayner might look at that?
    Mr. Jenkin: It certainly sounds like something that should be looked at. I am sure that the hon. Gentleman is aware of the enormous complexity of the operation at Newcastle. Pensions are paid by reference to the national insurance number rather than to the recipient's address. It is therefore necessary for the pension to be sent to the post office nearest the address given, in a separate envelope.
    Of the total of £130 million that my Department pays as an agency fee to the Post Office, only about £30 million goes to sub-post offices, although they transact some 70 per cent. of the benefit business done by the Post Office on behalf of my Department. That is a matter that we shall have to look at carefully.

    Voluntary Work
    Mr. Steenasked the Secretary of State for Social Services if he will give an assurance that he will make good any local authority cuts in support for voluntary work.
    Sir George Young: No, Sir. This would not be practicable.
    Mr. Steen: Has the Minister considered advising local authorities of the advantages of putting out to tender some of the social services that they carry out themselves, such as home helps and meals on wheels? Does my hon. Friend agree that it would be better to contract out to private enterprise some of those services, on the basis that it will be better and cheaper in the long run?
    Sir G. Young: The second part of that question is for my right hon. Friend the Secretary of State for the Environment. I am convinced that local authorities will consider the vital role of the voluntary sector in helping to keep people out of residential care, through the provision of domiciliary services, the development of informal care and in providing whatever support that they can.
    Mr. Greville Janner: Does the Minister realise that, whatever the importance of voluntary service—and it is very great —it is no substitute for professional service?
    Sir G. Young: We believe that there is tremendous scope for a partnership between professional support and the voluntary sector. Going round the country, I am delighted to see the ways in which many local authorities are making use of the untapped resources of the voluntary sector to meet areas of real need in the community.
    Mr. Dykes: Is my hon. Friend worried that the local authority social services people will cut services and output from their departments but will not cut their own numbers, thus producing an inflationary rise in the money cost of these services?
    Sir G. Young: That question may be more appropriately put to the Department of the Environment tomorrow. We have urged local authorities to try to protect, as far as possible, certain areas of activity that affect the elderly, children and the handicapped, and to use the resources of the voluntary sector to meet those needs, where possible.
    Mr. Freeson: Is the Minister aware of the representations that his Department received from the Association of Directors of Social Services, which refer to the cutbacks that are being forced on its members, not only in their own services but in the financial support that they have willfingly given to voluntary welfare organisations up and down the country?
    When the Minister says that it would not be practicable to adopt the idea put forward by his hon. Friend the Member for Liverpool, Wavertree (Mr. Steen), is he aware that such powers are vested in government by way of the urban programme?
    Sir G. Young: The Department has maintained the value of its grants to the voluntary sector this year. We hope to increase those grants next year, as evidence of the importance that we attach to the voluntary sector. I have read the report of the Association of Directors of Social Services. I was disappointed about the lack of reference to the use of voluntary organisations as a means of helping to meet the difficult circumstances that it faces.

    Hospital Waiting Lists (Staffordshire)
    Mr. Knoxasked the Secretary of State for Social Services how many
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    people were awaiting admission to hospitals in Staffordshire at the most recent count.
    Dr. Vaughan: I refer my hon. Friend to my reply to him of 29 January in which I said that, at 30 September 1979, the latest date for which information is centrally available, there were 15,259 such people.
    Mr. Knox: Does my hon. Friend agree that that figure is much too high? What steps is he taking to reduce it?
    Dr. Vaughan: Yes. We are concerned about the level of waiting lists. Unlike the previous Labour Government, we intend to reduce those lists. We are restructuring the Health Service. We are maintaining small local hospitals that serve the local community. We are encouraging voluntary services to help. We are also encouraging the private sector. We have set up a special study on how to reduce the orthopaedic waiting list.
    Mr. Golding: Is the Minister aware that an increasing number of my constituents tell me that, although they are in pain and although they are suffering, they have been told that they can gain immediate admission to a hospital only if they pay sums that are far beyond their pockets? They must wait months, or even years, if they cannot pay.
    Dr. Vaughan: I do not accept that. By attacking that side of the Health Service, the hon. Gentleman ignores the fact that, when the previous Labour Government were in office, waiting lists increased by 234,998 patients. The appalling strikes of last winter increased the waiting lists by 125,000 patients.

    Flowers Report
    Mrs. Renée Shortasked the Secretary of State for Social Services what consideration he has given to the Flowers report on London medical schools in his examination of the pattern of health care in the London area.
    Dr. Vaughan: The Flowers report was published this morning. I thank its members for the work that they have put into perparing this very valuable report. Its recommendations will be considered first by the university, since it set up the working party.

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    At the same time, the London Health Planning Consortium published its report today on the future pattern of acute hospital services in London. Copies of both reports are available in the Library of the House. The two reports together represent a fundamental examination of the organisation of hospital services and medical teaching in London. They make far-reaching proposals that will require careful consideration.
    Mrs. Short: I thank the Minister for that reply. As he has said, considerable changes will be made in medical education and in the distribution of health services in London. Will the Minister give an undertaking that the House will have a full opportunity to debate all the proposals before he makes any decision to implement them?
    Dr. Vaughan: I agree with the hon. Lady. The Royal Commission recommended that a further inquiry should be made into London. We do not agree. Sufficient inquiries have already been made about what is needed for London. We now need decisions and action. My right hon. Friend will shortly announce the setting-up of an advisory committee to look at the two reports and to recommend action.
    Dr. Mawhinney: As I have been put at risk by the report of the Flowers committee which was published this morning, will my hon. Friend understand if I do not share his enthusiasm for it.' Will he give an undertaking that he, or his right hon. Friend, will consult those members of the academic staff of medical schools who are involved in the delivery of health care, and who will be affected by the report, before any decisions are made?
    Dr. Vaughan: I am sure that the whole House will sympathise with my hon. Friend. We shall certainly hold wide consultations. There will be full representation on the advisory group that we intend to set up. There will be not only representatives from the university, but from other relevant bodies in London.
    Mr. Moyle: Does the Minister agree that irrespective of the quality and content of the Flowers report and of the report of the London Health Planning Consortium, they cover narrow areas? Does
    1134
    he further agree that evidence was not collected with full publicity? Community services, general practitioners and inner city areas are involved. The reports do not pre-empt a public inquiry into the London health services. Will he, therefore, reconsider his decision?
    Dr. Vaughan: The right hon. Gentleman should wait until he has read the two reports before making any further comments.

    PRIME MINISTER (ENGAGEMENTS)
    Mr. Neubertasked the Prime Minister whether she will list her official engagements for 26 February.
    The Prime Minister (Mrs. Margaret Thatcher): In addition to my duties in this House, I shall be having meetings with ministerial colleagues and others. This evening I hope to have an audience of Her Majesty the Queen.
    Mr Neubert: Does the Prime Minister share my surprise that Mr. Bill Sirs has called the proposal of the British Steel Corporation to hold a secret ballot in order to see whether the steel workers want to vote on their pay offer "a dirty trick"?
    The Prime Minister: I share my hon. Friend's suprise. Workers who have been without a pay packet for about eight weeks and who have gone without strike pay have a right to expect to be consulted about their wishes for the future.
    Mr. David Steel: Will the Prime Minister study today the speech of her right hon., noble and very distinguished Friend, Lord Butler? He spoke yesterday on the Education Bill. Is the right hon. Lady aware that he suggested that the Government could save public expenditure as regards sending a few pupils to private schools, and that they could use the money to maintain free school transport for children?
    The Prime Minister: I noted the observations of my very distinguished right hon. and noble Friend. He went to the type of school that we wish other children to have an opportunity to attend.
    Mr. John Browne: During the course of her busy day, will the Prime Minister

    1135
    consider the insidious effect of the activities of members of the Unification Church—known as "moonies"—and the threat that is thereby posed to family unity? Will she consider taking measures to alert and protect citizens from such activities?
    The Prime Minister: I am quite prepared to consider any proposition that my hon. Friend puts to me on the subject.
    Mr. Spearing: Will the Prime Minister reconsider her reply to the right hon. Member for Roxburgh, Selkirk and Peebles (Mr Steel)? Does she not agree that spending public money on private schools such as Marlborough will further divide British society? Will she consider the announcement made by the Minister, who, during the Committee stage of the Education Bill, made it clear that certain expensive schools would not be part of the system?
    The Prime Minister: I obviously disagree with the lion. Gentleman. It is important to give all children the very best educational opportunities. If that includes assisted places at some schools, so be it.
    Mr. Lee: Will my right hon. Friend find time today to consult her Treasury colleagues and to request clearing banks voluntarily to consider some form of reduced interest rate charge on smaller businesses, in view of the banks' substantially increased profits?
    The Prime Minister: My hon. Friend knows that one of the problems of bank profits is that banks inevitably make high profits when there are high interest rates. That occurs when other businesses are in considerable difficulty. Banks do less well when businesses are doing well. That is certainly a difficult problem to explain. However, I do not think that we can have two-tier interest rates. Nor can we do anything to increase the amount of borrowing. That is the cause of high interest rates.
    Mr. James Callaghan: Would the Prime Minister care to try to explain something else in the light of her television discussion last night? As wage earners are apparently able to claim more when an industry is prosperous than when it is
    1136
    not, is she now saying that bank clerks should have a substantial increase while steel workers should get nothing?
    The Prime Minister: The right hon. Gentleman knows that it is not my policy to intervene in pay claims.
    Mr. Heddleasked the Prime Minister if she will list her official engagements for Tuesday 26 February.
    The Prime Minister: I refer my hon. Friend to the reply which I have just given.
    Mr. Heddle: Will my right hon. Friend take time today to reflect on the decision of the executive of the Iron and Steel Trades Confereration to expel the Sheerness steel workers from union membership for exercising their desire to work?
    The Prime Minister: I saw the report to which my hon. Friend refers. If it is true it brings the trade unions into conflict with public opinion. These workers wish only to carry on working—
    Mr. Flannery: They are blacklegs.
    The Prime Minister: These workers wish only to carry on working in a company which is not in dispute with its own workers. They wish to carry on working to support their families and honour business contracts, and both of those objectives should be encouraged.
    Mr. Alexander W. Lyon: Before the elections begin in Rhodesia tomorrow, will the Prime Minister give a categorical assurance that Lord Soames will call on the leader of the majority party in the election to form the Government of Zimbabwe as soon as the results are known?
    The Prime Minister: I have every confidence in my right hon. and noble Friend Lord Soames to do whatever is just and proper—
    Mr. William Hamilton: Answer the question.
    The Prime Minister: I have every confidence in my right hon. and noble Friend Lord Soames as the man on the spot, to do whatever is just and proper as soon as the results are known of the free and fair elections which I am confident he will hold.
    Mr. John Townend: Is my right hon. Friend aware of the overwhelming support of the British people for her television statement last night that she will take the strongest action to get justice for this country in respect of our contribution to the EEC? Will she take time to remind our German friends that the sooner we get justice the less likelihood there is of our withdrawing troops from Germany, since those troops are highly expensive?
    The Prime Minister: It so happens that our German partners are considerable contributors to the EEC budget, and we hope that others will increase their contributions. With all due respect to my hon. Friend, I do not think we can get this issue muddled up with any question of reopening the offset agreement.

    MEDICAL EDUCATION
    Mrs. Renee Shortasked the Prime Minister if she will transfer responsibility for medical education from the Department of Education and Science to the Department of Health and Social Security.
    The Prime Minister: I have no plans to do so.
    Mrs. Short: Is the Prime Minister aware that in the Flowers report, which was published today, there are proposals to close down several medical schools of merit and also several teaching hospitals? Is she also aware that the proposals include the closure of several institutions, including the Institute of Obstetricians and Gynaecologists and the Institute of Paediatrics and Dental Surgery? Does she not think that the very far-reaching proposals in this report need adequate funding, and adequate discussion by this House and by all interested bodies outside? Will she give serious consideration to this?
    The Prime Minister: I looked quickly through the Flowers report, sufficiently to know that before any opinion is ventured on it, it requires considerable study and consultation. I heard what the hon. Lady said to my hon. Friend the Minister for Health during Question Time and I assure her that this matter will be given full consideration.
    Mr. John Carlisle: Has the Prime Minister had time to reflect on the com-
    1138
    ments of Lord Justice Lawson to the effect that social security scroungers should be sent to gaol? Will she comment on my suggestion that we should ask neighbours to help the authorities in their inquiries?
    The Prime Minister: My right hon. Friend is making strenuous efforts to bring to the courts any who are alleged to be fraudulent in claiming social security benefits to which they are not entitled. When they get to the courts it is a matter for the judge to decide what sentence should be passed.
    Mr. Ernie Ross: Will the Prime Minister take time today to study the comments made by the retiring chairman of the Inland Revenue, who estimates that there is a loss of £2,000 million to £3,00e million in tax evasion—
    Mr. Speaker: Order. This is not an open question. I shall call the hon. Member when we reach the next question, which is an open question.

    PRIME MINISTER (ENGAGEMENTS)
    Mr. Barry Jonesasked the Prime Minister what her official engagements are for 26 February.
    The Prime Minister: I refer the hon. Member to the reply which I gave earlier.
    Mr. Jones: Will the Prime Minister have the courage to admit that her Secretary of State for Industry has introduced ruthless, reckless and reactionary policies which are dividing our nation and totally rending apart the social fabric of Britain? When will she assert her premiership, move against the monetarists in the Cabinet and sack the Industry Secretary?
    The Prime Minister: My right hon. Friend, to whom the hon. Member has referred, has probably done as much for the social services of this country as any right hon. Member who was ever responsible for the social services. The hon. Member forgets that it was my right hon. Friend who introduced pensions for those over 80, family income supplement, pensions for widows between 40 and 50 years of age, invalidity pensions and constant attendance allowances. He should pay credit where credit is due.
    Viscount Cranborne: Will my right hon. Friend take time to reread a report in Saturday's Daily Mail which discloses that the Tameside council intends to allow representatives of the Irish National Liberation Army to lecture in Greater Manchester? Will she not only condemn that proposal, but ban appearances by representatives of a terrorist organisation which was responsible for the murder of Airey Neave?
    The Prime Minister: I certainly deplore the fact that this is being done. Subject to further inquiry, I believe that this is a proscribed organisation and, if so, the matter should be taken up formally with the Home Secretary.
    Mr. Ernie Ross: Will the Prime Minister study the comments of the retiring chairman of the Inland Revenue, who estimates that this country loses annually between £2,000 million and £3,000 million through tax evasion?
    Would it not be more correct to direct the efforts of a substantial number of the 1,000 people who are supposed to be investigating social security scroungers into chasing tax evaders?
    The Prime Minister: I agree that fraud is fraud wherever it occurs—
    Mr. Kerr: And Facism is Fascism.
    The Prime Minister: It is fraud whether it occurs when people try to claim social security benefits to which they are not entitled, or when people try to get out of paying tax. Both offences should be treated in exactly the same way.
    Mr. Rathbone: Will the Prime Minister, particularly in the light of her earlier answer, find time to send a message of congratulations and good wishes to the Governor of Rhodesia and to the people of Rhodesia on the eve of the historic act of casting their votes for a democratically elected Government?
    The Prime Minister: I am grateful to my hon. Friend. I will certainly do so. The Governor has had an extremely difficult task. This is a week of decision for Rhodesia. I shall send him that message from my right hon. and hon. Friends.

LAMBETH, SOUTHWARK AND LEWISHAM AREA HEALTH AUTHORITY
The Secretary of State for Social Services (Mr. Patrick Jenkin): With permission, Mr. Speaker, I wish to make a statement on yesterday's judgment on the appointment of commissioners in Lambeth, Southwark and Lewisham.
In August 1979 I gave directions under section 86 of the National Health Service Act 1977 in effect appointing commissioners to manage the affairs of the Lambeth, Southwark and Lewisham area health authority (teaching). My action was intended to ensure that the AHA(T) should keep its spending for the year 1979–80 within the cash limits laid down by my predecessors.
Although the court expressly held that I acted reasonably and in good faith in giving those directions and moreover accepted that the situation that faced me required immediate action, the learned judge found that in giving directions without specifying the duration I acted outside the power conferred by section 86. He also suggested that there was an alternative course that I might have taken. I shall study the judgment in detail when I receive a copy and any question of an appeal must wait until then.
However, my first concern is that proper respect for the courts and the rule of law means that I must give urgent consideration to the early restoration of their powers to the members of the authority. I shall therefore this afternoon be considering with the chairman of the regional health authority and the chairman of the commissioners the steps that might now be taken. All this must be done in a way that ensures that the progress made by the commissioners in establishing financial control will be maintained.
The learned judge said that it was in the public interest that the commissioners should continue to act in the interim and I know that the House will applaud what they have done to bring the financial affairs of the area under control.
Mr. Orme: The Secretary of State should have come to the House this afternoon, having accepted the judgment, and announced the replacement of the commissioners with the AHA. Was his action today based on the advice of the

1141
Law Officers, or did he take this decision by himself?
We would like to know the time scale for the restoration of the AHA and when the Secretary of State will make a further statement to the House. Will the right hon. Gentleman say what action he proposes to take about the closure of the two hospitals by the commissioners and whether or not the reinstated area health authority will be able to open those hospitals and allow them to operate in a free and fair manner?
Mr. Jenkin: I must say that it is good to see the Labour Front Bench accepting judicial decisions for a change.
Mr. Cryer: Shame on you.
Mr. Jenkin: I am sorry if that remark was too wounding for the hon. Member for Keighley (Mr. Cryer). I have come to the House on the first possible occasion—all that I had seen at this time yesterday were two conflicting press reports—and announced that I intend to meet the chairman of the regional health authority and the chairman of the commissioners in less than half an hour with a view to the return of their powers to the members of the area health authority. That being so I am bound to say that I think that the right hon. Member for Salford, West (Mr. Orme) has done me less than justice.
The right hon. Gentleman asked about closure decisions and mentioned St. Olave's and St. John's hospitals. I must tell the House that the commissioners decided temporarily to close some hospital facilities in order to contain current spending within the resources available. Those were short-term measures, and I have always made it clear that if permanent closures were contemplated any proposals would be subject to full consultation.
It is always open to health authorities to consider alternative ways of keeping expenditure under control that may lead to the ending of temporary closure. I have no doubt that when the members of the area health authority find themselves once again in power they may wish to do that. However, I must make it clear that there can be no question of the area health authority's expenditure exceeding the funds available to it.
Sir Derek Walker-Smith: It is not for me to tender legal advice to my right hon. Friend, but will he, in view of the clear limitations in section 86 to the period specified by the direction—which limitation was the ratio decidendi of the judgment—rather than appeal consider the issue of a section 17 direction, which places a specific duty, without limitation of time, on the method of the exercise of an authority's statutory function, which direction if not obeyed can be followed by the replacement of the defaulting members under section 85?
Mr. Jenkin: My right hon and learned Friend, who was Minister of Health some years ago, is probably more familiar than are most hon. Members with the intricacies of this legislation. He is entirely right in saying that the learned judge suggested that the course indicated by my right hon. Friend would have been open to me.
However, I have to make this point. Faced as I was at the end of July with a clear decision by the area health authority that it did not intend to remain within its cash limits, and faced with the fact that it was by then getting on for halfway through the year and that the authority had been overspending in previous years and had carried that overspending into the following year, I took the view that I should act immediately.
Had I proceeded by way of sections 17 and 85 a further time would have had to elapse between the giving of the direction and the recognition that the circumstances for the operation of section 85 had arisen. In the meantime the overspending would have continued, and I therefore took the view, on the balance of the legal advice available to me, that it was right and proper to take action at once. The only section under which that action appeared to be open to me was section 86.
Mr. Mellish: Cutting out all the legal jargon, do I understand that, in simple terms, the commissioners are to be sacked and the area health authority is to be reinstated? If my interpretation is correct, may I put it to the Secretary of State that the area health authority said that it was unwise to close St. Olave's hospital, in my constituency—the right hon. Gentleman knows the case—which caters for psychiatric and geriatric cases? St.

1143
Olave's has nothing to do with the teaching hospitals. It was a disaster to close that hospital, and though we had the sympathy of the right hon Gentleman we did not get his support.
I ask the Secretary of Stale a straight question: may I go back to my constituents tonight and say that it is now all right, and that having got rid of the other shower we will be getting our own people back and that St. Olave's will be reopened?
Mr. Jenkin: I have every sympathy with the right hon. Gentleman in his desire to cut out the legal jargon. However, as he will know, as a former member of Government, Ministers have to have regard to the law. [Interruption.] All lawyers can make mistakes from time to time.
The right hon. Gentleman knows that I expressed more than sympathy when he came to see me about St. Olave's Hospital. I gave him a statement about how I saw the long-term future of that hospital, in which I said that it seemed inconceivable to me that that part of London could do without the services for geriatric and psychiatric patients that St. Olave's was capable of providing. I felt that that was a perfectly proper use for the hospital and I drew that matter to the attention of the commissioners. No doubt the matter will be drawn to the attention of the AHA in due course.
The right hon. Gentleman asked me whether the commissioners would be sacked. I remind him that the judge expressed the view yesterday that in the interim it. was in the public interest that the commissioners should continue to act. He held that they were not validly appointed. Therefore, it follows that unless the ruling is reversed on appeal their decisions have not been validly taken. In considering the steps that should be taken to validate both the past steps of the commissioners and any that they may need to take before the return of the members of the authority, the learned judge, at the end of his judgment, drew attention to the possibility of giving further directions to that end.
Mr. Crouch: The whole House will regard my right hon. Friend highly for having come to the House this afternoon and accepted a judge's ruling. Is he also
1144
aware that, as a member of the regional health authority concerned, I believe that he took the right action in replacing the authority at the time that he did because it was in open revolt against the Government and the previous Government to an extent exceeding £5 million. Some action had to be taken. I also remind my right hon. Friend that whatever steps he may take now to abide by the legal niceties he should ensure that whoever runs the health administration in the Lambeth, Southwark and Lewisham area health authority will do so in accordance with Government policy.
Mr. Jenkin: I am grateful to my hon. Friend for his kind remarks. As I said in my statement, my first concern is to abide by the ruling of the court and to uphold the rule of law. I believe that to be the right priority.
With regard to the future, let me make clear that the judgment in no way changes the position that all health authorities need to control their expenditure within cash limits. Indeed, it makes clear that powers are available to ensure compliance with this requirement. The House may be aware that there is a clause amending the National Health Service Act 1977 included in the Health Service Bill that is now before Parliament. The effect of the amendment will make compliance with cash limits a statutory duty on health authorities. If the area health authority is restored—as I hope it will be soon— it will be under no less a duty than the commissioners to live within the cash limits.
Mr. Tilley: Does the Minister recognise that my constituents, like those of the right hon. Member for Bermondsey (Mr. Mellish), have been subjected to massive cuts in their health services— cuts that have been proved to have been carried out illegally? Does he feel that he has a moral duty not only to reinstitute that area health authority but to provide it with the powers and money to put back those illegal cuts?
Mr. Jenkin: I do not recognise any such duty. My duty is to recognise the order of the court, and that is what I am doing. As my hon. Friend the Member for Canterbury (Mr. Crouch) pointed out, the area health authority has a long history of overspending. It is significant that in the several years during which my

1145
predecessor, the right hon. Member for Norwich, North (Mr. Ennals) wrestled with the problem of the overspending by that authority, at no stage did he believe it right to increase its cash allocations on the ground that it was underfunded.
Mr. Beith: It is bound to concern the House when Ministers act as if their powers are much greater than they are. Has the Secretary of State told his right hon. Friend the Prime Minister that he is very sorry to have landed the Government in this trouble? Has it not caused him to reflect upon what his right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), who was so lavishly praised a moment ago, left in the health service—authorities that he cannot sack and that the electorate cannot sack when they act in ways that exceed their spending rights?
Mr. Jenkin: The House has every right to hold me to account. That is why I am here this afternoon. That is the chain of accountability whereby health authorities are made accountable to the House of Commons. I am happy to say that my right hon. Friend the Prime Minister fully shares my view as to the primacy of the rule of law.
Mr. Paul Dean: Does my right hon. Friend accept that his statement this afternoon shows clearly that we have a Government who are prepared to accept the judgments of the courts with good faith and to act on them speedily? In view of what has happened in the past, will he seek an undertaking from the chairman of the area health authority involved that he recognises that the vast bulk of the money spent by that authority comes from the taxpayer, to which this House has primary responsibility?
Mr. Jenkin: To be fair to the chairman of the area health authority, Mr. Stan Hardy, he has always done his best to try to persuade the members of that authority to abide by the cash limits that were laid down by my predecessor and later by myself. I have no doubt that when reappointed Mr. Hardy will do his best to make sure that the authority lives within the limits. I want to help him in that matter and to make absolutely certain that the Department can give him all the backing that he needs, whether by
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direction, law or otherwise, to see that the authority has regard to the cash limits laid down for it. There would be no permanent basis for the preservation of health services in that part of London if it were done in any other way.
Mr. Speaker: Order. I propose to call two more hon. Members from either side and from the Front Benches to conclude this matter.
Mr. Christopher Price: I am sure that the right hon. Gentleman would not wish to mislead the House. He said that the judge had said that he acted reasonably. Is he aware that what the judge actually said was that it had not been established that he had acted unreasonably? That is a different matter.
I should like to put two questions to the right hon. Gentleman. First, are St. John's and St. Olave's hospitals legally closed now, or are they legally open? Will he give us his opinion, based on the legal advice that he receives—inasmuch as that is worth anything? Secondly, in view of his praise of Mr. Hardy, and because Mr. Hardy is available, will he exclude him from his meeting with the chairman of the commissioners and the chairman of the regional hospital board? Will he restore Mr. Hardy's salary, which he chopped off illegally in October?
Mr. Jenkin: The hon. Gentleman will understand that at this stage I shall not dig too deeply into the legal consequences of the judgment. I have already made clear that Mr. Justice Woolf held that the commissioners were not validly appointed. It follows that unless the ruling is reversed on appeal their decisions have not been validly taken. I remind the hon. Gentleman that the judge said at the end of his judgment that in his view it would be in the public interest that the commissioners should continue to act. I understand that he indicated that he would be open to hear applications for directions as to how that might be achieved and how the decisions of the commissioners could be validated. Obviously, these are matters of considerable legal complexity, which my advisers have under study. I am making arrangements to see Mr. Hardy at the earliest possible opportunity.
Mr. Moate: Will my right hon. Friend continue to give full emphasis to the fact

1147
that the persistent and gross overspending by this area health authority has been at the expense of all other areas and districts within the South-East Thames region—in particular, many deprived districts such as Medway? There has been considerable support for the savings that have been made by the commissioners. There is also widespread support for the political action taken by my right hon. Friend even though, naturally, it is regretted that those actions were founded on unsound legal advice. Will my right hon. Friend emphasise the need to maintain almost continuous restraint on this area health authority, which is necessary if there is to be any fairness for the very deprived districts in the same region?
Mr. Jenkin: My hon. Friend is absolutely right. Indeed, the court made it perfectly clear that the overspending by the Lambeth, Southwark and Lewisham area health authority was at the expense of other areas in the region and that the region had had to divert funds to them. One of the factors that I had in mind in seeking to oblige that authority to remain within its limits was to be fair to the other areas in the region that were relatively underfunded.
I have already made clear that the restoration of power to the members of the area health authority will have to take place on terms that ensure that they, too, fully abide by the obligation to remain within the cash limits. It simply is not possible to run an organisation such as the National Health Service in any other way.
Mr. Ennals: Will the Secretary of State accept that he really cannot take any credit for saying that he has decided to accept the ruling of the court? He has no alternative but to accept the ruling of the court. Does he not accept, therefore, that he has acted with some arrogance, brusquely and illegally, and has created great confusion in one of the largest areas in London as a result of the action that has now been repudiated by the High Court? He has not said whether he is very sorry.
Mr. Jenkin: If the right hon. Gentleman had had a little more guts earlier the situation might never had arisen.
Mr. Michael Morris: Will my right hon. Friend take heart from the fact that the judge said that he had acted in good faith? If the members of the area health authority had acted in good faith this situation would not have arisen in the first place.
Mr. Jenkin: My hon. Friend is absolutely right. There is little doubt that some members of the area health authority were really making a political point rather than concerning themselves with running the health authority in accordance with the provisions of the Act and all the directions given to them.
Mr. Moyle: In his new found enthusiasm for accepting the words of judges, would the right hon. Gentleman care to tell us whether he accepts the finding of fact made by Mr. Justice Woolf to the effect that what put the area health authority into an impossible position was his right hon. and learned Friend's Budget on 9 June last year? Will the Secretary of State get up and say that he accepts that finding of fact?
Secondly, will the right hon. Member answer the question put by my right hon. Friend the Member for Norwich, North (Mr. Ennals)? Did he cause this chaos in South-East London off his own bat or did he take the advice of the Attorney-General first? Whom are we to blame for this?
Thirdly, does the right hon. Gentleman realise—I speak as someone who was administered to by these commissioners— that the commissioners had little credibility before today but as a result of his waffly statement today they will have even less credibility? Is not the only thing to do to get rid of them forthwith and return the old area health authority straight away?
Mr. Jenkin: I am sure that the right hon. Gentleman did not intend that intervention to be helpful. I am bound to say that it was not. The whole House knows the financial position that the Government inherited in terms of the National Health Service. I am not sure that there was evidence before the court that would have enabled the learned judge to draw a clear distinction between the addition of value added tax in the Budget and the national figure of £23 million that the right hon. Member for Norwich, North had already

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indicated was to be removed from the cash limits of health authorities as an offset against the pay increases that had to be given.
I entirely accept that health authorities —not only this health authority but others —have faced a significant squeeze on their spending this year, of which VAT is less than a quarter, because the cash limits which had been laid down by the right hon. Member for Norwich, North proved to be entirely inadequate. Every other health authority in the country has resolved to live within its cash limits but this authority did not. That is why I took the decision to act.
As to what advice I had, I am accountable to the House for the NHS and of course I accept responsibility for what has happened.
Mr. English: On a point of order, Mr. Speaker. On a previous occasion when the right hon. Herbert Morrison made a similar mistake in relation to the fire service, an Act of indemnity was introduced, on the same day I understand, to cover any liability in damages or crime for acts committed during the intervening period of illegality. Today we have been left in some suspense and I wonder whether you, Mr. Speaker, would consider tomorrow, after the Secretary of State has made a further statement, an application under Standing Order No. 9 so that we can discuss indemnifying those who may have broken the law?
Mr. Speaker: The hon. Gentleman knows that that is not a matter that I decide.
Mr. Dykes: On a point of order, Mr. Speaker. I am sorry to interrupt the proceedings, but this is, I believe, a very important point of order. At the beginning of these exchanges, after the spokesman for the Opposition had finished his points, I distinctly heard the hon. Member for Nottingham, West (Mr. English) say loudly and clearly words to the effect "Not on oil sanctions. You always supported the criminals", referring to my right hon. Friend the Secretary of State for Social Services. Perhaps you, Mr. Speaker, could guide the House appropriately and ask the hon. Member for Nottingham, West to confirm whether he did say that and, if so, to withdraw the remark.
Mr. English: Further to that point of order, Mr. Speaker. I took it that the decision not to proceed against the breakers of the oil sanctions was a Cabinet decision in which the right hon. Gentleman had a part. If it was left to junior Ministers, of course, I would automatically withdraw any implication against him.
Mr. Speaker: Order. It so happens that I did not hear the remark of the hon. Gentleman, but nobody's argument is advanced by personal references.

WESTMINSTER HOSPITAL (BEDS)
Mr. Ennals: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the proposal published this morning in a planning document that 410 beds at the Westminster hospital should be closed, thus reducing this hospital of international repute to a small 100-bed support hospital."
I submit that this issue is certainly specific in that such a proposal, if carried through, would mean the decimation of this great hospital, which not only has served the needs of the people of Westminster but has earned a national and international reputation as a great teaching hospital and as a centre for much vital specialisation and research.
The matter is certainly important because this is our hospital. Several right hon. and hon. Members and members of another place owe their lives to the skill of the doctors, nurses and other staff at the Westminster hospital. I certainly owe my life to the staff of that hospital, but I am only one of many.
The matter is urgent because proposals are too quickly accepted in this time of public expenditure cuts. I believe that the issue is of such importance that the House will wish to consider it and debate it.
Mr. Speaker: The right hon. Member for Norwich, North (Mr. Ennals) gave me notice before 12 o'clock today that he would seek leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,

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"the proposal published this morning in a planning document that 410 beds at the Westminster hospital should be closed, thus reducing this hospital of international repute to a small 100-bed support hospital."
I listened carefully to the exchanges that took place this afternoon on this subject. The House was able to hear the remarks that were made.
As the House knows, under Standing Order No. 9 I am directed to take account of the several factors set out in the order but to give no reason for my decision.
I listened with great care to the representation of the right hon. Gentleman. However, I must rule that his submissions do not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

WESTMINSTER HOSPITAL (BEDS)

  NORTHERN IRELAND (HOUSING)
  Ordered,
  That the matter of the review of policy in the private rented housing sector in Northern Ireland, being a matter relating exclusively to Northern Ireland, be referred to the Northern Ireland Committee for their consideration.— [Mr. Boscawen.]

SOCIAL SECURITY (PAYMENT OF BENEFIT)
4.2 pm
Dr. Edmund Marshall: I beg to move:
That leave be given to bring in a Bill to require the Secretary of State to continue to use the Post Office for payment of long-term social security benefits, except where a payee requests otherwise.
Hon. Members on both sides of the House will have become aware over recent weeks of the great concern throughout the country caused by the review undertaken at the request of Ministers in the Department of Health and Social Security of methods of payment of social security benefits, which at present are mainly through local post offices.
The volume of correspondence sent to hon. Members on this subject has been extremely large. From my constituency I have received representations from 18 sub-postmasters, from villages as far apart as Fairburn, Adlingfleet, Monk Fryston and Hatfield Woodhouse, from 26 other individual constituents and from six local councils and other organisations. Some of these representations have enclosed petitions containing hundreds of signatures. In addition, as all hon. Members will know, last Wednesday a mass lobby of the House was conducted by several hundred sub-postmasters from most parts of the country.
There is no need for me to repeat all the arguments used in opposition to any proposals to change the basic method of paying social security benefits. Indeed, all the arguments were deployed in debate in the House last Tuesday. I have carefully read the report of that debate, and I regret to say that I do not think anything was settled. Ministers merely muddied the waters with vague undertakings, and they still continue to discuss the outcome of their review of these matters. I am still awaiting a reply from the hon. Lady the Under-Secretary of State to a letter on this subject that I sent her on 29 January. At Question Time today the Government tried to make encouraging noises, but there is still no definite future for the maintenance of the present system of payments of social security benefits.
In the absence of any definite commitment by Ministers to preserve the present system, Parliament should now exert its

1153
authority to enact a legal requirement that Ministers should pay benefit as at present.
The present state of the law is very weak. Section 81 of the Social Security Act 1975 gives the Secretary of State wide discretion as to the time and manner of payment of benefit. Any regulations made by him on these matters are subject only to negative parliamentary control. So far as I can determine, if the Secretary of State wishes, there is nothing in the present regulations to prevent him from using any method of payment. He could even go round on the back of a lorry handing out benefits in cash. That would be legal under the present arrangements.
In view of the far-reaching social implications of these matters, especially concerning the key place of sub-post offices in most local communities, the law needs to be much more precise on the time and method of payment of benefit. At present the Secretary of State has far too much discretion—discretion that has led to all the uncertainty of recent months that continues unabated. New primary legislation is needed to tighten up the law. That would be provided by the Bill that I am seeking leave to introduce.
The simple principle of the Bill is to propose a legal requirement that the Post Office be used for the
1154
"payment of long-term social security benefits, except where a payee requests otherwise."
If the House in its wisdom grants leave for such a Bill to be introduced, it will be assenting to that general principle. It will be giving a clear indication to the Secretary of State of what is desired by the House and by the vast number of our constituents who have left us in no doubt about their views.
Question put and agreed to.
Bill ordered to be brought in by Dr. Edmund Marshall, Dr David Clarke, Mr. Arthur Davidson, Mr. Terry Davis, Mr. Eric Deakins, Mr. Peter Hardy, Mr. Barry Jones, Mr. Austin Mitchell, Mr. Martin J. O'Neill, Mr. David Stoddart, Mr. Roger Stott and Mr. K. J. Woolmer.

SOCIAL SECURITY (PAYMENT OF BENEFIT)
  SOCIAL SECURITY (PAYMENT OF BENEFIT)
  Dr. Edmund Marshall accordingly presented a Bill to require the Secretary of State to continue to use the Post Office for payment of long-term social security benefits, except where a payee requests otherwise: And the same was read the First time; and ordered to be read a Second time upon Friday 14 March and to be printed [Bill 152.]
ORDERS OF THE DAY
  COMPANIES BILL [Lords]
  As amended (in the Standing Committee), considered.
  COMPANIES BILL [Lords]
    New Clause 24

      CONTINUED APPLICATION OF PROVISIONS OF PROTECTION OF DEPOSITORS ACT 1963
      '(1) The repeal by the Banking Act 1979 (the "1979 Act") of the Protection of Depositors Act 1963 (the "1963 Act") shall not affect, and shall be deemed never to have affected, the application of the following provisions of the 1963 Act to unexempted companies on and after the commencement of Parts I and III of the 1979 Act, that is to say—

      (a) sections 6 to 17; and

      (b) so far as relevant to the operation of those sections, sections 5 and 22 to 27.

      (2) In this section "unexempted company" means any company within the meaning of the 1963 Act which is not excepted by section 2(1) of the 1979 Act from the prohibition on the acceptance of deposits imposed by section 1 of the latter Act.'.—[Mr. Eyre.]
      Brought up, and read the First time.
      4.8 pm
      The Under-Secretary of State for Trade (Mr. Reginald Eyre): I beg to move, That the clause be read a Second time.
      The purpose of this new clause is to remedy an omission from the Banking Act 1979, which was enacted by the Labour Government, which among other things provides for the repeal of the Protection of Depositors Act 1963. The Protection of Depositors Act 1963 restricts and regulates advertisements for deposits and requires companies subject to the Act to deliver to the Department annual and half-yearly accounts. These accounts are examined by the Department to ensure compliance with regulations made under the Act and to check the companies' general financial position.
      The Banking Act 1979 was enacted to improve the control of banks and deposit takers. It provides for the recognition of certain banks and for the licensing of other deposit-taking institutions by the Bank of England.
      It was originally envisaged that, fairly soon after the bringing into force of the major provisions on 1 April 1980, it would be possible to repeal the 1963 Act. The position would then be that deposit takers
      1156
      could take money from the public only if they had a licence under the 1979 Act. Unfortunately, account was not taken of the continuing need to keep an eye on deposit takers which failed to obtain a licence under the 1979 Act and which, while therefore unable to continue to seek deposits from the public, continued in existence making use of money deposited with them earlier. Repeal of the 1963 Act will remove all control from such deposit takers with possible risk to their depositors; on the other hand, failure to repeal the Act will mean that deposit takers licensed under the 1979 Act will have to make returns both under that Act and under the 1963 Act.
      Accordingly, it is proposed to keep the relevant provisions of the 1963 Act alive to control the 60 or so unlicensed companies which continue to hold deposits. This will protect people who have money deposited with those companies; and it will not hamper the express repeal of the 1963 Act in respect of licensed deposit takers.
      Although the 1963 Act has not yet been expressly repealed, I am advised that it is possible for repeal to have come about by implication on bringing into force the major provisions of the Banking Act, on the reasoning that the provisions of the later Act are so inconsistant with, or repugnant to, the provisions of the 1963 Act that the two cannot stand together: hence, as a safeguard, the retrospective nature of this amendment.
      Mr. John Fraser: At the end of the previous Parliament, the Banking Act was passed so quickly that Homer did not merely nod; he was knocked over in the rush. It is important that the 1963 Act provisions as to unexempted companies should be preserved.
      Although the Minister is restoring many of the sections of the 1963 Act, he expressly retained in the repeals section 17, which gives the Department of Trade the power to see documents to discover whether there has been any breach of the 1963 Act, and section 18, which provides for search and entry. I should like to know whether Homer nodded again or whether it is a deliberate act of Government policy to leave out the provisions for the production of documents, search and other powers to obtain information. Those powers are important. If there is

      1157
      to be the protection of depositors, the powers of entry and obtaining information must be preserved. Why have those been omitted in the restoration of the repeal of certain provisions of the 1963 Act?
      The second question is one that perhaps the Minister would like to think over and consider whether something should be done in another place by way of an amendment to the the new clause. I refer to the way in which the law is stated. It is difficult if someone reads the Banking Act and comes to the same conclusion that the Minister came to—that the 1963 Act is repealed—and then finds tucked away in the Companies Bill of this year a provision saying that the repeal did not take place but was restored. It is an unsatisfactory position. I am not sure whether the law will now he stated with the clarity that it should be stated. I doubt whether people can easily see that that which was intended to he repealed, or which was repealed by implication, is not now repealed. Perhaps the Under-Secretary would like to think about that point.
      Mr. Eyre: In basic principle, we retain such powers as we believe are necessary for the continuing supervision of the limited number of companies which will continue to retain deposits for a period in the manner that I explained.
      The Department is willing to discuss with these unlicensed companies their new position and its implications for the future. The hon. Gentleman need have no fear in respect of the continuing supervision of the function of these companies. It may well be that this will be only a transient stage as moneys are withdrawn from those companies, or they make other arrangements. Perhaps the unlicensed company will merge with another licensed company. For that reason, this is probably a transitional arrangement which we believe will adequately deal with the present situation.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    New Clause 22

      APPLICATION OF SECTIONS 54 TO 58 AND 60 TO 64 TO UNREGISTERED COMPANIES
      Section 435 of and Schedule 14 to the 1948 Act (which provide for the application of certain provisions of that Act to unregistered companies) shall have effect as if sections 54 to 58 and 60 to 64 above were provisions of that Act and were included among the provisions of that Act specified in that Schedule which relate to accounts and audit; and the reference in the last entry in column 3 of that Schedule to provisions applied by virtue of the foregoing entries in that Schedule shall be construed accordingly.'.—[Mr. Eyre.]
      Brought up, and read the First time.
      Mr. Eyre: I beg to move, That the clause be read a Second time.
      The effect of this new clause is to enable the Secretary of State, by statutory instrument, to extend the disclosure provisions of part IV of the Bill to unregistered companies. These are defined in section 435 of the Companies Act 1948 as
      "all bodies corporate incorporated in and having a principal place of business in Great Britain"
      other than a body incorporated by or registered under any Public General Act of Parliament or a body not formed for the purpose of carrying on a business for gain or any body from time to time exempted from the provisions of section 435 by direction of the Secretary of State.
      The bodies corporate falling within this definition are, broadly speaking, those that are incorporated otherwise than by registration under a general system of incorporation. They include bodies incorporated by Royal charter or by Private Act of Parliament, and the provisions of the Companies Acts 1948 to 1976 do not automatically apply to them. There is, however, power in section 435 of the 1948 Act to apply to such companies those provisions of the 1948 Act that are listed in Schedule 14 to the Act, with such adaptations and modifications as may be specified by the Secretary of State in the regulations applying therein. In both the 1967 and 1976 Companies Acts and the European Communities Act 1972, provision was made to include in Schedule 14 those parts of those Acts that it was felt desirable to be applicable to unregistered companies.

      1159
      The provisions of the Companies Acts that have been extended to unregistered companies are currently set out in the Companies (Unregistered Companies) Regulations 1975. Under these regulations the vast majority of the Companies Acts' provisions relating to accounting and disclosure have been applied without modification to unregistered companies, including section 197 of the 1948 Act and section 16 of the 1967 Act. The present position is, therefore, that companies formed under the Companies Acts, as well as unregistered companies, are subject to the same regime as to the disclosure of loans to directors and contracts between directors and their companies.
      As presently drafted, clause 64 of the Bill, when it comes into effect, will repeal section 197 of the 1948 Act and section 16(1)(c) of the 1967 Act, and they will be replaced for companies formed under the Companies Acts by the broader disclosure provisions of part IV. As I have explained, those broader provisions will not themselves automatically apply to unregistered companies, so that a more rigorous regime of disclosure will be applied to Companies Act companies and no disclosure provisions, other than those contained in the constitutions of the individual companies, will be applied to unregistered companies. Right hon. and hon. Members will agree that such a result would be quite unjustified, and the aim of this clause is to enable the disclosure provisions of part IV, which replace sections 197 and 16(1)(c), to be applied to the unregistered companies as were these sections.
      Therefore, the Government's intention is that the same requirements for disclosure of directors' transactions shall apply equally to Companies Act companies and to unregistered companies. I hope that this will meet with the approval of the House.
      Mr. Clinton Davis: I make no complaint about this new clause. It embraces a sensible concept. However, regrettably, I want to start on a note of complaint. New clauses 20 to 24 were all tabled last Wednesday night. The Government have had a long time between the Committee and Report stages. On a technical Bill of this character the Government—aided, as they are, by a group of hard-working officials, who undertake the task with great dedication
      1160
      —should have been able to table this and the other new clauses long before last Wednesday night. If they were not in that position, they should not have proceeded with the Report stage at this juncture.
      Faced with a large number of Government amendments. Opposition amendments and Back Bench amendments, it is extremely difficult for the Opposition to consult about these matters as we feel entitled to do. It is possible that the Government have got this one right. There is an awful lot that they have got wrong in drafting. I understand that. We are dealing with a highly technical Bill. One can never be absolutely right in company law. We shall return to that argument on another new clause.
      On highly technical matters such as new clauses 20 and 23, this is not the right way to deal with the House. The Minister was kind enough to write to me and, I presume, to other hon. Members who served on the Committee about new clause 24, but the Government did not find time to write to us about the other matters. We are entitled to some explanation. One understands that Ministers are heavily burdened. All hon. Members have been heavily burdened with getting the necessary information and reading up the necessary law for this difficult Report stage.
      I believe that the Minister owes those who served on the Committee an apology. I hope that in the absence of any real opportunity for scrutinising matters that require consultation with outside bodies the Government will recognise that it may be necessary for them to be scrutinised with great care in another place. I hope that the Government, if necessary, will not feel backward about producing amendments if such scrutiny requires this.
      Having made that complaint, which also applies to other amendments, the Opposition feel that this new clause has a great deal to commend it.
      Mr. Eyre: The hon. Member for Clapham, North—
      Mr. Clinton Davis: Hackney, Central.
      Mr. Eyre: I am sorry; the hon. Member for Hackney, Central (Mr. Davis).
      Mr. Davis: I think that the hon. Gentleman is confusing me with the

      1161
      reasonable man on the Clapham omnibus.
      Mr. Eyre: I apologise to the hon. Member for Hackney. Central for having thought that I had seen him on the Clapham omnibus. The hon. Gentleman would certainly be qualified for the role of the reasonable person riding on than omnibus. It was entirely fair of him to say that this is a highly technical Bill. Having struggled with it in Committee, all hon. Members know that this is inevitably so. I am, therefore, sorry if Opposition Members have been inconvenienced by the fact that because of the sheer complexity of the matter and the pressure of events the Government have not been able to give much longer time to consideration of various clauses.
      Mr. Davis: I am grateful to the hon. Gentleman. It is not a question of inconvenience; it is a question of not being able to do one's duty properly in scrutinising these difficult proposals.
      Mr. Eyre: I appreciate that. The hon. Gentleman, with his experience in Government, especially his experience in respect of these complicated matters, will know that the Government have to follow a complicated process of consultation with interested parties. The hon. Gentleman, if he thinks back some months, will know that this process of consultation takes up a long time.
      The hon. Gentleman acknowledged that I had written to him about new clause 24. He will know that Ministers have tried to be considerate and to write to and consult Opposition Members. I do not wish to disguise the difficulty of the job that we have to discharge in this respect. I can only assure the hon. Gentleman —I thank him for the welcome that he has given the new clause—that we will continue to assist him as much as possible in discharging his job and dealing with these highly technical matters.
      Question put and agreed to.
      Clause read a second time, and added to the Bill.

    New Clause 20

      EXTENSION OF SECTION 26 OF 1967 ACT
      `(1) In subsection (1) of section 26 of the 1967 Act (disclosure of director's service contract with company) the following paragraph shall be inserted after paragraph (b)—
      1162
      "(c) in the case of each director who is employed under a contract of service with a subsidiary of the company, a copy of that contract or, if it is not in writing, a written memorandum setting out the terms of that contract;".
      (2) The following subsection shall be inserted after subsection (3) of that section—
      "(3A) Subsection (1) above shall not apply in relation to a director's contract of service with the company or with a subsidiary of the company if that contract required him to work wholly or mainly outside the United Kingdom, but the company shall keep a memorandum—

      (a) in the case of a contract of service with the company, setting out the name of the director and the provisions of the contract relating to its duration;

      (b) in the case of a contract of service with a subsidiary of the company, setting out the name of the director, the name and place of incorporation of the subsidiary and the provisions of the contract relating to its duration,

      at the same place as copies and the memorandums are kept by the company in pursuance of subsection (1) above.".
      (3) Each reference in subsections (4), (5) and (7) of that section to subsection (1) shall be construed as including a reference to subsection (3A) of that section; the reference in subsection (7) of that section to a contract of service with a company shall be construed as including a contract of service with a subsidiary of a company; and in subsection (8) of that section, paragraph (a) shall cease to have effect.'.—[Mr. Eyre.]
      Brought up, and read the First time.
      Mr. Eyre: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker (Mr. Bernard Weatherill): With this it will be convenient to take Government amendments Nos. 302 and 247.
      Mr. Eyre: Section 26 of the 1967 Act provides for the disclosure of directors' contracts of service with the company. Clause 47 of the Bill, which will prevent directors from entering into long-term service agreements with their company without the approval of the general meeting, covers a wider category of employment agreements. This includes contracts of service which are the usual basis on which people are employed and contracts for service, for instance, where a director makes his services available through his own private company or as a consultant.
      The disclosure provisions of these two sorts of service contracts are to be effected in different ways. Contracts for service which are not at present required to be

      1163
      disclosed as such will in future fall for disclosure under clause 54. A director will be required to declare his interest in such contracts by virtue of section 199 as amended by clause 59 of this Bill. Under clause 54, the principal terms of the contract and the nature of the director's interest in it must be disclosed in the company accounts.
      Contracts of service are already largely provided for in section 26 of the 1967 Act, which requires details of directors' service contracts to be open to inspection by members of the company at an appropriate place. This section needs amendment, however, to bring it into line with the Bill in two respects.
      First, we need to ensure that a director's service contract with a subsidiary company is disclosed in the same way as his service contract with the holding company, of which he is a director, is already required to be disclosed. The effect of this is achieved by subsection (1) of new clause 20.
      Secondly, we need to restrict the exemption embodied in subsection (8) of section 26 for the disclosure of service contracts which require directors to work wholly or mainly overseas. Companies will now be required, by virtue of subsection (2) of this new clause, to disclose the existence of such a contract and those terms of the contract relating to duration in the same manner as those for non-overseas contracts.
      Subsection (3) is merely consequential on subsections (1) and (2). It applies the provisions in section 26 relating to the inspection of service contracts, fines for default, and variation of service contracts to contracts of service with subsidiaries. It disapplies the present total exemption from disclosure of foreign service contracts.
      Amendments Nos. 247 and 302 are also consequential. The latter extends the exemption from the disclosure requirements in clause 54 to contracts of service between a company and a director of its holding company, as this is now provided for in the amendment to section 26.
      Mr. Clinton Davis: I concede that I have not looked up the reports of the Committee stage of the 1967 Bill. I should like to know what is the rationale for the exclusion of the contract of service that
      1164
      is to be wholly or mainly performed abroad. The Minister must have been impressed by that qualification in the 1967 Act, as he has incorporated it in the Bill.
      4.30 pm
      I understand that the effect of the clause is to provide for disclosure of such contracts, but there are no sanctions similar to those which are provided subsequently in the Bill in relation to breaches of the contract of service provisions. I content myself with asking the Minister to reply to those specific points.
      Mr. Donald Anderson: To build on what my hon. Friend the Member for Hackney, Central (Mr. Davis) said, there must be very cogent reasons for exempting overseas service contracts, because the benefit in respect of a director who has an overseas service contract is no less than that applying to any other contract. If it appears that there is no need to disclose in respect of overseas contracts, greater use might be made of overseas service contracts for the purpose of evading the disclosure provisions applying to domestic contracts.
      Mr. Eyre: Having listened to the hon. Members for Hackney, Central (Mr. Davis) and Swansea, East (Mr. Anderson), I can only think that they misunderstood what I said. I emphasised that we needed to restrict the exemption embodied in clause 26(8) for the disclosure of service contracts which require directors to work wholly or mainly overseas. Companies will now be required by virtue of subsection (2) to disclose the existence of such a contract—
      Mr. Clinton Davis: I did not misunderstand it. I think the Minister must have misunderstood what I said. I conceded that there was disclosure, but I said that there were no sanctions.
      Mr. Eyre: It was the hon. Member for Swansea, East who misunderstood me, then. I am sorry if I misunderstood the hon. Member for Hackney, Central.
      Companies will now be required, by virtue of subsection (2) of the new clause, to disclose the existence of such a contract and the terms of the contract relating to duration in the same manner as those for non-overseas contracts. The exclusion of foreign service contracts in the 1967 Act was to prevent the disclosure of details

      1165
      which might be embarrassing to the holder of the contract.
      The hon. Member for Hackney, Central went on to raise the question of sanctions—
      Mr. Clinton Davis: There are, of course, sanctions for breach of the provisions which appear in the relevant clauses, but they do not apply in this instance, as I read the clause.
      Mr. Eyre: I remind the hon. Gentleman that under section 26 of the 1967 Act companies and any officers of companies in default are liable to a fine. There are, therefore, adequate means within the Bill for the enforcement of the requirement.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    New Clause 21

      DUTY OF AUDITORS OF COMPANY IN BREACH OF SECTIONS 54 OR 56
      'If in the case of any group or other accounts of a company the requirements of section 54 or 56 above are not complied with, it shall be the duty of the auditors of the company by whom the accounts are examined to include in their report on the balance sheet of the company, so far as they are reasonably able to do so, a statement giving the required particulars:.—[Mr. Eyre.]
      Brought up, and read the First time.
      Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 293 and amendment No. 91, in page 67, line 14, at end add—
      '(8) If in the case of any such accounts as aforesaid the requirements of this section are not complied with, it shall be the duty of the auditors of the company by whom the accounts are examined to include in their report on the balance sheet of the company, so far as they are reasonably able to do so, a statement giving the required particulars'.
      Mr. Eyre: I beg to move, That the clause be read a second time.
      We have tabled the clause in response to a helpful suggestion made by the Consultative Committee of Accountancy Bodies. Its effect is to place a duty on auditors to include in their report a statement giving the particulars of any loans and other transactions of the kinds described in part IV of the Bill, such as
      1166
      quasi-loans and credit transactions, which have not been disclosed in the accounts.
      The disclosure provisions in clauses 54 and 56 are intended to replace section 197 of the Companies Act 1948, but they do not at present include a provision replacing subsection (3) of that section. That subsection goes further than the general requirement on auditors to qualify their report it any information required by statute to be included in the accounts is not so included, as it places a duty on them actually to supply, as far as possible, the missing information required to be included by section 197 in a separate statement in their report. The subsection can therefore serve to discourage directors and officers from attempting to withhold the information in the first place. As we regard the new disclosure provisions as an important policing mechanism for the general prohibitions in part IV, we consider that, by maintaining this duty on auditors, the disclosure provisions will be that much more effective.
      The clause therefore repeats the wording of section 197(3), though extending the new provision to group accounts and to all the disclosure requirements of sections 54 and 56.
      We recognise that the intention of amendment No. 91 is very similar to that of our new clause 21. The scope of amendment No. 91 does not, however, extend either to group accounts or to the additional disclosure provisions in clause 56—that is, disclosure of loans to officers, and aggregate disclosure of loans to directors of recognised banks. We believe that this wider coverage is desirable and that the new clause is, therefore, preferable to amendment No. 91. I hope that Opposition Members will recognise that we have accepted the principle of amendment No. 91 in our new clause and will feel able to withdraw the amendment.
      Mr. Clinton Davis: I will put the Minister out of his misery at once by telling him that there will be no Division on the clause.
      I am delighted to see here the hon. Member for Folkestone and Hythe (Mr. Costain). He takes such an interest as Chairman of Committees and in many other matters. I am anxious to know what he is interested in today.
      I readily agree that the clause is an improvement on our drafting in amendment

      1167
      No. 91. It is amazing how valuable are the parliamentary draftsmen from time to time. We are all agreed about the principle, and I agree, therefore, that the new clause is to be preferred. I welcome the addition that is being made to the Bill.
      Mr. Eyre: May I thank the hon. Gentleman for his tribute to the parliamentary draftsmen?
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    New Clause 23

      INTERNATIONAL BONDS
      '.—(1) Section 65 above shall not by virtue of section 67 above prohibit an individual from doing anything in relation to any debenture if—

      (a) that thing is clone by him in good faith in connection with an international bond issue—

      (i) not later than three months after the issue date, or,

      (ii) in a case where the international bond issue is not proceeded with, before the date on which it is decided not to proceed with the issue,

      and he is an issue manager for that issue or is an officer, employee or agent of an issue manager for that issue; or
      (b) he is or was an issue manager for an international bond issue who is making a market in that debenture, or is an officer, employee or agent of such an issue manager, and that thing is done by him in good faith as a person making a market in that debenture or as an officer, employee or agent of such a person;
      and in either case the unpublished price sensitive information by virtue of which section 65 would but for this section apply in relation to that thing is information which he holds by virtue of his being (or having been) such an issue manager or an officer, employee or agent of such an issue manager, and is information which it would be reasonable to expect him to have obtained as an issue manager, or as such an officer, employee or agent.
      (2) In subsection (1) above—
      "international bond issue" means an issue of debentures of a company (the issuing company")—

      (a) all of which are offered or to be offered by an off-market dealer to persons (whether principals or agents) whose ordinary business includes the buying or selling of debentures, and

      (b) where the debentures are denominated in sterling, not less than 50 per cent. in nominal value of the
      1168
      debentures are so offered to persons who are neither citizens of the United Kingdom and Colonies nor companies incorporated or otherwise formed under the law of any part of the United Kingdom;

      "issue date" means the date on which the first of these debentures is issued by the issuing company; and
      "issue manager" means—

      (a) an off-market dealer acting as an agent of the issuing company for the purposes of an international bond issue; or

      (b) where the issuing company issues or proposes to issue the debentures to an off-market dealer under an arrangement in pursuance of which he is to sell the debentures to other persons, that off-market dealer.'.—[Mr. Parkinson.]

      Brought up, and read tile First time.
      Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 317.
      The Minister for Trade (Mr. Cecil Parkinson): I beg to move, That the clause be read a Second time.
      Like several clauses we have discussed this afternoon, this is a highly technical clause. Its objective is relatively simple. It is to seek to exclude from the operation of clause 67, the insider dealing clause certain activities carried on by those who manage the Eurobond market. The reason why we seek that exclusion is that by the very nature of the market those who deal and act as brokers also make the market. By the nature of their activity, insiders will be caught by clause 67 unless we seek to exclude them. It is an international market which is dealt in by professionals. The way in which the market operates ensures that the person making the market is the one broking the bonds. The clause has been drawn up to try to define Eurobonds, and to seek to provide defences for those who legitimately deal in them.
      I turn to the new clause and the definitions therein. The key definition is that of an international bond issue. While many recognise a Eurobond when they see one, it is especially difficult to define it. We approached the question from a rather unusual angle. We confined the definition to bonds that are to be offered to professional dealers—that is, persons, whether as principals or agents, whose ordinary business includes the

      1169
      buying or selling of debentures. That requirement applies in all cases.
      The bond must be denominated in foreign currency If it is denominated in sterling, at least half of the issue by value must be offered to persons, whether legal or natural, who are foreign. In the case of individuals, that means not citizens of the United Kingdom or colonies, and in the more usual case of companies incorporated or formed under the law of a country other than that of the United Kingdom.
      We have attempted to build into the definition a substantial international element to make up for the fact that we cannot directly define what is usually called a Eurobond. The other definitions of issue manager and issue date are, we believe, more straightforward.
      I turn to subsection (1). There are two separate defences. The first excludes from the operation of clause 67 anything done in relation to debentures by an issue manager or officer—or an employee or agent of such a manager—provided that it was done by him in good faith in connection with an international bond issue within three months of the issue date. That is intended to protect issue managers in allotting bonds while in possession of information about people's reaction to the original invitation and, also, where they make a market in the bond issue and take market positions in it, going long or short.
      There are two limitations. First, whatever is done must be done in good faith in connection with an international bond issue, so that if they had in mind some quite extraneous consideration the defence would not apply. Secondly, it is implicit in the defence that it should be limited in the sense that it relates to information about the issue of an international bond. It is better to make that explicit, and we have introduced a limit of three months after the issue date. By that time, the inside information that is linked to the issue manager's relationship with the issuing company will have lost its force.
      Obviously, there is an element of arbitrariness in selecting a specific period, but we think that it is desirable to put an explicit limit on the operation of the defence.
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      The second defence protects the issue manager and his officers, employees and agents when, in addition to being the issue manager, they make a market in other bonds already in issue by the same company that is making the present issue, or some closely related company, for example, another company within the same group.
      4.45 pm
      The defence permits them to continue to deal in those other debentures, provided that they are making a market in the debentures and that they deal in good faith as a market maker. The defence permits an issue manager to continue to make a market subject to those limitations in cases where, as issue manager, he possesses "unpublished price sensitive information".
      The argument in favour is one of continuity in market making, as the alternative would be withdrawing from the market. That would create confusion and speculation that would damage the market. My arguments are the same as those which lead to the defence for other market makers—for example, jobbers—under clause 65(8)(c).
      Both defences are further limited in that the information that would otherwise preclude them from dealing must be information, first, which an individual holds by virtue of being an issue manager, officer, employee or agent of that manager, and, secondly, which it would be reasonable to expect him to have obtained in such a capacity. Therefore, as in the jobber's defence, the defence is limited in its scope.
      Amendment No. 317 provides a definition of market maker, which will, if the House accepts amendment No. 323, apply for the purposes of clause 67.
      Mr. Anderson: I thank the Minister for his explanation and definition. At least we have the satisfaction of knowing that Eurobonds, in common with elephants, are difficult to define, but one knows what they are when one sees them.
      As the Minister said, this is a technical matter, and one that is better examined by looking at the cold print rather than by trying to understand what the Minister has said in detail from the Dispatch Box. In

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      so far as the Minister has made that explanation, I think that it will be broadly accepted.
      I have two major criticisms of the new clause. The first is procedural and the second is substantive. In making the procedural criticism I adopt the remarks of my hon. Friend the Member for Hackney, Central (Mr. Davis) in relation to timing. In response to that, and in mitigation of the Government, the Minister said that these were technical matters which needed a complicated system of consultation. Those two considerations apply to virtually all the matters in the Bill and are not a sufficiently adequate answer.
      We know that the amendment, which is highly technical, was tabled on 20 February, at the last moment. It may be of considerable importance. In the light of the Minister's explanation, it is probably not of world-shaking importance. Clearly we have had insufficient time as an Opposition to appraise the matter and to make the relevant consultations among the affected bodies and among those who could be of assistance to us. As a result, we cannot carry out our job to scrutinise and to improve Government legislation. We cannot obtain in time properly considered responses. It is asking too much of an Opposition when contrasted with the veritable army of advisers available to the Minister.
      Hence the need for the other place. Their Lordships will not recognise the Bill that we shall eventually return to them. It is of a wholly different character from the minor Bill which left them in July last year.
      If, as the Minister said, a lengthy process of consultation is needed, our response is "Yes", but we must also point out that the new clause was tabled at the last minute. There is no need to rush it. Indeed, if there is a deadline, it is a self-imposed one. It is one which the Government have imposed themselves by having the legislative timetable dictate that it will be this week that we shall examine the Bill on Report.
      That raises general problems about criticisms of the procedure for examining Bills of this nature. By and large, this measure is non-controversial between the parties. However, the Committee would have been aided if at a pre-Committee
      1172
      stage we had been able to call expert evidence on 'patters such as this in order properly to make up our minds on the validity of the several proposals that have been made. One wonders whether this Government or any other Government will draw the lessons in terms of parliamentary procedure from the shambles of a procedure that we have had in regard to this Bill.
      As the Minister said, the substantive matter is highly technical. He said that it was in response to the consultative document of October last year. Therefore, there has been ample time for the affected bodies to make their views known in response to those who are active in the Eurobond market.
      The way in which the new clause has been drafted and the procedure that I have outlined necessarily make one ask how serious the Government are about the effectiveness of these insider provisions. We know that there have been false starts in respect of insider legislation. One occurred in 1973, and the general election of 1974 brought that legislative attempt to an end.
      Another occurred in 1978, and the general election of 1979 brought that to an end. One wonders whether what has emerged from the consultative document, and the Government's improvement on it, will be truly effective,
      I invite the Minister and the draftsmen to ask themselves whether they should have put themselves in the shoes of a judge who is trying to direct a jury in making up its mind in respect of the criminal provisions that have been set out. I shall try to illustrate some of the difficulties of a judge in explaining these matters to a jury because of the multiplicity of tests that have to be satisfied at one and the same time.
      Clause 65 is the governing clause in respect of the new clause. According to clause 65(1), the individual must be
      "knowingly connected with a company".
      There is no rebuttable presumption, for example, that he is so connected. He must have information
      "which—
      (a) he holds by virtue of being connected with the company;
      and other hurdles—
      "(b) it would be reasonable to expect a person so connected … not to disclose except

      1173
      for the proper performance of the functions attaching to that position; and
      (c) he knows"—
      that the information he holds—
      "is unpublished price sensitive information in relation to those securities".
      What is "unpublished price sensitive information"? We are told by the definitions in the interpretation clause, clause 69(2)(a), that "unpublished price sensitive information" is information
      "which—

      (a) relates to specific matters relating or of concern (directly or indirectly) to that company, that is to say is not of a general nature relating or of concern to that company; and

      (b) is not generally known to those persons who are accustomed or would be likely to deal in those securities."

      The obstacles which the Government have erected continue clause after clause. Should it not be a necessary test for any draftsman in any provision that creates penal sanctions to seek to ask himself "Can a judge get across to a jury the nature of this crime?"
      I have tried to illustrate this point. Clearly, it is technical, but one accepts the possibilities contained in those clauses and the extra hurdles that have been set up by the new clause. One need not itemise them. This must be done in good faith, and the new clause goes on to reproduce what is contained in clause 65. In total, it appears that the possibility of a successful conviction in respect of these insider clauses is very remote indeed as a result of the obstacle course which the Government have provided for the prosecution.
      For that reason, one is bound to express some doubt as to whether the Government seriously want these provisions to be effective or whether they are saying that the whole purpose of this attempt to deal with insiders is essentially to be a deterrent and that they do not seriously expect a criminal prosecution to succeed for the reasons I have given. At least the new clause will be declaratory and will give an indication to people who are tempted that such action is viewed with sufficient official disfavour that it is brought within the ambit of criminal sanctions.
      By the new clause and the other insider clauses, the Government have imposed on the tempted insider not a straitjacket but a string vest, as one journalist has said. It is a string vest with
      1174
      so many holes that anyone so tempted is probably unlikely to be deterred.
      Sir Brandon Rhys Williams: I should like to echo the grumble of the hon. Member for Swansea, East (Mr. Anderson) that a new clause of this complexity has been tabled so recently. It does not give hon. Members the opportunity to study the implications. It is really beyond the majority of us in the House, even those who take an active interest in company law, to be perfectly certain about the implications of this and similar clauses. However, my hon. Friend the Minister for Trade has taken a great deal of trouble and has said much that will repay close study. No doubt it will receive it. Even so, there are some general observations that one must make in considering a new clause of this kind.
      I am not qualified to make particular observations, but my general observation is that it seems that here we are acknowledging a failure of self-regulation in the management of companies. That is a point which is worthy of comment, although I do not want to dilate on it now. Something must be done because companies are failing to discipline themselves. The Department has decided on a change in company law. That is an important decision, because there are other ways in which problems such as the one dealt with in the new clause could be tackled. However, the Department has taken that decision. That is important, because company law is growing like Topsy. Virtually every day the Department seems to have a brainwave about ways in which the conduct of directors or managements of companies should be regulated more minutely than ever before.
      5 pm
      I am concerned about the weakness of the supervisory elements in the company law framework that exists in Britain. The supervisory elements in British company law are much weaker than those in America, Germany or other free enterprise societies with which we have to compete. I have constantly sought to draw attention to that deficiency. Should company law be allowed to become more minutely detailed and unenforceable, or, as I believe, should we look for some other way of cleaning up a fraudulent, inefficient or drowsy firm? I am not opposinfi the clause, which may be correct

      1175
      and necessary. I am simply making a warning sound to the Department. Deeper thought is needed as to the way in which we should tackle known problems.
      I cannot help but reflect that before Parliament decided to make auditing compulsory lion. Members must have been distressed by a series of unhappy stories from companies about fraud or incompetence. In due course, those problems were dealt with by introducing compulsory audits. Will the Minister indicate that this is a problem that must be dealt with by legislation? It cannot be dealt with in any other way.
      Mr. Parkinson: I shall deal briefly with all the points that have been raised.
      The hon. Member for Swansea, East (Mr. Anderson) opened the debate for the Opposition. Although we had the pleasure of listening to him from the Opposition Front Bench in Committee, this is the first time that I have heard him speak from the Front Bench in the House. I enjoy his remarks and I look forward to hearing many more from him from that Dispatch Box. However, I cannot accept what he said, although he said it charmingly.
      It is difficult for a party in Opposition to move at the speed at which Governments can move. Having sat on the Opposition Benches for some time, listening to the hon. Gentleman sounding masterly as he repeated those beautifully drawn-up briefs provided by civil servants, I am aware that one has to do a great deal of homework oneself and that that presents difficulties.
      This clause arose from representations by the Law Society. Unless the Law Society is a different body today from the body that it was a few months ago—I know that it is not—I am sure that whatever the Law Society said to the Government about its criticisms of the clause, it said equally to the Opposition.
      Mr. Clinton Davis: One of the problems that must have confronted the Law Society was the time scale. The problem confronting us was how we could equip ourselves to deal with these complicated matters. The Government should have realised on Wednesday night, when they were faced with this problem, that they should have deferred the Report stage for a week or so to enable all hon. Members to get to grips with these matters.
      Mr. Parkinson: The clause has been drafted to meet an objection that was raised by the Law Society as a result of its examination of the original Bill. However, that is an argument on which we shall never reach a satisfactory conclusion. As the hon. Member for Hackney, Central (Mr. Davis) knows, we delayed the Committee stage so that he could take advice. I accept the difficulties that he has mentioned, but I hope that he will not continue to refer to them, because that could delay matters.
      Mr. Peter Archer: In order to put the record straight, may ir say that the Law Society mentioned to the Opposition the problem to which the Government have adverted. The difficulty arose over the way in which the Government dealt with it.
      Mr. Parkinson: It was because the Government recognised that problem that I devoted a good deal of time to it in my introduction to this new clause.
      The second part of the strictures of the hon. Member for Swansea. East was not valid. He talked about our approach to insider dealing. In this new clause we are excluding those people who deal in and make Eurobond markets from the provisions of the insider dealing clause. I listened with interest to his remarks about our approach to insider dealings, but we are making arrangements not to apply those provisions to this particular market.
      Mr. Anderson: Nevertheless, a potential defendant would still have to bring himself within those exemptions.
      Mr. Parkinson: The difficulty is that the Eurobond market is an international market. It is quite capable of picking itself up and moving itself out of the country. Most of the market is made by telephone and Telex, and it is the dealers who make the principal part of the market. If we were to apply the insider dealing clauses, the market could easily leave Britain and we would lose. There is, therefore, some urgency in getting this legislation on to the statute book.
      The views of my hon. Friend the Member for Kensington (Sir B. Rhys Williams) are always studied with great interest, especially by Ministers. However, we have debated on a number of

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      occasions whether we should make insider dealing a criminal offence. There is widespread agreement throughout the House that we should do so. I hope, therefore, that my hon. Friend will forgive me if I do not follow him into a discussion on whether we should approach the problem in that way. The decision has been taken, but we respect his view that there could have been another way of dealing with the matter.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    New Clause 3

      SPECIAL AUDIT COMMITTEE
      'In any company with a paid up capital of £100,000 or more the shareholders shall at the Annual General Meeting appoint a Special Audit Committee on the following terms:—

      (a) all members of the Board of the Company shall be completely and expressly excluded from membership of the Special Audit Committee, and no relative of any Director nor any person holding shares in the Company shall be a member of the Committee;

      (b) the Committee shall consist of not less than three nor more than six persons and shall be authorised to employ professional staff to carry out its duties;

      (c) funds for the work of the Committee shall be voted by the shareholders at the Annual General Meeting;

      (d) the Committee and its staff shall have an unqualified right at any reasonable hour and without notice to examine the books, records, documents, vouchers, ledgers, contracts or any papers whatsoever relating to the business of the Company or the remuneration of any Director or employee of the Company;

      (e) the Committee shall report at least annually to the shareholders and may report at any time on any matter which in their judgment should be brought to the attention of the shareholders, and may also if they think fit make reports to the Department of Trade.

      This section shall not be construed as overriding the normal statutory duties of the Company's duly appointed auditors.'—[Mr. Hooley.]
      Brought up, and read the First time.
      Mr. Frank Hooley: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker: With this we may take the following:
      New clause 29—Audit Committees:
      '(1) The agenda of every annual general meeting of a major public company shall include either—

      (a) the report of the audit committee of the board to the members, or

      (b) consideration of the appointment of an audit committee of the board.

      (2) The report of the audit committee of the board to the members of any company shall state in what ways if any the practice of the company or of the audit committee has differed from the practice required to conform with the provisions of Schedule () to this Act (Constitution and Functions of Audit Committees).
      (3) In this section a major public company shall mean any company registered in Great stock exchange if at any time within a period of five sears ending on the last day of its last Britain whose shares are listed on a recognised accounting reference period being a day not more than 12 months after the passing of this Act, the company has—

      (a) employed a number of employees in excess of 25,000; or

      (b) had total net assets in excess of £200 million.'.

      New clause 30—Appointment of Non-Executive Directors:
      '(1) Every company to which this section of this Act applies shall either—

      (a) have in addition to any other directors not less than three directors who shall be non-executive directors of the company, or

      (b) shall include in the agenda of the annual general meeting the consideration of the appointment of non-executive directors of the company.

      (2) This section of this Act shall apply to any company registered in Great Britain whose shares are listed on a recognised stock exchange.
      (3) The remuneration to be paid to the non-executive directors shall be decided by the members at each annual general meeting of the company and shall be at the discretion of the members, notwithstanding any provisions in the articles of the company governing the remuneration of directors.
      Amendment No. 383, which proposes to insert a new schedule—

      CONSTITUTION AND FUNCTIONS OF AUDIT COMMITTEES
      "(1) If at an annual general meeting of a major public company it is resolved in accordance with the provisions of section (audit committees) to appoint an audit committee, such a committee shall (unless otherwise specified in the articles of the company), be constituted by the board of the company within three months of that meeting and shall be required by the board to function in accordance with the following provisions of this section:—

      (a) the audit committee shall consist of such directors of the company as the directors shall determine but shall include not less than three non-executive directors;

      (b) not less than half the members of the audit committee shall be non-executive directors of the company;

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      (c) the non-executive directors who are members of the audit committee shall nominate one of themselves to be chairman of the audit committee;

      (d) the company secretary shall carry out the responsibilities of secretary of the audit committee;

      (e) each member of the audit committee shall have a vote and in the event of an equality of votes the chairman of the audit committee shall be entitled to exercise a casting vote;

      (f) the audit committee may act notwithstanding any vacancy in the number of its members;

      (g) the chairman of the audit committee shall convene audit committee meetings not less frequently than twice between each annual general meeting of the company and shall preside at such meetings;

      (h) the auditors of the company shall be entitled to receive notice of and to attend every meeting of the audit committee and to be heard thereat and the audit committee may require attendance by the auditors and every member of the audit committee and the auditors may require meetings of the audit committee to be convened, but the auditors shall not be members of the audit committee.

      (i) the audit committee shall—

      (i) undertake reviews of all audited or unaudited financial statements prepared by the directors before such statements are issued to members of the company or in any other manner published (and any such statement shall indicate whether or not it has been approved by the audit committee and any qualifications or reservations made by the audit committee) and of such data and estimates prepared by the company as in the opinion of the audit committee are necessary to allow a reasonable assessment to be made of the future profitability of the company and its ability to meet its debts as they fall due.

      (ii) consider any matter which the auditors require to be brought to the attention of the board.

      (j) the proceedings of audit committee meetings shall be minuted and a copy of the minutes shall be sent by the chairman of the audit committee to every director of the company within seven days of every meeting of the audit committee, but shall not be published, and the board shall consider at the first suitable opportunity the matters which have been examined by the audit committee and the opinions of the audit committee upon them;

      (k) before any meeting of the company at which the appointment of auditors is to be voted on. the audit committee shall make a recommendation as to the choice of auditors and this recommendation shall be circulated to the members with the notice of the meeting;

      (l) before any meeting of the Board at which the remuneration of the auditors is to be considered the audit committee shall make
      1180
      a recommendation as to the amount of such remuneration.

      (2) The audit committee of a major public company shall continue in being and to function in accordance with the provisions of this section notwithstanding any change in the classfication of the company as provided in section 1 of this Act unless at a meeting of the company convened on special notice its appointment is revoked by extraordinary resolution.
      (3) In all companies in which an audit committee has been appointed in pursuance of the provisions of this section:—

      (a) the audit directors shall make a statement in each accounting reference period (to be known as the audit directors' statement) in which they shall say whether in their opinion the reports of the audit directors on the board were duly considered by the board;

      (b) a copy of the audit directors' statement shall be attached to the balance sheet and read before the company in general meeting by the chairman of the audit committee;

      (c) each audit director shall sign the audit directors' statement or resign from the audit committee;

      (d) an audit director who has resigned from the audit committee for any reason shall give to the chairman of the committee and to the chairman of the company a statement in writing as to the reasons for his resignation and shall notify his resignation to the Registrar of Companies and such notification shall be accompanied by a letter confirming that there are no particular circumstances connected with his resignation which he considers should be brought to the notice of members of the company or the Registrar of Companies or, if there are any such circumstances, he shall require the company to have printed and circulated at the expense of the company to the members of the company a personal statement not exceeding one thousand words in length and a copy of any such personal statement shall be delivered by the company to the Registrar of Companies at the same time as it is circulated to the members of the company;

      (e) an audit director who has resigned from the audit committee shall not thereby become ineligible for re-appointment as an audit director of the company on any future occasion and shall continue to hold office as a director of the company subject to the provisions of the articles of association of the company;

      (f) an audit director shall be paid such additional fee, if any, as the members at each annual general meeting of the company shall determine in addition to the fees paid to him as a director of the company, notwithstanding the provisions of the articles of association of the company relating to the remuneration of directors;

      (g) the directors' report shall state in respect of the accounting reference period to which the report relates—

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      (i) which directors of the company served as chairman or as members of the audit committee;

      (ii) the name of any audit director who ceased to be a member of the audit committee; and

      (iii) in the case of any director other than a non-executive director who served on the audit committee the nature of his other primary responsibilities to the company.

      (4) In this section of this Act:—
      "accounting reference period" has the meaning given in section 2 of the Companies Act 1976;
      "audit director" means a director appointed to serve as a member of the audit committee of a major public company;
      "auditors' report" has the meaning defined in section 14 of the Companies Act 1967;
      "the Companies Acts" has the meaning defined in section 40 of the Companies Act 1976;
      "directors' report" has the meaning defined in section 15 of the Companies Act 1967;
      "non-executive director" means a director who is not an employee of and does not hold any other office or place of profit under the company or any subsidiary or associated company of the company in conjunction with his office of director or audit director of the company '.
      Mr. Hooley: I venture with a good deal of diffidence into the thicket of company law, but I am encouraged that my new clause is accompanied by a new clause and an amendment in the name of the hon. Member for Kensington (Sir B. Rhys Williams) which touch on the same principle. He has a great deal more knowledge of these matters than I could pretend to have.
      It is my belief that in Britain we should have a powerful statutory independent body to overview company law and the activities of companies, not dissimilar to the Securities and Exchange Commission in the United States. So long as we have a mixed economy, and private companies are as powerful and independent as they are at present, such a body should be created, and it should have extensive powers. The answer of the City to that argument has always been self-regulation and self-discipline. Let us look after those matters ourselves, and all will be well.
      All is manifestly not well. By proposing the new clause, I have in a sense accepted the principle of the City's idea. We should build a mechanism into the
      1182
      behaviour of companies and company law which will make that self-discipline and self-regulation work. At present it does not.
      I hope that the House will excuse me if I go into the background to the new clause, which is necessary to establish the case that I am putting forward. Over the past 10 years, and I suspect long before, self-regulation and self-discipline have not worked within the framework of company law. That company law needs some adaptation of new mechanism, which I have tried to provide, although I do not doubt that the Minister will attempt to pull it to pieces on technical grounds. The principle is nevertheless important. I shall listen with great interest to what the hon. Member for Kensington has to say. Although I disagree with certain details in his new clauses, they are closely connected with mine.
      I wish to refer to an early-day motion that appeared on the Order Paper on 11 November 1975. It noted with growing concern the official inquiries being conducted by the Department of Trade into the affairs of private companies. It noted the chain of City failures, embracing some 30 secondary banks, property and insurance companies, including London and County Securities, Lonrho, London Capital Group, Nation Life, Vehicle and General, Fire Auto and Marine, Jesse] Securities and others. It noted the industrial failure of British Leyland, then private, Court Line, Ferranti, Alfred Herbert and others. It emphasised the damage caused to British manufacturing industry by Slater Walker. It called upon the Government to issue a statement on Haw Par and Spydar. It is almost a roll of honour of the City of London. That was in 1975.
      In 1976, we had the famous or notorious report on Lonrho, which attracted a great deal of public interest and led to debates in the House. It caused the right hon. Member for Sidcup (Mr. Heath) to discover, rather late in life, the unacceptable face of capitalism.
      In the Financial Times on 8 July 1976 there were reports on the behavior of the key figures in this dispute, which is probably the most famous punch-up on a board of directors, if not this century, at least since the war. One comment was:
      "You are dealing with a man who had completely converted what was a sleepy, dozy

      1183
      company into something dynamic and who was a sort of tyrant and part madman to boot, but a brilliant one".
      It may be pleasant for companies to have tyrants and part madmen on their boards, especially if they turn out to be brilliant, but with such people in charge of company affairs, perhaps the miserable, non-tyrannical shareholders ought to have some protection against tyranny or madness, in case it goes beyond the bounds of reasonable behaviour.
      The report goes on to quote what Mr. Rowland saw as the function of directors:
      "In a letter to Angus Ogilvy in 1968: 'Lonrho is in my view nothing else but Alan (Ball), yourself and myself, combined in turn to give the company character and soul and constant and continuous drive and motion.'"
      That was Mr. Rowland's version of how a company director should behave and use his power—the company consists only of himself and two other persons who happen to be directors. That was it.
      Mr. Rowland made an even more startling and revealing comment:
      "He had heard how Harley Drayton had managed his companies:
      'Harley would say" Well, we are going to sell this, we are going to buy this, and incidentally he has got this, and I have done that," and this was the pattern and the right sort of behaviour, and the rest was a sort of Christmas-tree decorations.'"
      What a delightful definition of the way to run a company! Certain directors do this or that in the interest of shareholders and employees—presumably all the business of audit, financial control and responsibility, legal regulation and company law—and the rest was "Christmas-tree decorations". That is the considered opinion of a man whom, with no disrespect, I would describe as probably the most outstanding tycoon of the past 20 years. It does not say much for the rights and powers of shareholders.
      5.15 pm
      A couple of days later, on 10 July 1976, The Economist commented:
      "Easy money and easy morals upset Mr. Heath, and most people enjoyed a good dirty fight in the City."
      I am not sure what the word "dirty" means. I do not know whether it is supposed to include fraudulence, manipulation, swindling and cheating. I would not care to pronounce on the morals of
      1184
      the City, but it appears that a good dirty fight is acceptable.
      The article went on—and this is perhaps more pertinent to the argument—
      "Good business practice, only some of which is properly and clearly codified in law, sets bounds to the freedom of men who run companies."
      That is fair enough.
      "If their companies have to survive them, they have to carry their board on major decisions; the board has to tell shareholders what it is doing with their companies. Mr. Rowland clearly broke those bounds".
      Some directors, including Mr. Rowland, clearly believe that it is not necessary to tell shareholders what is going on. Provided directors are dynamic and successful, they can do this and do that, and the rest is "Christmas-tree decorations". to use Mr. Rowland's agreeable phrase. The Economist believes that there should be bounds to the freedom of directors to do what they like. My new clause would provide a mechanism to make sure, within the bounds of human certainty, that there was a check on the arbitrary, tyrannical and perhaps sometimes mad behaviour of directors.
      The article continues:
      "there is the undesirability of directors making personal financial arrangements with a chief executive whose activities they were there not just to support but to monitor."
      That is part of the problem. In that case, the directors were manifestly not monitoring such activities or at least, when they attempted to do so, there was an almighty row in the board room, which ended up in the High Court and led to investigations by the Board of Trade.
      The Economist comments further about those who practise such behaviour:
      "Some have ended in the honours list, some in disgrace, some both."
      On one occasion someone ended up in both. There is the more recent case of Peachey Properties. I shall not go into the whole of that disagreeable business. However, it led once again to a formal investigation by the Board of Trade.
      The inspectors found that the principal director had used the company as a private bank. He had spent company money as if it had been his own. He persisted in acting recklessly until he left the company. He apparently regarded it as quite proper to buy valuable

      1185
      jewellery without telling anyone. He had all sorts of dealings with other stockbrokers and with merchant banks. He failed to produce invoices for extremely valuable pieces of jewellery. He bought a silver model of Concorde costing £22,500 for display at the group's offices. That type of activity can be carried on by a director of an important company under present company law. However, in certain respects he clearly broke that law.
      No effective check can be made by shareholders on such activity. That raises some disagreeable queries about the nature of the accountancy profession. I am particularly concerned about the work of professional auditors. They would appear to be rather casual, if certain revelations are correct.
      Amendment No. 383 stands in the name of the hon. Member for Kensington. This clause and that amendment share the principle that a completely independent mechanism is needed. Mishaps, unpleasantness and malfunctionings have a long history. One need look only at the roll of honour of the past seven years for the City of London. Such mishaps have usually arisen as a result of improper behaviour by directors. By law, they are supposed to run the company in the interests of shareholders. Indeed, in general terms they should run the company in the interests of shareholders and of employees. Presumably they also have some responsibility to the community.
      I part company with the hon. Member for Kensington, because his amendment states that:
      "the audit committee shall consist of such directors of the company as the directors shall determine but shall include not less than three non-executive directors;"
      That falls foul of the problem. Lonrho, Peachey Properties, Vehicle and General, London and County Securities and other companies have shown that this problem concerns the misbehaviour or incompetence of company directors. There is an apparent failure by auditors and shareholders to exercise an effective check. The clause is designed to provide a layman's idea of a mechanism by which the shareholders would have an independent instrument at their command to investigate and call to account the behaviour of the board or of its individual directors.
      1186
      I am no particular friend of shareholders as a tribe. I do not have any shares. The only shares that I hold are held indirectly through a couple of modest insurance policies. However, important share holdines are held by pension funds that act on behalf of thousands—if not millions—of ordinary people. Such funds act as trustees and they should have some effective means of safeguarding the interests of those for whom they act. Such institutions can exercise a fairly powerful influence if they so wish. However, they sometimes seem to be astonishingly reluctant to pursue obvious malpractices. They wait until they are totally out of hand.
      There is now a new category of shareholders. Some of my friends, who are shop stewards, hold one or two shares in Johnson Firth Brown, a private steel firm in Sheffield. That gives them the right to appear at the annual general meeting and to speak on issues that they feel to be important to themselves and to their fellow workers. The law does not recognise the status that they have. However, the Bill will alter that to some extent.
      There are therefore two categories of shareholders: pension funds and those individual workers who avail themselves of this technique. They should be able to check whether a director's behaviour is out of line. A director's behaviour may be irresponsible, or perhaps illegal. This clause is set out in layman's language. I am sure that it does not appeal to the gobbledegook of parliamentary draftsmen. However, I hope that it is understandable.
      I suggest that the annual general meeting should appoint a special audit committee. I have suggested a company with a paid-up capital of £100,000. However, at present rates of inflation the paid-up capital may need to be £100,000 million. I shall take a chance. The sum of £100,000 is a good figure to argue about. If the clause is accepted and is debated in another place, the figure may be amended. It may become higher. I shall not quibble about the figure of £100,000. It acts as a marker.
      The key point of the clause is that the directors of a company will be expressly

      1187
      excluded from membership of the special audit committee. No relative of a director shall have anything to do with it. The clause also states:
      "nor any person holding shares in the Company."
      Perhaps that is a bit draconian. The object of the exercise is to ensure that the Committee will be financially independent of the progress of the company. It will have no financial incentive to condone or overlook any malpractice that might be justified on the ground that it is good for the company and, therefore, does not matter. Basically, that was the Lonhro defence.
      5.30 pm
      The other points are fairly straightforward. The committee will consist of three or four people, and not more than six. Obviously the shareholders must vote some money to the committee to enable it to do its work. (d) is the key paragraph in many ways in that it gives the committee an unqualified right at any reasonable hour—and by that I do not mean midnight, as we are not dealing with VAT inspectors—to examine any
      "books, records, documents, vouchers, ledgers, contracts or any papers … relating to the business of the Company or the remuneration of any Director or employee of the Company".
      Then the committee will have the right to report to the shareholders and draw the attention of the Department of Trade to anything which it may think has gone wrong.
      Hon. Members may ask me what is wrong with the auditors. I do not know why the auditors cannot do this kind of thing, but apparently they do not. Of course, the auditors have the drawback of being appointed by the board of directors and, therefore, there is a danger of undue or improper influence being brought to bear on them. In any case, auditors have basically the rather pedestrian function of ploughing solemnly through great masses of ledgers and computer print-outs, checking on all the tedious detail of the company's goings-on. What is needed is something with a rather sharper cutting edge—a small body or inspectorate which can come in at any time, go into the directors' office and ask for certain documents. It should be a body that can ask what amounts have been spent on certain items and demand to see the bank statement for any par-
      1188
      ticular date. It must have an unqualified right to inspect at any time.
      Also, the key factor would be that this committee would be responsible to the shareholders, and the board of directors would have no control over it whatever. If the directors sought to interfere, the committee itself could immediately refer the matter to the Department of Trade.
      Mr. Archer: Does my hon. Friend agree that his committee might be able to do what auditors are not normally called upon to do—look at the company not only from the point of view of honesty but also from that of effectiveness in management?
      Mr. Hooley: I would in no way dissent from that very sensible suggestion. I am a little surprised that Conservative Members, who are always talking about efficiency audits of public corporations, seem not to be so enthusiastic about efficiency audits of private companies. That is another point.
      I emphasise that I am entirely a layman in this matter. I am not an expert in any sense on company law. However, I am profoundly uneasy about a great many of the scandals which have occurred and which have involved a lot of money for shareholders. Also, serious failures can involve not only loss of money but also the loss of jobs, which means a complete loss of livelihood for thousands of innocent workers who had no means of knowing that the affairs of the company were not being properly conducted. For this reason, I put forward this new clause and I look forward to hearing the Government's response.
      Sir Brandon Rhys Williams: I am delighted to find that the number of hon. Members interested in audit committees has doubled since I began my campaign. At this rate we shall soon have the whole House on our side. Perhaps my optimism is running away with me, but one needs to be pretty optimistic to continue the struggle year in and year out for company law reform, which is by no means one of the major enthusiasms of hon. Members.
      A number of points have been made admirably by the hon. Member for Sheffield, Heeley (Mr. Hooley) in moving this new clause. I would not wish to comment on his remarks, because grouped with his proposed new clause are a

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      number of detailed proposals of mine. I shall not bore the House by going over familiar ground in detail which is altogether too minute, but there are some points that should be made about the proposal to move in the direction of establishing audit committees and about the whole role of the non-executive directors and the ways in which they may be helped to operate more effectively.
      The audit committee, as developed in Canada and North America, is a subcommittee of the board which is of particular concern to non-executive directors. It is welcomed by the non-executive directors because it provides them with a real function and necessary access to data. It also gives them the standing on the board that they might not otherwise have among their executive collegues.
      We must consider whether we should make the practice of appointing audit committees mandatory and, if so, in what classes of companies. I am increasingly inclinde to the view that an audit committee is appropriate only in very large companies. The etiquette of operating an audit committee is not by any means established, either among boards of directors or among auditors, but there is a general feeling that a need exists for closer co-operation between the auditors and the directors, particularly in large and complex organisations.
      We have the example of the New York Stock Exchange, which has made having an audit committee a qualification for having a company's shares quoted in New York. Many companies in this country are becoming familiar with the idea and would like to explore its possibilities.
      Mr. Robert Maclennan: The hon. Member will recall that during the passage through the House of the last Companies Bill I had some responsibility for the matter. Is the hon. Member in a position to inform us whether, since that time, there has been any shift of opinion in the securities industry towards his proposals, which were debated at some length then? At that time I recall that there was a certain reluctance—I put it no higher than that—to see his proposals made mandatory. However, there was an acknowledged interest in the general principle.
      Sir B. Rhys Williams: I acknowledge the force of what the hon. Member said. With the study of the practice of the audit committee there have grown up some doubts as well as some enthusiasm. I hope to visit New York again this year in order to make inquiries among those who take a particular interest in these aspects of company law and to learn what I can from the blunders and mistakes or wrong directions in the operation of audit committees over the years in these large American companies.
      I stress the fact that in the United States audit committees operate only in very large companies. The New York Stock Exchange is really concerned only with very large enterprises. It is not like the London Stock Exchange, where the share of quite small companies may be traded along with the very largest. Therefore, to say that one must have an audit committee to be quoted on the New York Stock Exchange does not imply that the generality of American companies are necessarily appointing audit committees.
      I feel that there is a general trend in favour of strengthening the relationship between auditors and non-executive directors. If audit committees are to exist and to grow in importance, the House must ask what their legal standing would he. If this is a phenomenon that is beginning to develop in British company practice, how do we deal with it from the company law point of view, if at all? What provisions should be included in company law to help companies in this respect of their work?
      In my new clause 29 it is suggested that in very large companies the practice should be considered of appointing an audit committee at the annual general meeting so that the subject is kept alive and a shareholder who chose to raise the subject could thus never be deemed to be out of order at an annual general meeting. I hope that that suggestion will be thought a useful device whereby the thoughts of management will be directed towards the advantages or disadvantages of appointing an audit committee and that management should have to be ready with its thoughts on the subject without being obliged to hurry faster than its shareholders would like.
      Suppose that they decided to set up an audit committee. What next? All to

      1191
      few companies have established audit committees in this country and few people know exactly how to go about setting one up. What is likely to prove successful in one company may be superfluous or a blunder in another. In order to set down some suggestions-1 always try to be absolutely specific—in my new schedule listed as amendment No.:383 I have had printed what I hope is a useful code of practice. It is an attempt to produce the draft equivalent of table A in so far as the conduct of an audit committee may be organised.
      In order to guide people towards the successful operation of an audit committee we should also make sure that companies that are bent on fraud do not set up such committees as a front organisation in order to deceive shareholders into believing that their interests are being properly looked after when they are not. I believe that it would be good to have a detailed code of practice set down somewhere in company law but to leave it to the shareholders to decide whether their companies should adhere precisely to that code or be free to vary the method of operation to suit their own circumstances and experience. The device that I recommend in my new clause is that shareholders must be informed if the company's practice, when it sets up an audit committee, differs from the norm as laid down in the Act. I hope that the Department will think that this is a useful way forward.
      I have not asked for separate votes on my new clauses or my schedule because I think that they have to be regarded as tentative and a possible basis for consultations. I hope, nevertheless—though I am quite willing to express my diffidence about them—that they will serve a useful purpose and will not die with tonight's debate.
      I turn now to the issue of non-executive directors. Once again I have only provided that it should be mandatory on companies to consider the appointment of non-executive directors if they do not have as many as three already. I believe that this should be a regular item on the agenda of the annual general meeting. We have heard increasingly about the importance of non-executive directors, and I believe that many people are interested in the status and the possible role of such directors. I do not claim the credit for my campaign, but I believe that an in-
      1192
      creasing number of people are concerned with the health of private companies and have discerned that non-executive directors could be more useful than they currently are.
      There is also a sense of uneasiness where companies are known to have no outside directors.
      We should ask what is the status of the non-executive director, who is often called the outside director. The implication is that these are people who do not quite belong to the company. The words "outside director" suggest in some way that outside or non-executive directors do not fit in quite as well as the other components of management.
      The weakness of the non-executive director is a relatively new feature in British company law. Before the war, and certainly in the nineteenth century, the vast majority of boards consisted of non-executive directors only. It is only in relatively recent times that the managerial revolution has changed the character of boards so that now the majority of directors of British public companies are the heads of department and only a minority survive from the pre-war boards which used to be entirely made up of outsiders who were there to look after the interests of the shareholders and to keep an eye on management.
      In British companies non-executive directors are now almost always in the minority, and though only rarely does one find a board of directors actually proceeding to a vote—except in times of serious trouble or contention—the minority element is at a disadvantage.
      My second point about non-executive directors is that they do not always have access to the facts, because they are unable to insist on having all the facts. That inevitably weakens their argument when they are dealing with heads of department who may have spent 20 or 30 years in becoming familiar with the company and its ways in terms of their particular functions. Such heads of department can silence criticism by demonstrating an absolute mastery of the company's practice and interests. That mastery nevertheless can fail to grasp some essential point of value that an outside director is trying to make. We should sympathise with the ineffective non-executive directors, because not only are they in a minority but they cannot

      1193
      be sure whether they are right when they try to take a stand.
      5.45 pm
      My third point about such directors is this. When they try to take a stand, what are they able to achieve? Company law does not give such a director any responsibility or function that would enable him to throw his weight about on the board. If he does not like what is going on, he can acquiesce notwithstanding his anxieties—many non-executive directors do that—or, if he is very unhappy, he can resign quietly, in which case his going will not be noticed. It will be assumed that he has reached the normal age of retirement, that he is withdrawing because he has new commitments or because there is a natural reason why he chooses not to present himself for re-election. Such a resignation is unlikely to attract the attention of the shareholders or the press, or, indeed, of anyone else.
      However, the non-executive director who chooses to resign may force a major row and make a statement as to his reasons for resignation. He can try to alert the shareholders or in many other ways try to attract attention to his point of view and thus force a confrontation with his colleagues. Almost always the non-executive director who chooses that cause is ill advised. His action will damage the company without his having made his point, and he will then probably be regarded as a dangerous person who flies to conclusions without knowing what he is saying and will damage any company that he is supposed to serve.
      That is the difficulty of the non-executive director if he tries to be an effective director. I believe that we have to solve this problem if we intend to cure a major deficiency in British company law. I believe that this is a matter for the House of Commons. I do not think that we can leave it to outside influences to deal with this problem quickly enough.
      Over the years I have tried to suggest various ways in which outside directors could be given the necessary status to enable them, while in a minority, to make a useful contribution. I believe that such directors should be given more information as a statutory right. That
      1194
      was provided for in one of the clauses that I proposed in Committee.
      I think that it would be helpful if outside directors had to make some kind of written return or were given some obligation to appear at the annual general meeting and to make a statement—even if only an oral statement—that would come from them in their capacity as supervisory directors. However, I realise that as soon as we give non-executive directors a role that is different from that of other directors we have started to make them into a different type of director from their fellows round the boardroom table.
      I do not feel that this is a particularly heretical move, because they are different from the heads of department in so far as they are non-executive directors. I think that shareholders are entitled to know, from the list of directors with which they are provided, who their outside directors are. Normally those directors are not clearly identified.
      At the annual general meeting, the outside directors should do something to justify their existence. I should like them to be required to make some sort of statement to the shareholders, which would correspond to the statement made by the auditors. The auditors are obliged to state on the balance sheet that they consider that the accounts present a true and fair view. It would be quite appropriate for the outside directors to make a statement such as that they have confidence in the management or that they consider that the assets are being properly employed.
      The advantage of that sort of statement is not that people would rush to read what they have said year after year, because it would tend to be taken as read, but that in the course of the preparation of the balance sheet the non-executive directors would be able to tell their colleagues, if they were unhappy with the way that things were being run, that they would have to qualify their report to the shareholders unless more attention was given to their point of view. The threat of the qualification of the non-executive directors' statement would provide a necessary element of discipline without resulting in any leaks, boardroom splits outside the company, or friction and disunity within the board.

      1195
      At the moment, non-executive directors are tolerated by the heads of department provided that they do not have views of their own and do not rock the boat or exercise their supervisory role in an effective way. Once they begin to exercise a supervisory role, I recognise that we have set out on the road towards the creation of a two-tier board. Of course, that is an immensely controversial question, partly because it is completely misunderstood. As soon as a two-tier board is mentioned, it gives rise to the suggestion that the idea is being promoted of worker directors. People in this country are nervous about such a development. I believe that industrial democracy is inevitable and right and that we should seek to encourage it in every way that we can. But it would not encourage or help the development of worker democracy to force the pace. The inevitability of gradualness is a necessary slogan when dealing with company law reform. However, at least we should know where we are going. I believe that we should strengthen the supervisory element so that in due course—it might be in 30 or 50 years' time—British company law will look much more like Continental law and there will be an identifiable supervisory team supervising the policy and not only the auditing of a company. That would be desirable.
      Mr. John Patten: Will my hon. Friend extend his argument about the proper role and possible statutory provision for non-executive directors to making some sort of statutory provision for the formation of audit committees within companies?
      Sir B. Rhys Williams: My hon. Friend may not have heard my earlier remarks on this point. I commend him to Hansard in order to pick up some of my views on that subject.
      It is necessary for us to identify our aim. That aim should be that the supervisory board and the executive board should have a somewhat separate existence. In this country we suffer from a lack of knowledge about the way that things are done in Germany. In that country two-tier boards have been normal practice for 100 years. They were developed there long before anybody thought of worker participation at board level. It may be that the success of the
      1196
      Germans in introducing worker directors was due to their having the two-tier board as an established and well-understood practice long before they thought of bringing in worker directors for the supervision of the management.
      I shall not digress too far on what, inevitably, will be the subject of future Companies Bills. I hope that when my hon. Friend the Minister winds up the debate he will indicate that he is giving serious consideration to the sort of reform that I have advocated before and which I am advocating in these new clauses. How can the necessary changes in the British private sector company be stimulated from outside? Should we leave that to the press, the Stock Exchange, the institutional investors, or even the pressure of increasingly organised middle management? All those forces can be healthy within the private sector, but Parliament must not abdicate its responsibility.
      In this country we have a glorious tradition of company law. In the nineteenth century it was far ahead of that of any other country, and it set a tremendous example to trading and manufacturing communities all over the world. Parliament must not abdicate and leave our company law as it is. We have to admit that it is now obsolete and inadequate.
      Mr. Clinton Davis: I begin by congratulating my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) on an excellent speech about which he was far too modest. The draftsmanship of the clause has been extremely competently done and I hope that he will take some comfort from that view. The importance of his tabling the new clause was to direct attention to the important issue of the appointment of non-executive directors and the role of audit committees, although I dare say that if he had not tabled the new clause we would still have debated the issue. We might have relied on the hon. Member for Kensington (Sir B. Rhys Williams) to ensure that.
      My hon. Friend approached the matter from an important angle—the protection that might be afforded in the reputation of companies to shareholders and those interested in fair dealing. For that purpose he drew attention to certain City scandals and company investigations, some of which I had a hand in setting up. An interesting feature of the sort of companies that are subjected to that sort of

      1197
      behaviour is that they are rarely, if ever, companies that are involved in making things—in manufacturing. They are companies which are involved in property dealing, speculation or financial manipulation. Such companies are sometimes susceptible to the sort of behaviour that gives rise to the need for investigations to be carried out.
      My hon. Friend was absolutely right to point out that recent experience over the course of the last two weeks has shown that everything is not manifestly well in connection with the system based on self-regulation. He said that his purpose was to make self-discipline work in practice.
      I also pay tribute to the hon. Member for Kensington, who, over a long period of time, has fought to some extent a one-man campaign to cause Governments to embark upon the process of reform about which, once again, he has spoken so eloquently today. He said that he was gratified that his support in the House seems to have been doubled by the recruitment of my hon. Friend the Member for Heeley. However, that is an injustice to me—I have always been a friend of his on this issue. Therefore, we have trebled our numbers.
      The concept of including the question of the appointment of the audit committee on the agenda of every annual general meeting is one that I commend to the Government on the basis that it was commended by the hon. Member for Kensington. Indeed, he founded his other notion on a similar basis which provides for flexibility of a company. It does not make it a statutory requirement that a company must have non-executive directors and an audit committee but it does provide for a company to ensure that it will deal with the matter at the appropriate time.
      What the hon. Member for Kensington did was to urge the Government to embark upon a process of consultation on that basis. I support him in that. I hope that we get a response, from whichever Minister replies, similar to that which we announced during the process of our bill in 1978, which was that we would enter into consultation. Indeed, that took place and I will refer to it in a moment.
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      6 pm
      I hope that the consultation is more specific this time and does not deal so much with whether it should be a statutory requirement as with whether the concept embraced by the speech of the hon. Gentleman might form a more satisfactory way of proceeding in the course of the next few years.
      I agree that non-executive directors need to be provided with some greater weaponry and armour to fulfil their duties of independent scrutiny more effectively than the law provides at present. I will not say anything about the two-tier board at this stage because that will be the subject of separate debate later in these proceedings.
      At this point I want to refer to our approach in 1978 following the consultation that we set up, about which I received a letter from the Minister today. That indicates that he is falling behind with all the work that he has to do, because he promised that reply in Committee. I do not blame him too much for the delay. It was helpful to have my attention drawn to the comments and research published in the Bank of England Quarterly Bulletin of December 1979, to which I will also refer in a moment.
      In his letter the Minister pointed out to me—this is evident from the replies that he received—that there was a great deal of support for the concept of non-executive directors among the many who were canvassed. It was felt that it would be conducive to the best interests of a company to have non-executive directors, but there was considerable opposition to the idea of making them a mandatory requirement.
      I dare say that if company directors in the United States and Canada had been similarly canvassed the answers would have been predictable. I am sure that they, too, would not want a mandatory system of audit committees imposed upon them. But the audit committees came about as a result of pressure from the Securities Exchange Commission; and the New York Stock Exchange, as has been said, decided to make them a listing requirement.
      I believe that very few people in the United States today would want to put the clock back. Throughout North

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      America the system is proving to be a distinct success. It has not been an unqualified success, because it has its blemishes and there are anomalies attached to it. But overall it has been a distinct success.
      If we could have more rapid knowledge about the practice that goes on where companies have embarked upon this idea, I believe that people would more readily entertain it. However, there it is. I do not think that the Minister favours the idea of a mandatory requirement, and no doubt he will tell us that today. Many of those who were canvassed pay lip service to the benefits of these two concepts but do not want to see too much progress.
      When I made the statement about consultation I remember saying that if the voluntary method failed we would have to look carefully at the need to impose a legislative requirement, and I see no cause to dissent from that proposition today.
      In Committee the Minister also supported the concept. He had something very interesting to say about it. He said:
      "I believe that this is a subject to which we should return on the Floor of the House so that the whole House should have an opportunity to say something about it".
      As we all know, this very full House is avid in its interest in the subject and no doubt we shall have hundreds of speeches on the topic later.
      The Minister also said:
      "The difference between my hon. Friend and myself is simply the question whether we impose these things by statute at this time."[Official Report, Standing Committee A, 6 November 1979; c. 35.]
      I emphasise the words "at this time". So the Minister does not seem to be ruling out the possibility of legislation if progress cannot be made swiftly enough. But still he believes in the principle of voluntarism when it comes to this concept.
      The Minister has said that more and more companies now recognise that non-executive directors are important and are appointing them, and we must look at the scale of advance that has been made. I hope the Minister will—not necessarily today—seize the opportunity to publish the information about the progress that has been made so that not only I but others receive it. Is there sufficient
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      evidence to support the conclusion that the voluntary approach will succeed over the next five years or so? What time scale do the Government think is appropriate to test this matter out properly? If progress within such a period is inadequate, should we not review, once again, the acceptance of the voluntary approach?
      My hon. Friend the Member for Swansea, East (Mr. Anderson) pointed out that the Government were placing entire reliance on voluntarism in this sphere of economic activity but yet denied that when it came to the trade union sector. I think that that nonplussed the Secretary of State. He was clearly stumped for an answer at the time and almost conceded that.
      What I commend to the Minister is that we should, at the very least, undertake a more coherent study of this matter. The prime purpose of having non-executive directors and audit committees, as I see it, is to encourage companies to be more responsive to change, to encourage greater efficiency and to keep them more in touch with what is happening in the world outside, and also to act as a balance to the overweening influence of members of the board. That is a subject to which we shall return later and something that was well illustrated by the recent Newman Industries case.
      All this, in every respect, is designed to assist and protect shareholders and at the same time those who are engaged as members of the work force in the progress that a company should be making. For the same reasons, I believe that it can act as a barrier against fraud and abuse.
      The paper submitted to me by the Minister and which was published by the Bank of England is very interesting. It certainly shows that there has been some progress since the Bullock committee conducted a survey into the application of the idea of non-executive directors and audit committees. An interesting fact was reported in the survey—namely:
      "About one-quarter of the companies in The Times 1,000 are controlled by foreign shareholders."
      That is about one-quarter of our top companies. The survey states:
      "This presents certain difficulties both in compiling and in interpreting the figures of non-executive directorships."

      1201
      It is much more than that. It presents all sorts of problems for the application of other aspects of company law. The survey adds:
      "The mere presence of non-executive directors on company boards does not, of course, ensure that they will be active in their role of independent critical advisers, nor that companies will use them in this way."
      That is one of the difficulties to which I alluded in my remarks in Committee. There are some matters which the proponents of non-executive directors and audit committees must deal with adequately.
      It would be fatally counter-productive if non-executive directors were chosen, or if their choice were influenced, by a powerful chairman or other board members who wanted cronies to help to camouflage and thus institutionalise existing inefficiency, malpractice, misfeasance and perhaps deceit and fraud.
      A compliant non-executive director manipulated by an authoritarian chairman, or by others on the board wielding such influence, would contribute to the death of this important idea. The selection of non-executive directors and audit committees should be independent of the sort of influences to which I have referred.
      The idea of non-executive directors must not be seen as a substitute for the concept of industrial democracy. I think that the hon. Member for Kensington recognises that. It is to be viewed, however, as a spearhead towards it. Essentially non-executive directors must be active, critical and independent if they are to be of value to the company and the concept, otherwise they will become discredited.
      The Stock Exchange has suggested that it might be possible to recommend that the concept be included as a listing requirement, a suggestion which did not receive wild acclamation. It is one of the ideas coming out of the Stock Exchange which I find interesting and progressive I hope that the Stock Exchange will not abandon it.
      In the Bank of England Quarterly Bulletin, to which I have referred, it is suggested that the survey which the Bullock committee carried out, and which was followed, should be undertaken at
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      intervals to check developments. That is something that the Government might well undertake. As the hon. Member for Kensington said, it is a concept with which the Bank should be intimately concerned and connected. I hope that it will feel it appropriate to carry out a survey at intervals to check developments. That is incumbent upon it if it is not merely to pay lip service to an idea which the hon. Gentleman has caused to flourish and which I hope will be brought to fruition in the not too distant future.
      6.15 pm
      Mr. Maclennan: I intervene briefly. The hon. Member for Kensington (Sir B. Rhys Williams) made his plea for non-executive directors and audit committees, but he did less than justice to the degree of support which his ideas on this subject have enjoyed not only in the course of this debate but in the course of the debates that preceded it during the abortive passage through the House of the Labour Government's Companies Bill. He suggested that the supporters of the idea in the House can be numbered in single figures.
      I recall vividly putting to the hon. Gentleman the Labour Government's view, which was strongly sympathetic to what he had in mind. However, I made it clear that there appeared to be considerable opposition to the proposal on the part of those most likely to be closely affected by it. It was for that reason that I thought it right to announce in Committee that wide consultation would be initiated by the Department of Trade. My hon. Friend the Member for Hackney, Central (Mr. Davis) has referred to that.
      In my brief intervention I asked the hon. Gentleman whether he was aware of any change in opinion since the days of the Labour Government. Although he acknowledged that I had a point, he did not altogether answer the question. I hope that the Minister will help to clarify the position. There has been an exchange between the two Front Benches on this issue to which the House would like to be privy.
      There has been some desire, perhaps, to interpolate into the discussion on the attractiveness or otherwise of non-executive directors and audit committees some consideration of whether this approach

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      might lead to two-tier boards or whether the concept has some relationship to industrial democracy. If we are to tackle either of these concepts, they must be tackled directly and not by an indirect process.
      If these proposals are meritorious, they are meritorious in themselves and not for what they might lead to ultimately. There is widespread support for the establishment of audit committees. That support was strongly expressed by the Governor of the Bank of England, Gordon Richardson, in a powerful speech which caused something of a flurry in the dovecotes at the time.
      Some people may have wrongly taken the view that the Governor was calling for the introduction in a statute of a mandatory requirement that audit committees be established as part of our company law. I think that the Governor had no such intention. None the less, the idea is finding increasing favour.
      I was interested to hear of some of the facts that my hon. Friend the Member for Hackney, Central quoted from the Bank of England Quarterly Review. In the last analysis we should not place too much weight upon the possible value of non-executive directors in all companies. That essentially is what the hon. Gentleman's proposals are designed to lead towards.
      I acknowledge that, as the hon. Gentleman has couched his proposals on this occasion, they are to some extent permissive. They merely require the issue to be raised at every annual general meeting and to be considered. The question whether non-executive directors are serviceable must depend upon their quality. The mere presence of non-executive directors on a board is no guarantee that they will be any more effective than executive directors. One of the general complaints about the proposition that they should be required to sit on every board is that there is a shortage of people with suitable talent. I know that the hon. Member for Kensington does not take that view. However, it is an argument that weighs against them.
      Some of the company directors with whom I have talked have considerable hostility to the idea of swelling their ranks with non-executive directors with no particular knowledge of the business
      1204
      that they are required to supervise through their role, and they regard the whole concept as an unnecessary appendage.
      That view is held strongly by those who would be most affected by any suggestion that the requirement should be mandatory.
      Sir Brandon Rhys Williams: I am in considerable agreement with almost everything that the hon. Gentleman said. Does he agree that it is precisely those managements that are opposed to the idea of making room for a supervisory element beside them on the board table that are possibly most in need of just that element?
      Mr. Maclennan: I do not agree with the hon. Gentleman. I hesitate to name names. However, as I was challenged I will say that one of the directors of the company to whom I spoke was named either last year or the year before as The Observer's business man of the year. He expressed strong hostility to that idea. He has a proven track record as an exceedingly successful business man. I cannot accept the general view of the hon. Gentleman.
      The willingness of the Stock Exchange to consider this matter seems to me to be a significant development. It will be of interest to hear from the Minister what is his reading of this development. No doubt he will give us the benefit of that advice. Important though the idea may be in the United States context—and it is interesting to learn from American experience—it is important to remember that just as German experience of two-tier boards is foreign to our present company law system, so the highly regulated American system is also foreign to our system. Perhaps we should move in the direction of the German and American systems. We should not tackle this problem through the side door. We should face these issues squarely. Indeed, some of the later clauses will give us a chance to do so. We should not seek from the proposals anything more than a modest change in the structure of boards and in the degree of supervision that would come about.
      I am hostile to the idea of introducing any requirement for mandatory non-executive directors without very much more evidence of the effectiveness of the role that they could play, not merely in

      1205
      respect of some but in respect of all companies—because we are legislating for all companies.
      Mr. Ernie Roberts: Previous speakers referred to the fact that there was growing support for audit committees. The difference comes about when we discuss the composition of audit committees. The hon. Member for Kensington (Sir B. Rhys Williams) referred to the proposed provision that
      (a) the audit committee shall consist of such directors of the companty as the directors shall determine but shall include not less than three non-execuive directors".
      They will still be judge and jury in their own cause. My hon. Friend the Member for Hackney, Central (Mr. Davis) referred to an audit committee that was independent of the board. It would be able to give a better, clearer and fairer judgment of the situation.
      Non-executive directors are no alternative to alert, alive and questioning shareholders and shareholders' meetings. They have the responsibility to ensure that the directors keep on the straight and correct line. Strong chairmen of companies have a great deal of their own way. They may quite easily choose yes-men as non-executive directors.
      In Standing Committee one hon. Member said that he was a non-executive director of a number of companies but had little time to go into the detailed control of them. In other words, non-executive directors may be just decorations on the board to give the impression that things are all right and that there are experts on the board who are helping the company with its business. The trouble with directors and directorships is that some persons have too many directorships. Their interests are spread far too widely. They cannot give sufficient time to the business of the companies of which they are directors.
      The national press has referred to comments about executive directors. A newspaper quoted the opinion of a well-known national trade union leader of such directors as "titled idiots". A well-known member of the other place summarised the functions of non-executive directors in this way:
      "For £500 a year he turns up once a month, says 'I agree' twice, utters a thought-
      1206
      ful 'I don't think so' once, and then goes off to a good lunch. It is like a permanent hot bath."
      It is undeniable that some outside directors are appointed purely for prestige purposes. Some are friends of the chairman to be relied on for their votes in case there is a split. Some are retired company lawyers, merchant bankers, accountants or former executives of businesses acquired in takeovers, or they might even be civil servants. The appointment of non-executive directors will not cure companies' problems or render the companies any more efficient. There is no guarantee of honesty by the remainder of the directors. This is not a solution to the problem of democratisation of companies. It will not lead to industrial democracy for employees of companies. Such directors are appointed to companies to counter the criticisms made of the autocratic nature of directorships.
      Mr. Nicholas Baker: I am grateful for the opportunity to intervene briefly in the debate.
      Audit committees are discussed frequently. I pay tribute to the work done by my hon. Friend the Member for Kensington (Sir B. Rhys Williams) on this matter. However, we should proceed carefully before accepting this concept. New clause 3, which was persuasively introduced, outlines some of the dangers. It does not start by saying what an audit committee should do. There is no limitation on the powers of the people appointed to it. It gives them the right to inspect the books without notice. That reminds me of inspections by Customs and Excise officers, to which many people object. This is a serious innovation. It could damage companies.
      The clause refers to the employment of professional staff. I declare an interest as a practising solicitor. I am not keen on clauses that encourage the greater employment of professional staff, which again is a way of increasing companies' costs.
      More seriously, I feel that such a committee, once appointed, between its appointment and the next annual general meeting would have a free hand to range round the company and contribute not so much to industrial democracy as to industrial warfare without any remit and without any set objective.

      1207
      6.30 pm
      New clause 29, propounded by my hon. Friend the Member for Kensington, covers some of those points. It specifically states what audit committees are there to do. That clause, I believe, muddles or muddies the two distinct jobs that some people feel have to be done. The first is that directors responsible for management need greater control and greater advice in the management of companies. The second is that the role of auditing watchdog—the job that auditors of companies are supposed to do—should be carried out to a much greater extent. We should try to distinguish between these two objectives and not muddle them.
      I am sympathetic to the idea of non-executive directors. I do not go along with the faint praise that has been given to this concept. I believe that, if voted upon by the shareholders, they would be some protection in the management of the company at board level and a guarantee, to some extent, to the shareholders that objective standards of behaviour were observed by management in the course of running a company.
      Mr. Parkinson: The hon. Member for Sheffield, Heeley (Mr. Hooley), who opened the debate on his new clause 3, would, I think, be the first to admit that he rather overstated his case. The picture that he painted was of a company law structure that no longer works, that is collapsing and that gives rise to permanent trouble. I should like to put his complaints into perspective. Over 700,000 companies are registered. There are very few complaints of the kind to which the hon. Gentleman referred. The problems that occur from time to time in individual companies are not the norm, as he tried to suggest.
      We are talking about the way in which to deal with problems that arise in a tiny minority of registered companies. They are serious problems, but they are not widespread. I do not think that the hon. Gentleman helped his case by pretending that they were. He suggested that absolutely nothing could be done at present if a company got into the wrong hands. He obviously does not understand the role of the auditor, who appoints him and to whom he reports. I should like to explain briefly. The shareholders have a person
      1208
      to do the job that his special audit committee would do. That is the auditor, who is appointed by the shareholders. It is his duty to report to them how the directors are handling the assets of the company. That is his job.
      The auditor does that job through the annual audit report and also by appearing at the annual general meeting and reading his report. I do not believe that the present position of the auditor is wholly satisfactory. I prefer, however, to concentrate on trying to improve his position and his role rather than to create a body that would simply duplicate that job. Nothing that the hon. Gentleman says justifies the creation of a new body. We should perhaps find ways to make the existing official—the auditor—more responsive to those to whom he is due to report. I do not believe that putting this new clause on the statute book would do anything of the kind. The role of the committee, as my hon. Friend for Dorset, North (Mr. Baker) said, is extremely ill defined. One would merely be creating another body to do the job that an official already exists to do.
      I should like to explain to the hon. Gentleman one of the powers of the auditor. Section 14(5) of the 1967 Act states:
      "Every auditor of a company shall have a right of access at all times to the books and accounts and vouchers of the company, and shall be entitled to require from the officers of the company such information and explanation as he thinks necessary for the performance of the duties of the auditors."
      So the auditors have the powers that the hon. Gentleman says that his special audit committee needs. I do not believe that he has established the case for creata new body. His new clause perhaps reflects his lack of understanding of the existing law and the existing powers of the auditor and the duties of that official.
      Mr. Hooley: The Minister must explain to the House why these massive scandals have occurred. It seems to me that if the auditors had been exercising all the formidable powers that the hon. Gentleman has outlined, they would have come upon these malpractices much sooner. Does he not realise that in the period 1973–74, now happily behind us, the malpractices that occurred nearly brought down our banking system? Is he dismissing that as a matter that should have been dealt with by auditors?
      Mr. Parkinson: No. I am saying that the hon Gentleman's suggestion would have done nothing to help deal with the problem that he thinks he identifies. How did a number of these scandals come to be known about? The answer is that the auditor, having conducted his investigations, qualified his report. Again, under the Companies Act my Department has power to appoint inspectors. Having learnt from those inspections, the House has the power to amend the law.
      I should like to refer to part IV of the Bill, which we shall be discussing later. That is specifically designed to deal with some of the problems that emerged as a result of the work of the auditors and the inspectors. The Bill makes illegal some of the things that happened and makes sure that when these things happen they are revealed to the shareholders, so strengthening the power of the auditor.
      Mr. Clinton Davis: In fairness to my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley), it must be said that the assertion that many of the scandals came to light through auditors qualifying their reports is not accurate. The auditors have been criticised in virtually every report.
      Mr. Parkinson: The hon. Gentleman is saying that there was a duty on the auditors that they did not carry out properly. That does not destroy my case. To give an ill-defined duty to a group is an interesting idea, but it is very badly defined. There is already a person with clearly defined duties. Where there are weaknesses in the law, the House has the capacity to deal with them. That is what the Bill is about.
      For the reasons that I have given and some of those at which I have hinted, the Government do not find new clause 3 acceptable. I hope that the hon. Member for Heeley will be partially reassured by my informing him of the powers that already exist and the ways that we are seeking to strengthen the arm of the auditor and to make sure that such practices come more readily to light. If we are to deal with this problem—to strengthen the power of the auditor and make sure that shareholders get a better report on the activities of directors—I must say that I prefer the approach of my hon. Friend the Member for Kensington (Sir B. Rhys Williams).
      1210
      I prefer the way in which my hon. Friend has modified his approach since we discussed these matters in Committee. He now seeks to put into company law the right for the shareholders to decide whether they should have these bodies. That is a major improvement on his previous idea, which sought to impose on every company of a given size a number of non-executive directors and the requirement to have an audit committee with the clearly defined duties contained in amendment No. 383.
      Early in 1979 the previous Government conducted a survey of 20 bodies representative of both sides of industry, the professions and securities interests. They found support for the idea that companies that wished to do so should experiment in this way, but they found unanimous hostility and opposition to the idea that non-executive directors and audit committees should be statutorily imposed on the boards of companies.
      I still take the view that that is the best way to go about these matters, although I accept that there is a growing interest in the subject, thanks to the activities of my hon. Friend the Member for Kensington, and consultations on this subject will continue. The approach that my hon. Friend is now making, of not seeking to impose this requirement on every company but to give a company's shareholders the option of having such a body and non-executive directors, and defining their duties if they choose to have them, is a major step in the right direction.
      I deal now with the question raised by the hon. Member for Hackney, Central (Mr. Davis) and mentioned by the hon. Member for Caithness and Sutherland (Mr. Maclennan), whom I welcome to our discussions. He and I sat facing each other for 23 happy Committee sittings in the previous Parliament, and it is a great pleasure to see the hon. Gentleman taking part in our debates. I agree very much with his analysis of the problem and his approach to its solution.
      As the hon. Member for Hackney, Central said, I wrote to him and sent him a copy of an extract from the Bank of England Quarterly Bulletin stating the progress that is being made by companies in appointing non-executive directors. It will not waste the time of the House if

      1211
      I give two or three figures from that report. It compares the results of a survey carried out about three years ago for the Bullock committee with the position that emerged when the Bank carried out its own survey three years later.
      Three years ago, at the time of the Bullock survey, 75 per cent. of the top 1,000 companies had one non-executive director or more. Three years later that figure has risen to 88 per cent.—a substantial increase. The number of companies having three or more non-executive directors has risen from 36 per cent. to 53 per cent., so there is a substantial move towards the appointment of non-executive directors and a growing awareness of their importance. On behalf o f the Government, I welcome the decision by companies that it is in their interest to have non-executive directors in ever-growing numbers on their boards.
      May I say in a joking spirit that the hon. Member for Hackney, Central slightly dented his formidable credibility by the warmth of his compliments to his hon. Friend the Member for Heeley on the new clause and by adding 1 to 2 and saying there had been a 300 per cent. increase in the number of people in favour. He is a lawyer and not an accountant, so we will forgive him for that slight failure in his arithmetic.
      6.45 pm
      The Government's approach to this problem is to continue consultations on the subject of the audit committee and the non-executive director. We welcome the growing number of appointments of non-executive directors. We hope that more British companies will experiment with the audit committee and find out whether there is a place for it in our company law and whether it has a worthwhile contribution to make.
      I am a supporter of the concept. There is a need to strengthen the position of the auditor. Far too frequently the auditor is reporting to the directors, the very people about whose activities he should be reporting. We must encourage the strengthening of the links between the auditor and the shareholders and find ways of doing that. There is a need to build up the position and the independence of the auditor and to make sure that he reports more directly to the shareholders.
      1212
      I hope that the House will feel that we have had a worthwhile debate on an important subject and that the hon. Member for Heeley will not seek to press the clause.
      Mr. Archer: I was interested when the Minister of State at the end of his speech announced his conversion and publicly came to the penitents' form. I have been persuaded to join him in the course of the debate, so the hon. Member for Kensington (Sir B. Rhys Williams) would be entitled to speak of a super exponential growth in the number of his supporters.
      What is in issue is not whether it would be worth while experimenting with non-executive directors and audit committees. The necessity for that seems to be agreed. I should be surprised if there were an issue as to how far my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) overstated his case when he spoke of the reasons for anxiety which had arisen over the past few years. If I may venture a modest note of criticism, I thought that the Minister of State was a little less than fair to my hon. Friend. It does not require a majority of companies to give rise to anxiety to cause us to wonder whether something should be done. For many years we have been talking about a crime wave. That does not mean that the majority of our citizens are criminals. We need to have only a fairly substantial minority to give a reason for thinking more about these matters.
      The issue is not whether we should proceed with this kind of experiment. Even the Minister of State recognised that audit as we have known it has at least two limitations. The auditors are appointed by the company, and that usually means that they are appointed by the very people whom they are set to report on. Most auditors are capable of standing up to pressure from directors. Certainly there is no reason to think that it is a widespread and worrying aspect of audit that auditors are always under the thumb of directors. But we cannot be sure that all auditors are always capable of withstanding pressure, and that has been borne out by a number of events in the past few years, particularly when there is a strong personality on the board.

      1213
      I should be the first to agree with the Minister that we should look for ways of making audit as it is at the moment more effective and strengthening the hand of those auditors who want to stand up to that kind of pressure. I am not sure that these are alternatives. I do not understand why that would necessarily exclude the proposals of my hon. Friend the Member for Heeley and the hon. Member for Kensington.
      The second difficulty about audit at present is that it is usually confined to examining first for dishonesty and secondly to ensure that where the resources of the company have been dealt with in a certain way proper authority was given according to the proper procedures. And I think that auditors are considering increasingly whether a company has received value for money.
      I declare an almost historic interest. I began my working life as a temporary boy clerk on the staff of a district auditor. But I am not sure that, even now, they test the effectiveness, imagination or energy of management. They do not necessarily look for the backing away from a challenge or for a missed opportunity.
      I hope that I am not minimising the effective work carried out by many auditors. Where they do not function fully, why should there not be a long stop? What is so wicked or wasteful about that? There are aspects of the role of considering a company's performance that audit committees may be better fitted to deal with than auditors as we have them at present.
      As my hon. Friend the Member for Hackney, Central (Mr. Davis) said, where the experiment has been tried extensively in North America it appears to have been generally regarded as worth while. Of course, as my hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan) said, no one pretends that the mere fact of appointing non-executive directors, or of incorporating them into an audit committee, will necessarily ensure improvement in every company. Obviously, it depends on the quality of the non-executive directors.
      I agree with my hon. Friend the Member for Hackney, North and Stoke Newington (Mr. Roberts). It depends on whether the non-executive directors devote
      1214
      a meaningful proportion of their time to the job. As my hon. Friend the Member for Hackney, Central said—the Hackney twins were effective on this aspect of the matter—it depends on whether the non-executive directors are in the pocket of the chairman.
      What is at issue is whether this worthwhile experiment should be allowed to continue as an experiment or whether it should be made mandatory. It is true that many of the best and more progressive companies are experimenting in that direction, thought I would not wish to define an unprogressive company as one which at the moment is not persuaded. But we are not legislating for the best and most progressive companies.
      It is a story that has been repeated time and time again. It arose in the case of employee protection. It arose in the case of industrial safety. There were those who said that the best companies were doing it already, so why impose the straitjacket of a statutory, mandatory responsibility upon them? It is now accepted that, for many companies, it is essential and that there is nothing especially restrictive, frightening or wasteful about it.
      Perhaps the real question is whether we wait for the tide—as the Minister pointed out, the tide appears to be flowing in that direction—or whether we help it along a little. I was a little disappointed that the Minister did not respond to the suggestion of my hon. Friend the Member for Hackney, Central about the possibility of conducting further surveys to discover in which direction, and how quickly, the tide is flowing.
      We have to consider a series of choices about the way in which an audit committee would be constituted. Would the committee include any of the regular directors? My hon. Friend the Member for Heeley said "Certainly not". My hon. Friend the Member for Hackney, North and Stoke Newington supported him. The hon. Member for Kensington thought that it should. I am not clear why he thought that. He did not state why he parted company on that issue with my hon. Friend the Member for Heeley. Presumably, it was because he did not want the tide to flow too quickly but to progress a step at a time. Both agreed that an effective audit committee should include some non-executive directors who were not part of the establishment.
      Sir Brandon Rhys Williams: If the right hon. and learned Gentleman considers the precise terms in which I have drafted my proposed new schedule, he will see that the non-executive director element has to be in a majority, even if only through the exercise of the non-executive chairman's casting vote.
      I believe that in North America it is normal for the committee to consist entirely of non-executive directors. That is in the context of an American board. In British companies, where there are so few non-executive directors, I thought that the necessity was to strengthen the audit committee with non-executive directors.
      Mr. Archer: I am grateful to the hon. Gentleman for elucidating that aspect of his thinking. At this stage, I would not wish to declare an option one way or another. That is one of the issues on which we may have to make up our minds.
      The other issue is, perhaps, more immediately important. It is how one ensures that the non-executive directors are not in the pocket of an over-authoritative, over-paternalistic chairman. The hon. Member for Kensington would prefer to see the non-executive directors constituted by the board. At least, that is the way in which the audit committee would be formed. My hon. Friend the Member for Heeley said that they should be elected by the shareholders at the annual general meeting. As my hon. Friend the Member for Hackney, Central said, it is important, if they are appointed by the board, that great care is taken to ensure that they are not in the pocket of an over-authoritative chairman. We may have to build in some institutionalised safeguards against that possibility.
      The next question in which I am interested is how detailed these proposals have to be. There are two proposals to make it mandatory by statute that there should be an audit committee. My hon. Friend the Member for Heeley left his proposal fairly broad, with the detail to be filled in later. That was a sensible approach. He does not have to apologise for his draftsmanship or for intervening in what is so often the prerogative of company lawyers. He more than justified himself.
      In Committee, the Minister was slightly critical of the hon. Member for Kensing-
      1216
      ton because his requirements were too detailed. He said that they were not flexible enough. The hon. Member for Kensington is unrepentant. Once again he spelt out his proposal in detail. The House should be grateful to him. Whether his proposal is incorporated in the Bill is a different matter. At least, it enables us to understand how these proposals will function.
      It was interesting to note the reaction of the hon. Member for Dorset, North (Mr. Baker). He finds it all slightly suspicious. He believes that an audit committee would take on the role of a snooper. He said that he was interested in the experiment and was prepared to see it go further but that it was dangerous unless kept in a clearly defined role. He is suspicious of my hon. Friend the Member for Heeley's proposal because it was not sufficiently spelt out. He joins issue on that matter with the Minister.
      What are to be the powers of non-executive directors? Clearly they will require to have a right to information. I was interested in the proposal of the hon. Member for Kensington that they would report to the annual general meeting. Such a report may have to be qualified.
      The hon. Gentleman has not resolved one question that I tried to put to him in Committee. If a non-executive director finds that he cannot sign a report which has been prepared by the majority of the audit committee, the hon. Gentleman said that he should resign. I am not sure why anyone who wishes to produce a minority report should, for that reason, be required to resign.
      I accept that this is not a situation that will frequently arise or that the hon. Gentleman envisages mass resignations. But if there is to be provision for it, it ought to provide for a minority report which does not entail the resignation of those who make it.
      7 pm
      Sir Brandon Rhys Williams: The right hon. and learned Gentleman is tempting me to intervene at too great a length. Briefly, what I am trying to avoid is a situation in which a non-executive director decides to acquiesce with the majority of the board when in his conscience he knows that it is wrong. I would rather that he had the courage of Mr. Angus

      1217
      Murray, whose conduct has been so highly praised in connection with the Newman scandal, and that he should speak out or resign in the hope that he would rally the support of a big institution or of public opinion.
      Mr. Archer: Again, I am grateful to the hon. Gentleman. I can see that there may be a situation where, in order not to institutionalise the faults of a company, a director might feel impelled to resign. I would not wish to discourage him. What troubles me is the imposition of an obligation to resign. But that is a matter which we may have another opportunity of discussing at greater length. Of course, there will be other opportunities to discuss a number of aspects that have arisen in this debate, such as the question of industrial democracy and two-tier boards.
      It is for my hon. Friend to decide whether he wishes to divide the House, but I am sure that the House is grateful to him, and to the hon. Member for Kensington, for initiating the debate even though it may not bear fruit today. I suspect that the Minister will get his way today, but history may tell a different story.
      Mr. Hooley: I thought that the Minister rather gave the game away in his closing sentences when he admitted that the powers of existing auditors needed to be refined, strengthened or beefed up in one way or another. The discussion has been useful, and I have no desire to divide the House. Therefore, I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn.

    New Clause 4

      AMENDMENT OF SECTION 18 OF COMPANIES ACT 1967
      (1) In section 18(1) of the Companies Act 1967 there shall be inserted the following:

      "(c) the members joining and leaving the company during the year and there shall be separately classified the numbers of school-leavers joining the company, the numbers of those retiring and of those who have been made redundant;

      (d) the employment and training policies of the company and, in particular, those relating to employees under the age of 19 years;

      1218

      (e) the trade unions recognised by the company for collective bargaining purposes, and a resumé of the collective bargaining arrangements;

      (f) the employee participation arrangements;

      (g) the numbers of man-days lost per year as a result of industrial disputes within the company;

      (h) the pension and sick pay arrangements of the company;

      (i) the numbers of disabled people employed and of those who have retired or been made redundant;

      (j) a resumé of how the company's personnel practices cater for disabled employees.".

      (2) In section 18(2) of the Companies Act 1967 there shall be inserted the following:
      "(c) those matters which are set out in section 18(1)(c) to (j) inclusive."
      (3) This section shall not apply to the directors' report in respect of a financial year ending before this section comes into operation.'.—[Mr. John Smith.]
      Brought up, and read the First time.
      Mr. John Smith: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker (Mr. Bryant God-man Irvine): With this we may take the following:
      New clause 6—Amendment of section 157(1) of Companies Act 1948:
      'There shall be added to section 157(1) of the Companies Act 1948 the following:
      "A public company shall also distribute to each of its employees the balance sheet and report described above.".'.
      New clause 15—directors' reports and employment of disabled people:
      (1) The Companies Act 1967 shall be amended in accordance with the following provisions of this section.
      (2) In section 16 (additional general matters to be dealt with in directors' reports) in subsection (1) there shall be added after paragraph (g)—"(h) in the case of companies of such classes as may be prescribed by the Secretary of State, contain such information as may be so prescribed about the arrangements of the company and its subsidiaries in that year for the recruitment and training of disabled people and for the employment, training and advancement of disabled employees."
      (3) In subsection (6) of the said section 16 for the words "paragraph (g) shall" there shall be substituted the words "paragraphs (g) and (h) shall".
      (4) After subsection (5) of the said subsection 16 there shall be added—" Any expression used in the said paragraph (h) and in the Disabled

      1219
      Persons (Employment) Act 1944 shall have the same meaning in that paragraph as it has in that Act.".'.
      Mr. Smith: New clause 15 stands in the name of the hon. Member for Exeter (Mr. Hannam) and other hon. Members. I shall make a brief reference to it, but I shall leave it to those hon. Members to explain it.
      The purpose of new clause 4 is to require a company to make a wider disclosure of its employment practices. That would apply both to its able-bodied and to its disabled employees. It is in the belief that the general requirements which the law imposes on companies in the United Kingdom are not wide enough that we have put forward the new clause.
      In general, the disclosure requirements that are imposed on United Kingdom companies relate to their financial situation rather than to a requirement to show a general economic or social picture of their activities.
      Increasingly in recent years, in successive pieces of legislation, the minimum information that companies are required to disclose in their annual reports has been increased. There has been an increasing requirement on companies to show more detail of the financial side of their affairs. But the tradition has been to look on the information required as that which would principally be of interest to shareholders and creditors rather than to employees or to members of the general public who are interested in assessing the company's economic wealth as well as the details of its finances.
      In recent years, there has also been a recognition that those legitimately interested in a company's affairs constitute a much wider group than just the shareholders and creditors or those particularly interested in its finances. If we look at recent history, we notice that Governments have been taking a much closer interest in the affairs of companies. There were provisions in the Industry Act 1975 requiring disclosure of company affairs to the Government, and the Government also took power to elicit more information about particular company affairs. That is information sought by Governments in the interest of national economic planning. I do not suppose that that is a line which the present Government will be inclined to
      1220
      follow, since almost perversely it seems that they have decided not to interest themselves in national economic planning or in the fortunes of particular companies, be they in the public or the private sector.
      Another tendency which has been growing in recent years, and which is to be highly commended, is that the work forces of companies feel much more involved when given information about the companies for which they work. After all, their work represents a large part of their lives. They contribute that to the company, and as a result they have a legitimate interest. They have an interest as individuals and also an interest through their trade unions and professional associations.
      Under the Employment Protection Act. we have seen the growth of an obligation upon companies to give information, for example, for the purpose of collective bargaining. The requirements on companies to do that were strengthened in terms of that Act. But in Europe and other parts of the world much more information is disclosed and is required to be disclosed under the laws of other countries than is the case under the law of the United Kingdom, particularly in the case of countries that are members of the European Community. For example, the works council system in the Federal Republic of Germany leads to the disclosure of much more information on the employment side as well as much more general information about companies. I understand that a French decree will come into operation in 1984 under which employees will be able to demand a social balance sheet from a company. There are also developments in Belgium and the Netherlands.
      To a large extent, they build upon the system of statutory works councils that operate in many Community countries and which, whatever their merits or demerits in terms of industrial democracy, are a useful method of disseminating information to the work force. It gives a work force a sense of involvement in the decisions of the company, a wider and deeper perception of both the problems and opportunities of the company and an opportunity to make an intellegent critique of the management of the company. One hopes that that will lead to a better spirit of co-operation between the management and those who give their

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      lives to the company in terms of the work that they perform throughout their working lives.
      New clause 6 suggests that a company should give a balance sheet and report to all its employees. I imagine that the objection to that will be that it is too cumbersome. If that is so, I am sure that my hon. Friends would settle for a reasonable abbreviation. However, I do not think that it would be too burdensome in principle to have an obligation to communicate to the employees who work for a company. One of the main points behind the new clause is the feeling that not enough information is required to be disclosed under United Kingdom law at present and that many other countries do a great deal more.
      There is quite an interesting survey by the Financial Times entitled "The Financial Times Survey of 100 major European Companies' Reports and Accounts", from which it is quite clear that many continental European countries publish much more information about their employees and various employment matters. It also becomes clear that the United Kingdom and other countries such as Australia, Canada and South Africa, publish much less. Indeed, many United Kingdom companies go no further than conforming to the basic requirements of the Companies Act 1967, which makes them disclose the numbers employed and the related wage costs.
      A number of guidelines were published by the OECD in June 1967 which apply principally to multinational companies, or, as they are called in United Nations parlance, transnational corporations.
      The United Nations has an international standard of reporting and accounting for those corporations. By and large, they appear to be ignored by the multinational companies and also by United Kingdom companies. There is much room for improvement. In this new clause we are not suggesting anything very dramatic. The idea of an employment statement was canvassed in the Green Paper entitled "The Future of Company Reports" published by the Labour Government in July 1977. A number of other matters were canvassed on that occasion, but for the purpose of this new clause we are confining ourselves to an employment statement.
      Mr. Nicholas Baker: Does the right hon. Gentleman agree that in some countries where greater disclosure of matters relating to employment is required there is not the same detailed employment legislation—apart from company law—that we have in Britain?
      Mr. Smith: I am not in a position to confirm or deny that, because I do not have detailed knowledge of employment legislation in other countries. It does not matter how the information is obtained, but I am not confident that the Employment Protection Act covers all the information that we are seeking in the new clause. The Employment Protection Act provides for information that is required for collective bargaining purposes. Our ambition should be wider than that. There should be a desire to inform employees and the general public about employment within the narrow confines of the collective bargaining system.
      It is not unduly burdensome to suggest that companies should be required to disclose information about the numbers of employees joining and leaving the company, about their employment and training programmes, about the unions they recognise for collective bargaining purposes, about pension and sick pay arrangements, and so on. That is not an onerous obligation. Most good companies should have that information in any event. It would give a fuller picture to people interested in a company of how it carries out its employment policies and practices.
      We include in our requirements a reference to the disabled. I do not wish to trench on the provinces of other hon. Members who take a deep interest in the problems of the disabled. I simply say that we think that the disabled should also be included in the comprehensive disclosure about employment. They fit neatly into it. Most people would like to see a statement on how many disabled people companies employ and how they are employed. The same principle could apply to able-bodied employees also. Indeed, it might be preferable to include the figures relating to the disabled in a general employment statement rather than have them sticking out like a sore thumb in a separate statement.
      The advantages to be gained from the requirements in the new clause are considerable. We have a long distance to

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      go in Britain to improve industrial relations in many companies. In some companies there are good industrial relations, in some companies there are adequate industrial relations, but in many companies there are not effective communications between the work force and the management and it is extremely difficult for the work force to find out proper and legitimate information from the company. It might also be useful for companies to be subjected to public assessment, not simply in terms of their financial performance—which tends to be the principal concern of the financial press—but in a slightly wider framework. It would be a useful start to have a disclosure of employment.
      7.15 pm
      Many companies may be willing to do that voluntarily. Many companies in other countries are able to do so. The requirements of the law should have the effect of bringing our regulations up to a higher standard. We do not think that enough is being done in this area, and we think that the process could be stiffened by the introduction of a statutory requirement. New clauses 4 and 6 are modest. I shall not trench too much on new clause 15, which has its own advocates, except to say on behalf of the Opposition that we wish the proposers of new clause 15 well. They will recognise that there are some advantages for them, as well as for the public, if the Minister gives a sympathetic reception to new clauses 4 and 6.
      Mr. John Hannan: I wish to speak particularly to new clause 15, which is in my name and the names of other members of the all-party disablement group. It is interesting to note how often that group is becoming involved in legislation. I notice and welcome the attendance of the four musketeers of the group, plus, in this instance, my hon. Friend the Member for Kensington (Sir B. Rhys Williams), who so ably moved a similar amendment in Committee.
      We seek to include in the 1967 Act provision for directors' reports on company policies relating to the employment, training and promotion of disabled people. In Committee my hon. Friend the Member for Kensington moved a similar amendment, and his presentation of the case received support from the
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      Opposition and from the Minister, who promised to follow the guidance of the Manpower Services Commission's review of the quota scheme. The Minister gave an assurance to the Committee that he would use clause 48 powers to meet any requirement that the commission might recommend. However, there is a significant difference between the amendment that my hon. Friend tabled in Committee and new clause 15.
      All hon. Members are concerned at the appallingly high level of unemployment amongst disabled people. The figure for January is 137,063. The failure of the present quota system is due partly to non-compliance by employers but also to ignorance on the part of companies as to their responsibilities towards the disabled in our society.
      We do not seek to achieve a requirement to fulfil the quota. We accept the point made by the Minister in Committee that he would wish to wait for the Manpower Services Commission's quota study review before including any provision in the Bill. We have therefore removed that part of the orginal amendment, and we now propose that in its directors' reports a company should provide information on the recruitment and training of disabled people. That is a straightforward suggestion, and it is in line with the basic concept of section 79 of the Health and Safety at Work etc. Act 1974. Under that Act companies had to include information on their employees' health, safety and welfare at work. Many companies have done that, and some have moved even further. In recent years they have begun to give reports on local community actions, anti-pollution activities, and other varied policy matters.
      The greatest support for our amendments lies in the 1977 Green Paper entitled "The Future of Company Reports". In that Green Paper it was suggested that companies should publish information on their policies towards the employment of disabled people. At present, those companies with a good record in this field often have a director or a senior manager with a special knowledge of or a close interest in disability. Many other companies would happily employ disabled people if, each year, they had to concentrate their minds on the problem in a directors' report. The fact that disabled workers provide the most

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      loyal and dedicated service to companies would be more widely known than at present.
      As in many other areas of disablement, we want to achieve a consistent and more uniform treatment for disabled people. A written statement of policy would ensure that every consideration was given to the employment and retention of disabled people. Another important factor is that non-disabled employees would have a much clearer indication of what their company would do in the event of their becoming disabled.
      For all those reasons, and with the intention, which I know the House shares, of enhancing employment opportunities for the disabled without imposing new and onerous requirements on a company, I hope that the Government will accept new clause 15. It does not prejudice the outcome of the quota review. If it is decided that the statutory quota system should continue, the Government can use their powers under clause 48. If it is decided not to continue the quota system, the proposal will nevertheless help to provide employment opportunities for disabled people.
      We cannot allow these large numbers of willing and, with training, highly talented workers to remain cut off from normal work opportunities. I hope that the Government will accept the new clause.
      Mr. Jack Ashley: I support the contentions of the hon. Member for Exeter (Mr. Hannam). I almost called him my hon. Friend. As the two chief officers of the all-party group on disablement, we work closely together. I should like the Minister to know that the all-party group feels strongly about new clause 15.
      The aims of the clause are to focus the attention of top management on the problems of disabled people. Far too often those problems are completely disregarded by companies or, alternatively, dealt with by junior staff. If attention is not focused on those problems, they simply go by default. As a consequence, disabled people suffer.
      Disabled people suffer not only in terms of employment but in terms of training. Far too often the legitimate claims of a disabled man or woman to adequate training are overlooked, partly because of -the common prejudice against disabled people—we are all aware of that—and
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      partly because in the minds of some employers is the conviction that disabled people require more training than non-disabled people. That is a complete myth.
      For similar reasons, disabled people are often overlooked when it comes to promotion. The best men or women may be overlooked because they are disabled. That is gross unfairness. If the clause is accepted or viewed sympathetically by the Minister, it will mean that in the annual report of every company attention will be focused on the problems of disabled people.
      New clause 15 is of far greater importance to disabled people than is commonly realised. The employment of disabled people is an absolute disgrace, training is deplorable, and promotion is absolutely disgraceful. Last week I tabled questions about the rate of unemployment of the disabled—a subject about which we have been concerned for many years. The trend has not changed at all. There are proportionately many more disabled people who are unemployed. The problem is that many employers are breaking the law. They are not fulfilling their quota of disabled people and are taking on new people without permission to do so.
      We have deliberately avoided dealing with the quota in the new clause, because we want to meet the Minister as best we can. The quota system is under review. We have therefore deliberately kept the quota out, in order to give the Minister an opportunity to meet us. On Report the Government could insert a provision for reference to the employment, training and promotion of disabled people.
      I hope that the new clause will be accepted by the Minister. It is of profound importance. It is a small clause, which will cost the Government no money but will greatly help disabled people.
      Mr. David Price: I support the remarks of my hon. Friend the Member for Exeter (Mr. Hannam) and the right hon. Member for Stoke-on-Trent, South (Mr. Ashley). New clause 15 is a modest clause. It is put forward on the premise that we are all concerned about employment and want to see more employment for more people. We are particularly concerned about the disabled.

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      The figures are well known and I need not go through them. As the right hon. Gentleman said, there are proportionately more disabled people unemployed than able-bodied people. The reasons are obvious, and I need not go into them.
      We are anxious that disabled people should at least get their fair share of employment opportunities. Indeed, we could argue the case that they should have more than their fair share because of their other disadvantages in life. However, that is not our case. It is only that they should have their fair share.
      The quota system is being reviewed. I have never been happy about it because the nature of employment varies so much. There are undoubtedly firms that could take far more disabled people into their service than any quota system would lay down. Conversely, there are firms, such as contractors and those working on building sites, in which, with the best will in the world, it is difficult to employ many disabled workers.
      We are putting forward the value of publicity. Surely that is what open democracy and government is all about. It is one of the premises of our existence in Parliament. Publicity helps to get things done. We in no way suggest taking executive power to compel firms to employ more disabled people. We advocate the use of publicity.
      If a company had to spell out in its annual report the modest fact that we suggest in the new clause, it would concentrate the minds of management, and hence others in the company, when writing the report. When the chairman or managing director reads the draft of the annual report produced by the company secretary and sees a thin return of what the company has contributed to the employment of disabled people, if he values his reputation he will say that it is not good enough and that the firm must do better next year. It will concentrate the mind, and that is one of the most important points. It is not just the external effect but the internal effect on an organisation of having to publish those statistics.
      We hope that in the long run there will be more incentives rather than penalties for companies to employ a greater number of disabled workers. For a number of years I have been most anxious to see the Queen's Award for Industry extended
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      to include a company's performance in regard to disabled employees. The Manpower Services Commission has gone half-way in proposing a solution of its own. Because of the prestige of the Queen's Award for Industry, I should like to see it awarded for performance in regard to employment and subsequent training of disabled people. New clause 15 would be a good start. If it is incorporated in the Bill, I believe that it follows logically that the Queen's Award for Industry should be given to companies which perform well with regard to the disabled, as well as in export and technological innovation. The three go happily together.
      7.30 pm
      Mr. Lewis Carter-Jones: I am the fourth of the four musketeers. If the Minister has listened carefully, he will have decided to accept new clause 15. The more information, the greater the awareness. Directors will then appreciate what can be done. All too often, an attitude of defeatism prevails towards the disabled and their prospects of employment. I may cause some upset by saying that I am not completely convinced that the Manpower Services Commission understands the problems of the disabled. It makes an attempt to employ the disabled, but it has not got the message concerning what can and should be done.
      Perhaps this clause will give the commission another little weapon with which to approach the problems involved in employing the disabled. If the boardroom is aware of the problem, company policy may change. Those of us who are involved in this subject know that from time to time we meet pleasant personnel officers. They may say that we are quite right and that they agree with us. But then they go on to say that it is not company policy, or that there is no one on the board who believes in it. However, if this subject is included in the annual report, there may be a better chance of getting this concept of the disabled accepted. If it is accepted at boardroom level, it can be passed down to the shop floor.
      We tend to tuck the disabled away and to say that in the fullness of time they will die. The congenitally disabled, those who become disabled as a result of illness and those who become disabled

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      as a result of industrial or traffic accidents may have an expectation of a working life of between 40 and 50 years, thanks to medical skill. Why should they be ignored as part of our work force?
      Managers tend to raise problems. They often say that there is a problem of mobility. They ask how the disabled can get to work. However, this is not such a big problem. Vehicles are adapted. Several schemes are run by the Manpower Services Commission in order to help the disabled to get to work. The problem of mobility can therefore be overcome.
      It is also said that there may be a problem of access to the factory. Directors should show some concern about that. If their premises are inaccessible, they should make them accessible. Should the disabled be employed? I am an unpaid director of Possum Controls Limited. From experience I know that if the will exists there is no disability. I shall repeat slowly for the benefit of the Minister. There is no disability that cannot be overcome by advanced technology.
      There are total quadraplegics who are unable to breathe, but they are able to control their environment and to earn a living. The oldest surviving respiratory polio victim in the world caught polio in Malaya. He can export specialised hospital beds all over the world from his bed. He can do that only because someone has thought about the problem and has considered how to exploit his obvious skill. He uses his mouth. Some people use their chins and others use their noses. This is a challenge to directors and to the Manpower Services Commission. Let us inject a little bit of life into directors. We should make them realise their duty. If we accept the clause, we may give the disabled a chance to indulge in industrial, economic and social work.
      Mr. A. P. Costain: No one will disagree with the need to employ the disabled. No one will disagree that new clause 15 will help towards that end. My hon. Friend the Member for Eastleigh (Mr. Price) has put forward constructive proposals. He has suggested that there should be some way of providing special provisions. After the First World War, anyone who employed a disabled soldier or sailor was allowed to put a medallion on his notepaper.
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      Such companies were proud to do so. If the proposal of my hon. Friend the Member for Eastleigh is carried a little further, it will have greater effect than new clause 15.
      New clause 15 has its advantages. Perhaps it should be obligatory on every board meeting to include on the agenda information about its disabled employees. People tend to take too much notice of balance sheets. Once they have been published, they are of little interest to the general public. However, competitors may be interested.
      I am very much against new clause 4. I hope that the Government will resist it. Basically, it is a "Nosey Parker" clause. It would give a tremendous amount of information to competitors. Overseas competitors would be able to find out too much about a company. However, the information would be fairly useless. It might appeal to an employer or to someone who was investigating. Subsection (1) refers to
      "the members joining and leaving the company during the year and there shall be separately classified the numbers of school-leavers joining the company, the numbers of those retiring and of those who have been made redundant".
      However, the number of people travelling or walking to a building site will depend upon whether the site is starting or finishing. A tremendous amount of information will be produced that is of no value to anyone other than a competitor. A competitor may wish to know whether business is growing. What use can this information be as regards employment statistics?
      The new clause refers to
      "The numbers of man-days lost per year as a result of industrial disputes within the company".
      Workers may strike for an hour about a cup of tea. In order to comply with the requirements of the new clause, it will be difficult to work out the number of men on a site and the number of strikes over silly things such as sugar in the tea. I have known a strike to go on for half an hour as a result of a dispute about sugar in tea. That should not happen. However, putting statistics on an annual balance sheet will be a waste of time.
      The problems involved in the other subsections seem obvious. What purpose can be solved by putting this information

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      on a balance sheet? It would be better to have a standard form of employment policy. It should be available to shareholders who wish to see it, but it would not be repeated year after year.
      Sir Brandon Rhys Williams: I join my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) in hoping that the Government will resist new clause 4. I have considerable sympathy with one line of new clause 4. The right hon. Member for Lanarkshire, North (Mr. Smith) proposes that emphasis should be placed on the employment and training policies of the company. During the next 10 years the Government should encourage companies by every means possible to undertake training schemes. Such schemes should be financed by the company. That is preferable to the practice of discharging employees whose skills have become obsolete. Those companies leave such people to the taxpayer to retrain. Companies take them on again when they have acquired the skills necessary for the next decade. The taxpayer cannot bear that burden.
      The Government should recognise the need for training within industry. They should give every possible emphasis to it. Much of the information that is called for in new clause 4 would be superfluous and misleading. Companies have to pay a lot of attention to public relations to the exclusion of their business. They would have to spend time explaining the facts to any hostile elements who looked through the accounts and who felt that they were on to something. Very often there are good reasons why things have gone wrong, and boards should not be harassed too much by being forced to disclose every detail. Therefore, I hope that the Government will resist new clause 4.
      I hope that the Government will also resist new clause 6. Although I am entirely in favour of a great many more consultations with employees, I do not think there is much point in blinding them with science by giving them the balance sheet. It would simply require an enormous amount of paper to be printed which would probably be thrown away unread. Once again, I recognise the intentions of the right hon. Member for Lanarkshire, North (Mr. Smith), but I
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      think that in practice such a proposal would be a blunder.
      New clause 15 resembles the clause that I moved in Standing Committee. I hope that on this matter we shall have a gesture from my hon. Friend the Minister tonight. There have been speeches from both sides of the House that have been absolutely sincere and they have shown a real understanding of the problems of the disabled. The House often comes back to problems of the disabled and debates these matters, always with sympathy but not always effectively. The Government should adopt this proposal because hon. Members know what they are talking about. I hope that the Minister will be forthcoming.
      Mr. Esmond Bulmer: I declare an interest in that I am deputy chairman of a public company. I support the spirit of both new clause 4 and new clause 6. However, I think that much of what is contained in new clause 4 would be better put in a code of practice. Some of the information that is listed here could create difficulties either for management or trade unions and if a body such as ACAS were to draw up a code of practice this would be the best way of producing some real and useful information which could be used for the benefit of everyone.
      The other point with which I have some sympathy is that the list of information contained in new clause 4 is very much concerned with advancing good human relations in a company. It is right that the chairman of a company should be very much concerned, and if he had to sign a statement which described his recruitment policies, the training that was done within the company and how the different forms of participation were being developed, it would be helpful in terms of ensuring that the most senior person in the company concentrated his mind on seeing that his company was doing all that could be done. Inevitably he would look at his competitors to see what they were doing and at other companies which had established a reputation for good practice in these areas.
      I like the concentration on school leavers, and we should all be concerned about this. In my constituency there is a very real rapport between industry and education. There is a concern to ensure

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      that children are given an early warning of the sort of areas where there are likely to be more jobs and the areas where jobs are likely to be fewer. On training, it might help to establish a better understanding of where the balance should be drawn between in-company training and training through the agencies of the Manpower Services Commission.
      Some chairmen may like to spell out the particular initiatives that have been helpful in their own companies. In my company we made every employee take the IBM aptitude test and as a result we found five people who had skills that no one had suspected. As a result, their career prospects were absolutely transformed.
      On the development of participation, sadly Bullock was the great missed opportunity of the decade. The loaded terms of reference and the insistence on a single channel fouled the water to the point where it is quite difficult to see what useful initiatives could be taken. I think that a code of practice is the only useful way that is politically practical at present.
      If one looks at some of the information that is required by new clause 4, one sees that some company chairmen might not wish to spell out the fact that they have been successful in getting unionists and non-unionists around the table. Or they might not wish to spell out that their employees, particularly members of some unions, were now member of BUPA. Also, they might feel that if all the unions were listed it might encourage multi-unionism. There would be certain unions who would look through company reports to see where they should have negotiating rights but did not have them. Therefore, I believe that there are serious practical difficulties which would be best explored through ACAS.
      7.45 pm
      On the question of circulating annual reports to employees, we already do this in my company. We have an employees' meeting immediately afterwards and we try to expand the information. A lot of the information that is listed in new clause 4 would be helpful for such a meeting. Again I endorse the spirit of the new clause, even though it may be premature and we may have to think rather harder about the sort of companies in which it
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      would be useful. I am sure that when my hon. Friend replies he will take us further in these arguments.
      Mr. Anderson: I open briefly by asking the motive of the obligations placed on directors' reports in the Companies Act 1967 under section 15 and thereafter. There are a range of obligations which include profitability, information about the average number of employees by the week and the amount of wages by the year, and contributions for political or charitable purposes—and there may be other motives in that. I note that section 20 requires that in certain circumstances the directors' report should include particulars of exports. It is not just a question of better disclosure of information; it is also a means of directing the attention of the chairman in a certain way to matters which the Government consider important. That appears to be a relevant consideration in the section relating to exports.
      As regards most of the suggestions made in new clauses 4 and 6, the information is readily available to the company. It is not as if the requirement will impose a vast amount of new paperwork on a company. The imposition of the obligation to include those particulars in the directors' report is a means of giving some official pressure for improvement in practice. This may be particularly relevant in the case of school leavers.
      Perhaps in passing I should mention that the practice stated by the hon. Member for Kidderminster (Mr. Bulmer) which operates in his company of distributing the directors' report is an example of what the best companies are already doing. The purpose of the new clauses is to impose on the laggards the practices of the best companies.
      I shall now consider the clause in relation to the disabled. To impose this obligation on a company in its report is, as it were, an official declaration of the importance which the Government attach to this matter. Very much has been done, as is illustrated in the recent report by the Low Pay Unit. This report shows, for example, the increase in the number of firms which are below their quota in percentage terms. On page 2 of the report there is a table showing the percentage of employers who have failed to fulfil the quota of disabled employees.

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      In 1960 it was 38·2 per cent. of employers. That figure has increased a great deal since then. In 1970 it was 57·3 per cent.; in 1975 it was 60·9 per cent. and in 1978—the latest date for which figures are available—it was 63·2 per cent. Although there are other factors behind it and these figures need clarification, the general trend has been adverse for the disabled.
      This report and the corresponding report from the Royal National Institute for the Blind conclude—precisely in the terms suggested in the new clause—that all employers should be required to publish annually details of their levels of quota compliance. If the Government accept that there needs to be some pressure on employers, particularly at this time of high unemployment, when it is more difficult for the disabled to find jobs, this would he a small symbolic way of showing their determination to improve the situation and to ensure that chairmen of companies at least—since they sign the reports—have brought to their attention from time to time the practice of their own companies concerning the disabled.
      For a number of reasons, partly disclosure and partly the seal of official approval and pressure, let us hope that the Department will have something positive to say about these new clauses.
      Mr. Eyre: Recognising the importance of the fact that so many hon. Members have spoken from both sides of the House on new clause 15, I hope that the right hon. Member for Lanarkshire, North (Mr. Smith) will understand if I reply to that part of the debate before going on to new clauses 4 and 6.
      The Government have considerable sympathy with the intentions of new clause 15, as I am sure that the House does. We are all concerned that the disabled should have better opportunities of obtaining employment. A number of points in this context are not matters of company law, and I ask the House to bear with me if I mention them.
      In 1977 the previous Administration published a Green Paper "The Future of Company Reports", which contained a proposal similar to that of this new clause that companies should, as part of an employment statement, publish details of the numbers of disabled people
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      employed together with a short statement of how company personnel practices catered for the disabled. In responding to that proposal, companies pointed out that they were frequently unable to meet the required quota of disabled employees as laid down in the Disabled Persons Employment Act 1958 because there were not enough registered disabled persons applying for jobs.
      That may, of course, have been due in part to a natural reluctance on the part of the disabled to register as such and thereby to class themselves as a separate category of employee with lower expectations. Quite apart from the views of companies—as I explained in Committee—the Manpower Services Commission is undertaking an important review of the quota scheme for the employment of disabled people. In May last year the commission published a comprehensive discussion document which described trends in the operation of the quota scheme, posed a number of key questions and identified a range of future options for providing protection or assistance for the employment of disabled persons.
      One of those options was that there should be a statutory obligation on employers to publish statements about their policy and record on the employment of the disabled, possibly in their company report. As I made clear in Committee, it is well known that the commission's review, together with its recommendations, is expected to be available by the end of the year.
      I was much affected by the terms in which my hon. Friend the Member for Exeter (Mr. Hannam) put forward his new clause 15, and I recognised as the debate proceeded the strength of the support that came from both sides of the House. I thank the right hon. Member for Stoke-on-Trent, South (Mr. Ashley), my hon. Friend the Member for Eastleigh (Mr. Price) and the hon. Member for Eccles (Mr. Carter-Jones) for their moving speeches. I explained in Committee that under clause 77 of the Bill—I also explained how we were awaiting the report of the Manpower Services Commission—there is a provision whereby we have taken a general power to add to or to alter the statutory requirements of the directors' report by regulation.
      I explained that this power could be used to meet the intention of the new

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      clause and I gave a strong assurance in Committee that upon the arrival of the Manpower Services Commission's study and recommendations I would be prepared to use the power in new clause 15 for the purpose of making that regulation.
      I further explained that I thought it best that I should await the report of the Manpower Services Commission. I also made it clear in Committee that I had every sympathy with the principle and sentiments of new clause 15. Having been affected by the arguments put forward, I would point out that clause 77 of the Bill enables me by regulation to alter or to add to the statutory requirements of the directors' report, and I undertook that that power would be used immediately to implement any recommendation of the Manpower Services Commission based on its report.
      In the light of the debate today, I am pleased to inform the House that I am prepared to go further on this point tonight. I can give an assurance on behalf of the Government that we will use our new powers under clause 77 as soon as the Bill is enacted to make regulations on this matter. I would propose to use the interval between now—it will be a short interval—and the passing of the Bill to consult the organisations concerned—in particular those organisations representing disabled persons—about the exact content of the regulations. These regulations will be subject to an affirmative resolution by the House and, therefore, the House will have an opportunity to debate the precise proposals of the Government.
      I hope that on the basis of this undertaking, which definitely advances the matter and which is the most hopeful proposition that I can bring forward, my hon. Friends and all those hon. Members who supported them will feel pleased that progress has been made and that it will be agreed that this new clause should be withdrawn.
      8 pm
      I now refer to the speech made by the right hon. Member for Lanarkshire, North, I appreciate that he has an interest in putting forward his amendment because it is similar to a proposal that was contained in the Green Paper "The Future of Company Reports"
      1238
      which was published my the previous Government in July 1977. In that report it was suggested that companies should publish in the annual report a statement on employment matters. The idea was that the statement should include information about the work force that was relevant not only to employees but also to the shareholders and other interested parties.
      Nearly all of the many bodies that submitted comments on that proposal were totally opposed to the inclusion of such information in company reports. One of the main arguments that was put forward against the idea was that the need for such information had not been identified or justified. When the present Government came to office, we also considered whether large companies should be required by law to publish such non-financial information. Our conclusions are to be found in another Green Paper, "Company Accounting and Disclosure", which was published in September of last year. Paragraph 2 of chapter III states that
      "no useful purpose would be served by introducing legislation requiring the inclusion of detailed employment and other non-financial information in company accounts."
      The reason for that is that it is already a requirement of employment legislation that companies should disclose to union representatives information that is relevant, particularly, as the right Member for Lanarkshire, North mentioned, to collective bargaining.
      My hon. Friend the Member for Dorset, North (Mr. Baker) made a good point in his speech when he said that the comparisons with other countries which the right hon. Gentleman made are not easy unless we can look at the whole picture of legislative obligation. He included not only company law but other forms of legislation which give rise to such obligation. While we welcome the voluntary moves that have been made by companies to provide employees with information about the financial position of the company and the experiments in the wider social reporting which are being undertaken by a growing number of companies, we do not consider that, for the present at least, legislation has a part to play in these developments.

      1239
      Indeed, the comments that we have received on our Green Paper hold us steadfast in that belief. My hon. Friend the Member for Kensington (Sir B. Rhys Williams) emphasised the importance of training in industry. I agree strongly with the emphasis that he placed on the importance of that. I listened with great care to what my hon. Friend the Member for Kidderminster (Mr. Bulmer) said on the subject because I greatly respect his knowledge and experience of industrial matters. However, I am not sure that the Bill and company law provision are necessarily the best way to meet such important points. Certainly, I shall bear the views of my hon. Friends in mind as we move on towards the preparation of the next Companies Bill. However, with regard to this Bill I ask my hon. Friends to accept that, while I recognise the importance of their points, I cannot help them on this occasion. I shall bear in mind all the points that they have made.
      In discussing the proposed clause, I do not wish to go into the finer drafting points. However, I shall make one or two points about what I consider to be important differences between this proposal and that put forward in the previous Government's Green Paper. The right hon. Member for Lanarkshire, North did not explain the differences that have developed. The Green Paper said that its proposals had been considered with large companies in mind. It suggested that only those with over 500 employees or a turnover of £5 million should produce all the information called for. This clause requires all companies with more than 100 employees to provide information, and, therefore, in effect, many smaller companies are required to disclose the full range of information called for in the clause. That goes considerably further than the previous Government's original proposal that only large companies should be required to produce an employment statement. Therefore, it would be yet another burden on the small company.
      I resist the measure strongly because our aim is to lessen the bureaucratic demands on small companies. Equally important, the proposal in "The Future of Company Reports" said:
      "It is not intended at the outset to lay down a full range of detailed requirements for the employment statement. This is a new
      1240
      departure and it is expected that the form that the statement will take will evolve over the next few years, once the broad requirement to publish an employment statement has been introduced."
      In this case, the Opposition seek to lay down a host of specific items for disclosure. In their original proposal they were meant to be examples of the sort of items that might be covered in the employment statement. I do not see how Opposition Members can seriously suggest that all the information should be included when they originally proposed that only some of it should be published, particularly when their original propoosal got minimal support.
      The present Government's view on disclosure generally—I stress this once again because it is relevant to the clause—is that every proposal put forward which would add to the amount of material required by law to be included in company reports should be subject to the closest scrutiny to see, first, whether there is intrinsic justification for it. If so, the question arises as to whether it adds yet another avoidable burden to industry.
      My hon. Friend the Member for Folkestone and Hythe (Mr. Costain) made some powerful points when he instanced an example which would be to the detriment of a company in the situation that he mentioned. The suggestion of art employment statement has been subject to extensive debate and close examination. Despite the arguments put forward from the Opposition Benches, we believe that the case for the statement does not even get past the first hurdle of justification. However, there is one aspect of the proposed clause with which we have some sympathy and to which I have made an exception—the disabled. I am glad to have been able to deal with the subject.
      I have pointed out that there are certain major differences in these industrial proposals as between what is now proposed by the Opposition and what they put forward in their Green Paper when they were in Government. The differences would have far-reaching consequences for a number of companies that would have to disclose information to the extent that would be required.
      Our Green Paper "Company Accounting and Disclosure", which envisages legislation and which will give effect to

      1241
      the European Community fourth directive in Session 1980–81, is the context in which discussion on the subject should now be raised. Section 18 of the Companies Act 1967 will have to be recast completely to meet the directive's requirement. Thus, I hope that Opposition Members will not seek to burden the legisation and, more important, to burden companies with what would be a transitory provision only. If they seek to press the new clause, I advise the House to vote against it.
      I will very briefly refer to new clause 6. I recognise that hon. Members have put this clause forward from the best of motives. The right hon Member for Lanarkshire, North considers, as do the Government, that companies should keep their employees properly informed about the affairs of the company for which they work. However, as the Government explained in the Green Paper "Company Accounting and Disclosure" published in September, we do not consider that the statutory annual accounts of a company will necessarily be the most appropriate means of presenting information to employees. This view has been reinforced by the comments we have received on the Green Paper.
      Indeed, there are those who also question whether the increasingly complex annual accounts of companies are the best way of communicating with shareholders. A considerable number of companies are making particular efforts to communicate essential financial and other information to their employees in the form of special employee reports. This is a development that should be welcomed and encouraged. To impose a statutory duty on companies to send the annual accounts to employees as well would cut across these welcome developments. Such a move could add nothing except expense to the process of communication with employees and, indeed, might serve largely to confuse the situation.
      Another suggestion that has been made is that both shareholders and employees might be sent a simplified form of financial statement with the full annual account being available upon request. The accountancy profession has done some research on the content of simplified financial statements and this work may, in due course, be of some assistance to those who
      1242
      are concerned with promoting effective communication with both shareholders and employees. But it would certainly not be right at present to contemplate legislation on the subject of simplified reports for companies generally.
      For the reasons that I have given, the Government are not able to support this clause. Although we strongly support the proposition that companies should provide financial information to employees, we do not believe that rigid statutory requirements would help to improve communications; they could well hinder them. But, as stated in the Green Paper, we would expect larger companies at least—those with, say, 250 employees or more—voluntarily to provide copies of their full company reports and accounts to their employees on request.
      I hope that the House will recognise that the process of research, experimentation and evaluation now being pursued by an increasing number of companies and the accountancy professsion is the best way of making progress in this area. The clause we are now considering would inhibit these welcome developments. If the proposers wish to press the matter, I strongly advise the House to vote against new clause 6.
      I have made clear the Government's opposition to new clause 4 and new clause 6 and I am pleased to give the undertaking to bring forward proposals for the assistance of the disabled which I mentioned in the earlier part of my speech.
      Mr. John Fraser: Perhaps I could tell the House a cautionary tale. When I was a new Member of Parliament I was involved with the Companies Bill in 1967. I moved an amendment to that Bill which had precisely the same effect as clause 46 of this Bill. A very persuasive and kind Minister, now my right hon. and noble Friend Lord Darling of Hillsborough, took me to one side and said "Look, John, this would embarrass the Government. But you will find it in the next Companies Bill that we shall see during Session 1967–68."
      I waited in vain until the end of the Labour Government's life, throughout the Tory Party Administration and for the last five years, but it was not until this Bill came before the House that I saw clause 46. The point of my tale is that

      1243
      if one has an opportunity to do something in the House or in Committee today, it is better to do it rather than be seduced by the argument that another Bill is on its way.
      8.15 pm
      New clause 4 and new clause 15 have a common theme, which is that the annual report of a company should not merely reflect the state of its balance sheet, profit and loss account and the contents of its books but should give an indication of the thinking, compassion and social and industrial policies of a company. I do not think that the Minister disagrees with that in terms of the disabled. However, exactly the same argument must apply to matters such as the recruitment of school leavers, policies for training, and so on.
      The Minister responded generously to the amendment. I had clear support throughout the House. Perhaps that is one of the reasons why he responded so generously to it. I do not think that I should detract from the way in which he did respond. My right hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley) said that the approach to the employment of disabled people is disgraceful. It is a conundrum that has defied the imagination of Governments of both parties.
      When I was an Employment Minister in 1974, I received a report on the employment of the disabled. As a junior Minister I read that report avidly because I had little else to do at the time. It was in that short period before Parliament begins to sit. I was fascinated by what I read. Clearly we wanted to do something, but in practice it proved far more difficult than one imagines. My right hon. Friend the Member for Doncaster (Mr. Walker) conscientiously went through a special exercise over the quota scheme, yet it still defied him; and now we have the Manpower Services Commission exercise.
      What is important is to provide information. That is why I am glad that the Minister responded as he did. What amazes me—it is the same when one talks about the employment of women or racial minorities—is that once one gets the information out in the open, one often finds that two firms, almost identical in size and making almost identical products,
      1244
      can have totally different policies about sex equality or disablement. It is quite extraordinary. The answer may well be nothing to do with malice; it may simply be because of a lack of forethought and being open to persuasion. But the moment such matters appear in the company report, and the thinking, compassion and approach of a company are revealed, perhaps a change of policy can be brought about.
      As my right hon. Friend says, perhaps the drafting of new clause 4 has not got it exactly right. It might be too detailed. It is possible that it would be difficult for some companies to produce information in exactly the way that the clause requires, but I do not believe that there should be a difference in principle about this information being required, because it is so important to the future of our country. For example, it is important that every company should address itself to the problem of the recruitment of school leavers and training. Everyone who has worked in the Department of Employment knows that, paradoxically, no matter how high the rate of unemployment, there are areas—even those with a high rate of unemployment—where there is a lack of skilled labour.
      It is true that companies as a whole have done too little about training and that very often the example has been set by local and public authorities. The principle of disclosure of this information, opening a company to persuasion, debate and, if need be, criticism, is the right principle to follow.
      Lastly, I think that the Minister gave the least sympathetic response to the simple proposition that is contained in new clause 6. That proposition is that a copy of the company's balance sheet, trading account and annual report should be seen by every employee. He said that perhaps it should be sent to the employees in a simplified form. If he thinks that, he should have tabled his own amendment to say that he would take power to require companies to send the annual report to employees in a simplified form. In the absence of that, we urge upon the House the simple proposition that each company should give an order to its printers to provide an extra number of reports, which could be sent to each employee. The success and sometimes

      1245
      the failure of a company depend on the performance of its employees.
      It seems only right that the employee should be informed. He should not be required to extract the information, which he is able to do under the employment protection legislation. The information should not have to be extracted for collective bargaining purposes. The company should provide the information as a voluntary and generous act. It should do so without being asked.
      There are two Opposition new clauses before the House. I understand that we have the opportunity to divide the House on only one of them. In the light of the debate that has taken place, it will be more appropriate to divide the House on new clause 6 than on new clause 4.
      Mr. Deputy Speaker: The House is discussing new clause 4. Does the hon. Gentleman wish to ask leave to withdraw the clause?
      Mr. Fraser: In the circumstances, Mr. Deputy Speaker, I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn.

    New Clause 6

      AMENDMENT OF SECTION 157(1) OF COMPANIES ACT 1948
      'There shall be added to section 157(1) of the Companies Act 1948 the following:
      "A public company shall also distribute to each of its employees the balance sheet and report described above.".'.—[Mr. John Smith.]
      Brought up, and read the First time.
      Motion made, and Question put, That the clause be read a Second time:—
      The House divided: Ayes 151, Noes 201.

      Division No. 196]

      AYES

      [8.20 pm

      Alton, David

      Ewing, Harry

      Maclennan, Robert

      Anderson, Donald

      Field, Frank

      McMahon, Andrew

      Bagier, Gordon A. T.

      Fletcher, L. R. (Ilkeston)

      McNamara, Kevin

      Beith, A. J.

      Fletcher, Ted (Darlington)

      Marshall, David (Gl'sgow, Shettles'n)

      Benn, Rt Hon Anthony Wedgwood

      Ford, Ben

      Marshall, Jim (Leicester South)

      Bennett, Andrew (Stockport N)

      Foster, Derek

      Mason, Rt Hon Roy

      Booth, Rt Hon Albert

      Foulkes, George

      Maxton, John

      Brown, Hugh D. (Provan)

      Fraser, John (Lambeth, Norwood)

      Maynard, Miss Joan

      Brown, Ron (Edinburgh, Leith)

      Freeson, Rt Hon Reginald

      Mikardo, Ian

      Buchan, Norman

      Freud, Clement

      Millan, Rt Hon Bruce

      Callaghan, Jim (Middleton & P)

      Gilbert, Rt Hon Dr John

      Miller, Dr M. S. (East Kilbride)

      Campbell-Savours, Dale

      Ginsburg, David

      Mitchell, R. C. (Soton, Itchen)

      Canavan, Dennis

      Gourlay, Harry

      Morris, Rt Hon Charles (Openshaw)

      Carmichael, Neil

      Graham, Ted

      Morton, George

      Carter-Jones, Lewis

      Grimond, Rt Hon J.

      Moyle, Rt Hon Roland

      Clark, Dr David (South Shields)

      Harrison, Rt Hon Walter

      Oakes, Rt Hon Gordon

      Cocks, Rt Hon Michael (Bristol S)

      Haynes, Frank

      O'Neill, Martin

      Cohen, Stanley

      Healey, Rt Hon Denis

      Orme, Rt Hon Stanley

      Coleman, Donald

      Heffer, Eric S.

      Palmer, Arthur

      Conlan, Bernard

      Holland, Stuart (L'beth, Vauxhall)

      Parker, John

      Cowans, Harry

      Home Robertson, John

      Pavitt, Laurie

      Craigen, J. M. (Glasgow, Maryhill)

      Homewood, William

      Penhaligon, David

      Cryer, Bob

      Hooley, Frank

      Powell, Raymond (Ogmore)

      Cunliffe, Lawrence

      Horam, John

      Race, Reg

      Cunningham, George (Islington S)

      Howells, Geraint

      Rees, Rt Hon Merlyn (Leeds South)

      Dalyell, Tam

      Hudson Davies, Gwilym Ednyfed

      Richardson, Jo

      Davies, Ifor (Gower)

      Hughes, Robert (Aberdeen North)

      Roberts, Ernest (Hackney North)

      Davis, Clinton (Hackney Central)

      Hughes, Roy (Newport)

      Robertson, George

      Davis, Terry (B'rm'ham, Stechford)

      Janner, Hon Greville

      Rooker, J. W.

      Dean, Joseph (Leeds West)

      Jones, Rt Hon Alec (Rhondda)

      Ross, Ernest (Dundee West)

      Dempsey, James

      Jones, Barry (East Flint)

      Ross, Stephen (Isle of Wight)

      Dewar, Donald

      Kilroy-Silk, Robert

      Sever, John

      Dixon, Donald

      Lambie, David

      Sheldon, Rt Hon Robert (A'ton-u

      Dobson, Frank

      Lamborn, Harry

      Silkin, Rt Hon John (Deptford)

      Dormand, Jack

      Lamond, James

      Silverman, Julius

      Douglas, Dick

      Leadbitter, Ted

      Smith, Cyril (Rochdale)

      Duffy, A. E. P.

      Leighton, Ronald

      Smith, Rt Hon J. (North Lanarkshire)

      Dunn, James A. (Liverpool, Kirkdale)

      Lewis, Ron (Carlisle)

      Spearing, Nigel

      Dunnett, Jack

      Lofthouse, Geoffrey

      Spriggs, Leslie

      Dunwoody, Mrs Gwyneth

      Lyons, Edward (Bradford West)

      Stallard, A. W.

      Eadie, Alex

      Mabon, Rt Hon Dr J. Dickson

      Steel, Rt Hon David

      Eastham, Ken

      McCartney, Hugh

      Stewart, Rt Hon Donald (W Isles)

      Edwards, Robert (Wolv SE)

      McDonald, Dr Oonagh

      Stoddart, David

      Ellis, Raymond (NE Derbyshire)

      McGuire, Michael (Ince)

      Thomas, Dafydd (Merioneth)

      Ellis, Tom (Wrexham)

      McKay, Allen (Penistone)

      Thomas, Jeffrey (Abertillery)

      Evans, Ioan (Aberdare)

      McKelvey, William

      Thomas, Dr Roger (Carmarthen)

      Evans, John (Newton)

      MacKenzie, Rt Hon Gregor

      Wainwright, Edwin (Dearne Valley)

      Wainwright, Richard (Colne Valley)

      Wilson, Rt Hon Sir Harold (Huyton)

      Young, David (Bolton East)

      Walker, Rt Hon Harold (Doncaster)

      Winnick, David

      Welsh, Michael

      Woodall, Alec

      TELLERS FOR THE AYES

      White, Frank R. (Bury & Radcliffe)

      Woolmer, Kenneth

      Mr. James Hamilton and

      Whitlock, William

      Mr. James Tinn.

      NOES

      Adley, Robert

      Gorst, John

      Murphy, Christopher

      Aitken, Jonathan

      Gow, Ian

      Myles, David

      Alexander, Richard

      Gower, Sir Raymond

      Needham, Richard

      Ancram, Michael

      Gray, Hamish

      Nelson, Anthony

      Arnold, Tom

      Greenway, Harry

      Neubert, Michael

      Aspinwall, Jack

      Griffiths, Peter (Portsmouth N)

      Newton, Tony

      Atkinson, David (B'mouth, East)

      Gummer, John Selwyn

      Normanton, Tom

      Baker, Nicholas (North Dorset)

      Hamilton, Hon Archie (Eps'm&Ew'll)

      Page, Rt Hon Sir R. Graham

      Benyon, Thomas (Abingdon)

      Hamilton, Michael (Salisbury)

      Page, Richard (SW Hertfordshire)

      Berry, Hon Anthony

      Hannam, John

      Parkinson, Cecil

      Best, Keith

      Haselhurst, Alan

      Parris, Matthew

      Bevan, David Gilroy

      Havers, Rt Hon Sir Michael

      Patten, Christopher (Bath)

      Biggs-Davison, John

      Hawkins, Paul

      Pattie, Geoffrey

      Blackburn, John

      Hawksley, Warren

      Porter, George

      Blaker, Peter

      Heddle, John

      Powell, Rt Hon J. Enoch (S Down)

      Body, Richard

      Hicks, Robert

      Price, David (Eastleigh)

      Bonsor, Sir Nicholas

      Hill, James

      Proctor, K. Harvey

      Braine, Sir Bernard

      Hogg, Hon Douglas (Grantham)

      Renton, Tim

      Bright, Graham

      Holland, Philip (Carlton)

      Rhys Williams, Sir Brandon

      Brinton, Tim

      Hooson, Tom

      Ridsdale, Julian

      Brocklebank-Fowler, Christopher

      Hordern, Peter

      Rifkind, Malcolm

      Brooke, Hon Peter

      Howell, Rt Hon David (Guildford)

      Roberts, Michael (Cardiff NW)

      Brotherton, Michael

      Howell, Ralph (North Norfolk)

      Roberts, Wyn (Conway)

      Brown, Michael (Brigg & Sc'thorpe)

      Hunt, David (Wirral)

      Rossi, Hugh

      Bruce-Gardyne, John

      Hunt, John (Ravensbourne)

      Sainsbury, Hon Timothy

      Buchanan-Smith, Hon Alick

      Hurd, Hon Douglas

      St. John-Stevas, Rt Hon Norman

      Buck, Antony

      Jessel, Toby

      Shaw, Michael (Scarborough)

      Budgen, Nick

      Jopling, Rt Hon Michael

      Shepherd, Colin (Hereford)

      Bulmer, Esmond

      Kaberry, Sir Donald

      Silvester, Fred

      Burden, F. A.

      Kellett-Bowman, Mrs Elaine

      Skeet, T. H. H.

      Butler, Hon Adam

      Kimball, Marcus

      Speller, Tony

      Cadbury, Jocelyn

      King, Rt Hon Tom

      Spicer, Jim (West Dorset)

      Carlisle, John (Luton West)

      Knight, Mrs Jill

      Spicer, Michael (S Worcestershire)

      Chalker, Mrs Lynda

      Knox, David

      Sproat, Iain

      Channon, Paul

      Lamont, Norman

      Squire, Robin

      Churchill, W. S.

      Lang, Ian

      Stainton, Keith

      Clark, Hon Alan (Plymouth, Sutton)

      Lawrence, Ivan

      Stanley, John

      Clark, Sir William (Croydon South)

      Lawson, Nigel

      Stewart, Ian (Hitchin)

      Clarke, Kenneth (Rushcliffe)

      Le Marchant, Spencer

      Stewart, John (East Renfrewshire)

      Cockeram, Eric

      Lennox-Boyd, Hon Mark

      Stradling Thomas, J.

      Costain, A. P.

      Lloyd, Peter (Fareham)

      Tebbit, Norman

      Cranborne, Viscount

      Loveridge, John

      Thomas, Rt Hon Peter (Hendon S)

      Critchley, Julian

      Lyell, Nicholas

      Thompson, Donald

      Crouch, David

      McCrindle, Robert

      Thorne, Neil (Ilford South)

      Dean, Paul (North Somerset)

      Macfarlane, Neil

      Thornton, Malcolm

      Dickens, Geoffrey

      MacGregor, John

      Townend, John (Bridlington)

      Dorrell, Stephen

      MacKay, John (Argyll)

      Trippier, David

      Douglas-Hamilton, Lord James

      McQuarrie, Albert

      Vaughan, Dr Gerard

      Dover, Denshore

      Mates, Michael

      Waddington, David

      Dunn, Robert (Dartford)

      Mather, Carol

      Wakeham, John

      Eden, Rt Hon Sir John

      Mawby, Ray

      Walker, Rt Hon Peter (Worcester)

      Eggar, Timothy

      Mawhinney, Dr Brian

      Walker, Bill (Perth & E Perthshire)

      Eyre, Reginald

      Mellor, David

      Walker-Smith, Rt Hon Sir Derek

      Fairbairn, Nicholas

      Meyer, Sir Anthony

      Waller, Gary

      Fairgrieve, Russell

      Miller, Hal (Bromsgrove & Redditch)

      Ward, John

      Faith, Mrs Sheila

      Mills, Iain (Meriden)

      Wells, Bowen (Hert'rd & Stev'nage)

      Fenner, Mrs Peggy

      Mills, Peter (West Devon)

      Wheeler, John

      Finsberg, Geoffrey

      Miscampbell, Norman

      Wickenden, Keith

      Fisher, Sir Nigel

      Mitchell, David (Basingstoke)

      Wilkinson, John

      Fletcher-Cooke, Charles

      Moate, Roger

      Williams, Delwyn (Montgomery)

      Fowler, Rt Hon Norman

      Molyneaux, James

      Winterton, Nicholas

      Fraser, Peter (South Angus)

      Montgomery, Fergus

      Wolfson, Mark

      Fry, Peter

      Moore, John

      Young, Sir George (Acton)

      Gardner, Edward (South Fylde)

      Morgan, Geraint

      Younger, Rt Hon George

      Garel-Jones, Tristan

      Morris, Michael (Northampton, Sth)

      Gilmour, Rt Hon Sir Ian

      Morrison, Hon Charles (Devizes)

      TELLERS FOR THE NOES

      Glyn, Dr Alan

      Morrison, Hon Peter (City of Chester)

      Mr. John Cope and

      Goodhew, Victor

      Mudd, David

      Mr. Robert Boscawen

      Goodlad, Alastair

      Question accordingly negatived.

    New Clause 7

      LIABILITY OF HOLDING COMPANY FOR DEFAULTING SUBSIDIARY
      '(1) Subject to subsection (3) below, if any sum required by any judgment or order to be paid by a company which is a subsidiary of a holding company is not paid by the company concerned within the period of fourteen days beginning on the date on which the judgment or order becomes enforceable by execution or (in Scotland) by diligence, the holding company shall be liable to pay that sum and that judgment or order shall be enforceable against the holding company accordingly.
      (2) Where any such sum as is referred to in subsection (1) above is required to be paid in respect of a liability arising under a contract made by the defaulting company, the cause of action shall be regarded, for the purposes of this section, as having arisen at the time when the contract was made.
      (3) Subsection (1) above shall apply only if the holding company or the subsidiary company has not given notice in writing to the creditor of the subsidiary company prior to the inception of the liability on which the judgment or order is based.
      (4) For the purpose of subsection (1) above the expression "holding" shall mean any company which is the holder of one quarter or more of the shares of the subsidiary company or of the shares of any company which holds a quarter or more of the shares in the subsidiary company'.—[Mr. Clinton Davis.]
      Brought up, and read the First time.
      8.30 pm
      Mr. Clinton Davis: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker: With this it will be convenient to take the following:
      New clause 8—Liability of related companies:
      '(1) Subject to subsections (2) and (3) of this section if any sum required by any judgment or order to be paid to any creditor by a company is not so paid within the period of fourteen days beginning on the date on which the judgment or order becomes enforceable by execution or (in Scotland) by diligence, every related company shall be jointly and severally liable to pay that sum, and that judgment or order shall be enforceable against any related company accordingly.
      (2) In the event of a related company being wound up, nothing in subsection (1) of this section shall entitle the creditor to recover any part of the sum until the claims of the other creditors have been satisfied.
      (3) Subsection (1) above shall apply in the case of a debt arising out of a contract only if the related company has not given to the creditor notice to exclude the operation of this section prior to the making of the con-
      1250
      tract on which the judgment or order is founded.
      (4) For the purpose of this section, "related company" in relation to any company means any body corporate which is that company's subsidiary or holding company, or a subsidiary of that company's holding company, but for the purpose of this subsection no company shall be deemed to be the holding company of a subsidiary unless it is the holder of one quarter of the shares of that subsidiary, and the expression "subsidiary" shall be construed accordingly.'.
      New clause 9—Liability of holding company in case of fraud:
      '(1) If in the course of the winding up of a company it appears that any business of the company has been carried on with intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose the court, on the application of the official receiver, or the liquidator or any creditor or contributory of the company, may if it thinks proper so to do, declare that any holding company shall be responsible without any limitation of liability, for all or any of the debts or other liabilities of the company as the court may direct.
      (2) For the purpose of subsection (1) above the expression "holding company" shall mean any company which is the holder of one quarter or more of the shares of the company which is the subject of the winding up, or of the shares of any company which holds any shares in the company which is the subject of the winding up.'.
      Mr. Davis: This series of new clauses seeks to provide that a holding company should, in certain circumstances, be liable for a subsidiary of that holding company which defaults in its legal obligations. We sought to provide a number of alternative routes which the Government might be able to consider. In essence, the clause provides that the holding company would be liable for the defaulting subsidiary, unless the holding company had given notice to the creditor to exclude the operation of the clause before the inception of liability on which a judgment order is founded. I should like to return to the details later.
      I acknowledge that this is a difficult concept, especially for an Opposition, to draft into legislative form, and I have no doubt that the Minister will be able to point to certain defects of draftsmanship. Previously he was able to point out that he could embrace an idea that the Opposition put forward and improve on it. Perhaps he will be able to do the same here. The Minister is a fair man. He would concede this point as we are discussing the principle involved.

      1251
      The basic principle that the current state of the law establishes is that a holding company and its subsidiaries must be regarded as separate entities. That is sometimes a difficult concept when one translates it into practice. It can lead to abuse. If the law insists on always treating each company as a wholly distinct legal entity, ignoring the fact that the group is a true economic unit, the results can be palpably absurd. The situation may result in a total lack of realistic information, and possibly misleading information being forthcoming.
      Where a holding company has two subsidiaries one of which makes a loss of £50,000 and the other a profit of £10,000 and that profit is wholly distributed by way of dividends to the holding company, the holding company's individual accounts will show a profit of £10,000, unless there are expenses, although the group as a whole made a loss of £40,000. That is an example where mischief can arise. Where there is a deliberate holding out by the holding company, the principle that I have adumbrated is qualified in respect of group accounts, for example. There can be no doubt that the whole question of control with which we seek to grapple is very difficult. The law has constantly had great difficulties in this respect.
      The concept does not necessarily mean that one has to have a majority of the shares. Control can exist without majority shareholding. An extreme example of that situation occurred in 1935 in the case of Investment Trust Corporation v. Singapore Traction Company, where a £1 management share was able to outvote the remaining 399,999 shares. That is a somewhat extreme example. It nevertheless found its way into the Chancery Division.
      Section 154 of the 1948 Act seeks to define a holding company. But it contains certain anomalies in relation to that definition, particularly in a control situation where a person holds more than half the equity share capital in a company. The Jenkins committee of 1962 recommended that the anomalies that arose out of that situation should be abolished. We have not yet dealt with that.
      The anxiety that has arisen about the ability of a holding company to distance itself from a subsidiary has been expres-
      1252
      sed on numerous occasions over a long period. The Jenkins committee reflected on the inadequacies of section 332 of the Companies Act 1948 and recommended that it should be extended to cover the situation where reckless behaviour resulted in creditors being defrauded.
      Part of our case is that the burden of proof of a creditor seeking remedy under section 332 is far too heavy and operates as an effective deterrent to the search for such a remedy. The plaintiff, under subsection (1) of section 332, has to establish actual knowledge. Taking into account the fact that he is pursuing a case against a powerful and financially well endowed defendant, that can be not only evidentially difficult but enormously costly. This represents a deterrent.
      The judiciary expressed recently some grave doubts about the current position at law. In the course of an application to stay execution of an order for damages in the recent Esperanza case now settled, Mr. Justice Parker, in granting the application, said that it was the right of a holding company to stand aside from its subsidiary, but he added:
      "It may well be that it is an attitude which is unfortunate."
      I agree with that proposition. The Opposition say that this situation needs to be rectified. The Government concede, interestingly enough, that section 332 needs to be re-examined. But the Government say that the timing of our proposals must be challenged. They pray in aid the Cork committee which the previous Labour Government established to look at the whole scope of insolvency law. The Government say that they do not want to engage in piecemeal reform. The trouble with that argument is that we know that the Cork report is not due to be presented to the Government until about the end of 1980. The Government will then have to consider it. They will no doubt present it to the House of Commons and then engage in detailed consultation.
      The Government will have to consider what Cork has reported in relation to the insolvency law of other European countries because they would seek to harmonise bankruptcy law. It is difficult to expect that there will be any legislation on the insolvency front in this Parliament. The issue to which we are

      1253
      addressing ourselves should not wait for several years to be remedied. It is an abuse which has caused considerable anxiety, because there seems to be an increasing tendency on the part of holding companies to refuse to honour debts of their subsidiaries.
      Mr. Douglas Hogg: I have studied the clause with considerable interest. Am I not right in saying that if the clause became law a holding company could become liable without there being any misfeasance or culpability on the part of the holding company?
      Mr. Davis: That is right. We provide a qualification in new clause 7(3) which is repeated in new clause 8. Some people say that effectively the rule of caveat emptor should prevail, but I believe that that is too simplistic. It ignores what happens all too often in everyday practice. That is why the Government concede that there is a case for reform.
      Small firms become impressed by the connection of a subsidiary with a substantial, highly prestigious holding company, a connection that is often mercilessly exploited by the subsidiary for its own commercial purposes to give the impression that it has backing from the parent company. It is only when that subsidiary is unable or refuses to meet its obligations and the holding company disclaims any responsibility that the full hideous truth dawns on the small business man, and this may be accompanied by disastrous effects on his business.
      I am able to cite some recent examples which have thrown the issue into sharp relief. One is the case of George Hensher Ltd. In the early 1970s, a company called Hensher (Furniture Trades) Ltd. appointed a receiver to a major subsidiary, George Hencher Ltd. A sum of £100,000 had been lent to the subsidiary by the parent company. Eventually, the parent company appointed a receiver to recover that money, but no intention was ever evinced on the part of the holding company to assist the trade creditors in any way. I believe that those trade creditors still have debts totalling about £400,000 outstanding to them.
      I have already referred to the case of Esperanza. There, an award of $2·1 million in damages was made against a company called Kaleb Brett and Son Ltd.,
      1254
      a subsidiary of Esperanza. As soon as that happened, the holding company sought to wind up the subsidiary on the ground that it had a duty to the shareholders to avoid incurring responsibility to pay the money due unless there were overwhelming commercial considerations for so doing. Business morality did not intrude into those considerations. Yet there was a time when it was thought that such considerations had some validity and that creditors, particularly small business men, should not be placed in this position. That case was eventually settled because of the enormous moral pressure that was brought on Esperanza. Public enterprises are expected to apply the same mores in this respect as are private enterprises, and rightly so. Several statements have been made recently in the House about the liability of British Leyland for its subsidiaries and so on.
      I would argue that, whatever defects the Government might find in the new clauses, there is an overwhelming case for using the Bill as a means of remedying an abuse which can so severely prejudice the interests of the small business man, about which both sides of the House—the Government in particular—rightly profess concern. This is their opportunity to show that that is not merely election verbiage on their part. They have to overcome the hurdles of 15 per cent. VAT and 17 per cent. bank rate.
      The Government have a chance to make some compensation in a small way. I hope that they will respond to the debate in a positive manner. Let them choose from the new clauses. I do not mind what permutation they take. Let them produce ther own remedy, but they must not use the argument that we should wait for Cork.
      8.45 pm
      Mr. Nick Budgen: I hope that the hon. Gentleman will comment on the proposition that his new clause would prevent established large companies from going into high-risk activities, knowing that there was a risk of failure. It would tend to diminish the flow of risk capital.
      Mr. Davis: I do not accept that argument. There is a strong case for lifting the veil, as company lawyers would say, in this instance. I do not accept the proposition that damage to risk capital

      1255
      would result. We are providing for a qualification—to which the hon. Gentleman does not appear to have addressed his mind—that the holding company would be able to give notice that it was not liable for the debts and other obligations of its subsidiary. The hon. Gentleman can make his own speech about that.
      New clauses 7 and 8 owe much of their parentage—it is a little reticent to announce its parentage, because it might destroy the case—to the Government's British Aerospace Bill. Despite that, it has some respectability. New clause 7(1) provides for the time from which the availability of the remedy will flow. Subsection (2) deals with the time from which liability will run. Subsection (3) provides for the point that I have made in answer to the hon. Member for Wolverhampton, South-West (Mr. Budgen), namely, the question of notice.
      Subsection (4) provides for a definition of the holding company. I concede that there are no hard and fast rules. It may be that if the Government are prepared to embrace the new clause in principle they will wish to qualify the way in which we define the holding company.
      New clause 8 is not very different. It refers to a related company. New clause 9 repeats the new clause that we introduced in Committee.
      Mr. Douglas Hogg: I have the misfortune to dissent from the hon. Member for Hackney, Central (Mr. Davis) on all three new clauses. I oppose the new clauses for a variety of reasons.
      I wish to deal with new clause 9. It is objectionable for two basic reasons. First, should it become part of the statute, it could be oppressive to the holding company. Secondly, there is no need for it.
      On the first point, namely, that the provision of new clause 9 as presently formulated could cause injustice to the holding company, I wish to make five points. First, if one looks at the definition of the holding company, one sees that it is a company for the purposes of the new clause if it holds a quarter or more of the shares in the relevant company. That is not a high threshold. It means that many companies which will be regarded as holding companies are, in practice, in
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      no way in control of, or able to supervise, the practice of a company in which they hold shares.
      Secondly, it takes the principles of vicarious liability too far. Under new clause 9, the holding company, at least in theory, can be liable for the fraudulent acts of officers who were never appointed by the holding company and who were perhaps people whom the holding company itself was unable to dismiss. A further objection to the new clause is that the discretion given to the courts is very wide. I think that the word that is used is "proper". That word does not mean the same as the word "just". I suspect that if the courts were to interpret the word "proper" in a fairly broad way—and there is nothing to prevent them from so doing—they could use that word in order to impose a liability upon a holding company when the holding company was guilty of no negligence or culpability, simply in order to make an example—let us say an object lesson—of holding companies.
      That brings me to my two final points in relation to the new clause. Holding companies under new clause 9 can be made liable for fraudulent trading when in no sense are they to blame. In principle, I find that a worrying extension of the law. There is a further point which I suspect the hon. Member for Hackney, Central has not really turned his mind to. It seems from a careful look at new clause 9 that the liability on the part of the holding company can also apply to acts of fraudulent trading which pre-date the time when the holding company acquired any shares in the company with which we are concerned. Therefore, if new clause 9 becomes law, I suggest that its effect could be, and probably would be, to cause considerable injustice to a number of holding companies.
      There is the related point that I have suggested, namely, that the new clause is unnecessary. That point was touched on by the hon. Member for Hackney, Central, but it was hastily departed from. As the hon. Gentleman well knows, there are provisions within the company laws which make fraudulent trading by officers of a company not merely a criminal offence but also an act which gives rise to civil liability, in the sense that officers guilty of fraudulent trading can be

      1257
      ordered to compensate those of the company's creditors who have suffered loss thereby. Therefore, one must ask whether, when we already have the existing provisions under the 1948 Act, it is necessary to introduce new clause 9. I therefore oppose the new clause on the grounds that it is unnecessary and unjust.
      I turn briefly to new clauses 7 and 8. The objections to those new clauses are very similar to the objections to new clause 9. Once again, one asks to which companies these new clauses apply. They are defined as being holding companies and related companies. When one asks "What is a related company?", one finds the same kind of threshold of shareholders, namely, one-quarter. That gives rise to precisely the same point as I previously made, which is that related companies may find themselves liable for judgment debts when in no sense have they been in control of the defaulting company or, in practice, able to supervise.
      That is an objectionable principle to advance. Moreover—again, this applies to both new clauses—it is hard to make anyone, even if it is a corporation, liable for acts not merely which it did not control but in respect of which it is in no sense culpable. In that case there is no requirement that those seeking to make the holding or related company liable should establish negligence, culpability or misfeasance.
      I find it objectionable that this concept of absolute liability should be imported into this rather esoteric area of company law.
      I make one final point, which applies to judgment debts. It would seem, if we look at the new clauses carefully, that, notwithstanding the points made by the hon. Member for Hackney, Central, who introduced the new clauses, the liability of the holding company could be a liability in respect of judgment debts arising from debts that pre-dated the time when it entered into a relationship with a defaulting company. In practice and in principle, that must be highly offensive to hon. Members. I hope that the House does not endorse any of the new clauses.
      Mr. Ernie Roberts: In putting forward new clauses 7, 8 and 9, my hon. Friend the Member for Hackney, Central (Mr. Davis) is providing a basis of protection
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      for small businesses. The hon. Member for Grantham (Mr. Hogg), who said that this may stop risk capital being injected into companies, must bear in mind that small companies are risking all their capital and losing it all as a result of the effects of major companies not facing their responsibilities.
      It is reported in the financial press that a growing number of businesses are failing due to bad debts—debts owed in many cases by the subsidiaries of parent companies. Generally, businesses that fail are small businesses. The Government claim to support small businesses, and this is the time for them to show their support.
      Hon. Members have referred to the National Enterprise Board. In some cases it has been responsible for the collapse of companies such as British Tanners Ltd. and a number of other small leather companies. The companies that supply British Leyland are also becoming concerned lest the NEB leaves them holding the baby and because of the possibility of a cutback in financing British Leyland.
      There should be a moral and legal obligation on the parent company to be responsible for its subsidiaries, just as a parent is expected to be responsible for his children and for the acts of his children. Some subsidiary companies build their businesses on the well-known name of the holding company, which then refuses to accept responsibility for any debts that may be incurred. That is a loophole for dishonest dealing in the same way as insider dealing is a loophole. Small and weak companies must be given protection by the Government in the Bill. Incidentally, the strong holding company enjoys the benefits and the values from the subsidiaries. Why should it not share the losses incurred by its subsidiaries?
      Mr. Budgen: I hope that the hon. Member for Hackney, North and Stoke Newington (Mr. Roberts) will forgive me if I begin by saying that I know that my hon. Friend the Member for Grantham (Mr. Hogg) wished to be present to hear his speech, but unfortunately he was asked to leave the Chamber a moment ago, and he had to do so immediately.
      However, the hon. Member for Hackney, Central (Mr. Davis) will understand that I disagree fundamentally with the way in which he put his point of view.

      1259
      He does not understand the nature of risk in company finance. The hon. Gentleman talks about a subsidiary's relationship to its holding company as though it were a young child relating to its parent. Even in the most paternalistic societies, there is some limitation on the obligations that the parent feels towards its child. The hon. Gentleman is speaking of a subsidiary company as though it were able to call upon the parent company to a total and unlimited extent, as though in every instance the son were able to call upon the father to the total limit of his capacity, wealth and honour.
      9 pm
      The reality is this. If these new clauses were put into the Bill, we should be putting holding companies in a completely different position from that of individuals. We should be telling individuals that they may invest their money in a company on the basis of limited liability, knowing the extent of their potential losses, but we should be telling a holding company that, once it put its money into a subsidiary company, there might be no limit to its liability.
      However the hon. Member for Hackney, Central puts his point of view, there must be disincentive to investment of risk capital if these new clauses are enacted. I am sure that I do not carry the hon. Gentleman with me, but let me assume for a moment that in different circumstances I agreed with him. For the sake of argument, let us concede that the system by which large companies tend to proliferate subsidiaries has got out of hand in recent years. That is a disagreeable product of our present tax system. If, for the sake of argument, GEC finds itself sitting on a cash mountain, it will be extremely difficult to distribute that cash mountain, because of the shareholders' potential liability for capital gains tax.
      I hope that the Chancellor will abolish capital gains tax in the next Budget. It may be that he will not. I hope also that British companies in general will be moving into a more profitable period, but in the past shareholders' rights have been undermined by dividend restraint. Once again, it has been difficult for large companies to rid themselves of cash in such a way that it is tax-effective for shareholders.
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      It is, therefore, almost inevitable that the present system drives companies into becoming what they should not be, which is really something like merchant banks. Instead of distributing their cash to shareholders, they set themselves up as punters in their own right, investing limited sums in subsidiary companies. I regret that, but the system will not be changed overnight. As long as the system has that disadvantageous effect, it is important that subsidiary companies should be able to trade on the same limited liability basis as companies that receive investments from private individuals.
      Mr. Clinton Davis: Is the conclusion that we are to draw from the hon. Gentleman's remarks that it is hard cheese as far as the small creditors of subsidiaries are concerned?
      Mr. Budgen: No, it is not hard cheese. The point to which the hon. Gentleman does not attack proper importance is that when these large companies invest money in smaller subsidiaries they wish to retain their good name. The hon. Gentleman a moment ago gave an instance of a large holding company that settled as a result of pressures put upon it. Indeed, I would argue that the probability is that large holding companies that diversify into subsidiary companies are much more likely to be a soft touch than, for instance, an individual who invests in a small company, because they have their good name to uphold.
      I hope that the hon. Gentleman will not persist with these proposals. They will only cause large and respectable companies to become reluctant to risk cash sums in businesses about which they know little.
      Perhaps my next remarks are contrary to the ethos of my party. However, it is inevitable that some of those who start small businesses will take substantial risks. Those who are engaged in small businesses do not always dot the "i"s and cross all the "t"s of legal requirements. They still need risk capital. If these proposals are enacted, small companies will not get risk capital from large organisations. We should therefore enforce the principle that people should risk capital in the hope of gaining proper reward in the market place.
      Mr. Nicholas Baker: I do not wish to repeat the arguments that were put forward in Committee between the hon. Member for Hackney, Central (Mr. Davis) and me. Conservative Members disagree with the change in company law structure and with the trading principle that lies behind these three clauses.
      I shall take up some of the points raised by the hon. Gentleman. The Jenkins committee simply recommended a change in the definition of holding companies. That does not affect the substance of the debate. The hon. Gentleman referred to a case that involved a furniture subsidiary company that had gone into liquidation. The liquidator of the subsidiary company found that the company was owed money by the holding company. It could therefore make a claim against the holding company. Consequently, the example that the hon. Gentleman gave does not support his case.
      Subsidiary companies do not use the name of parent companies; they are careful not to. There is a legal reason for that. If a subsidiary company uses the name of a holding company, the holding company may become legally liable for its debts. Therefore, subsidiary companies are at pains to explain the distinction. The major weakness of the Opposition's argument is apparent. They have thrown three inadequately drafted clauses at us. They hope that by spraying their fire they will meet the target.
      Mr. Eyre: I have sat opposite the hon. Member for Hackney, Central (Mr. Davis) for many weeks in the Standing Committee and during debates in the House. I think that he has approached these clauses in a diffident manner. I hold a good opinion of the abilities of the hon. Gentleman. He earlier acknowledged that there might well be defects in the drafting of these clauses. He was absolutely correct to have that reservation. I am sure that he recognises that serious difficulties are involved in drafting. Great difficulties of principle are involved. If a proper examination of these clauses is made, all reasonable hon. Members will become convinced that the clauses are unsuitable and should not be enacted.
      The intention of the new clause is evidently to make holding companies responsible for the debts of their sub-
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      sidiaries. I have noticed a certain similarity between the wording of this clause and the wording of section 53 of the Aircraft and Shipbuilding Industries Act 1977. Quite apart from the difference between the provision governing two nationalised industries and a provision regulating all holding companies and subsidiaries, the section of the 1977 Act was continued to wholly owned subsidiaries of the new corporation.
      The present amendment seeks to legislate to ensure that holding companies pick up the tab for any companies in which they hold a quarter or more of the shares. There is scope there for an interesting discussion on the relations between a company and its subsidiaries. Indeed, this is the subject of continuing debate in the commercial world. To make a company responsible for the debts of another company merely because it has a holding of 25 per cent. or more in that company would go well beyond the generally accepted relations between companies.
      It is significant that the clause seeks to introduce into our company law a completely new definition of "holding company" and "subsidiary", although the latter term is not in itself defined. The definition used elsewhere in the Companies Acts is that contained in,section 154 of the 1948 Act, which deems a company to be a subsidiary of another only if the other company
      "controls the composition of its board of directors; or holds more than half in nominal value of its equity share capital".
      Section 154 also contains a number of further provisions that ensure that, in effect, a subsidiary is under the control of the holding company. It is surely wrong that we should contemplate treating holding companies as responsible for the debts of companies in which they may have a significant shareholding but over which they are not in a position to exercise control. Indeed, they may well have little relevant information about the subsidiary. For example, a company may feel no obligation to inform another company, which simply holds 25 per cent. of its shares, about the details of its creditors. A similar point arises on subsection (3). How can the holding company give notice if it does not know who the creditors are? Why should the subsidiary give notice?

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      Unlike section 154 of the 1948 Act, the clause is weak on definition. What is meant by "shares" in subsection (4)? Does it include all share capital or only equity shares? Certainly it would be penal to put a contingency liability of this nature on a preference shareholder. In any case, what does "holder" mean? Does it mean the holder of more than 25 per cent. by number or by nominal value?
      A further point arises on subsection (2), which provides that where payment is required by a holding company in respect of liabilities under a contract made by a defaulting company, the liability in effect arises when the contract is made. But subsection (1) refers to judgments or orders in general and is not confined to judgments or orders in respect of contracts. There is no provision in the clause in respect of judgments in the event of fraudulent misrepresentation, for example. I have demonstrated that the clause is misguided in principle and defective in drafting. If the matter is pressed to a vote, I must ask the House to reject the new clause.
      I am very much strengthened in this view by the powerful criticisms advanced by my hon. Friends the Members for Grantham (Mr. Hogg), for Wolverhampton, South-West (Mr. Budgen) and for Dorset, North (Mr. Baker). I am grateful for their comments.
      I turn now to new clause 8, since I think that it would be for the convenience of the House if I referred especially to that clause. It follows the same theme as the clause that we have just discussed, and my general observations about this clause are similar to the ones I made on the previous clause.
      9.15 pm
      The purpose of the clause appears to be to introduce into commercial relationships a draconian interpretation of the relations between companies linked by ownership of a proportion of the shares. Responsibility would be placed on businesses that might have had no control whatever on the commercial activities of a company in which it had, say, a 25 per cent. holding. That would go far beyond what would be generally recogconsiderations of good name, reputation, nised as reasonable.
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      As I have already explained, the definitions provided of a holding company and a subsidiary are in any event completely inadequate in themselves and are incompatible with the definitions of these terms used elsewhere in the Companies Act 1948.
      It would be illogical to introduce a new definition confined to a specific provision, particularly when that definition does not bear close examination. There are some intriguing differences between this clause and the previous one. That is an indication of the complexity of provisions of this nature.
      For example, we have here a different definition of a holding company from that in the previous clause. Whereas the previous clause imposed responsibility for the debts of the subsidiary on the parent company, this clause leaves responsibility at the first generation. The clause would, therefore, not apply to the wholly owned subsidiary of a wholly owned subsidiary.
      Perhaps those who drafted the clause realised that the same flaws existed in subsection (2) of the previous clause to which I drew attention. At any rate, the provisions of that clause are not carried over into this clause. More seriously, in this clause only the related company can give notice under subsection (3), but, as I indicated earlier, a related company will often be in no position to know of any transactions of a company in which it has a shareholding. For all these reasons, I strongly urge the House to reject this new clause.
      I turn now to new clause 9, the last of the three clauses introduced by the hon. Member for Hackney, Central. As I have said, the relationship between the holding company and the subsidiary company as defined, for the sake of argument, n the Companes Act 1948 is a subject of continuing debate. The position of a holding company when a subsidiary is forced to cease trading has been a significant element in the debate, and I appreciate the concern felt about that.
      The position in law has been that subsidiaries are separate from their holding companies. Whether or not in practice a holding company stands behind its subsidiary in the event of its being unable to meet its debts has been regarded as a matter of commercial practice involving and so on.

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      The present law governing fraudulent trading is contained in section 332 of the Companies Act 1948. In that section the court may
      "declare that any persons who were knowingly parties"
      to fraudulent trading
      "shall be personally responsible, without any limitation or liability, for…the debts or other liabilities of the company."
      Section 332, therefore, already applies to a holding company whether or not the company is considered by the court to have been knowingly a party to the carrying on of the business of its subsidiary with intention to defraud its creditors. The new clause would extend the potential liability of the holding company to situations in which it was not knowingly a party to fraudulent trading.
      The definitions of a holding company and subsidiary in subsection (2) are as unsatisfactory for this clause as for the previous clause. The clause therefore contemplates a potentially very severe penalty for a company that simply has a significant holding in another company, over which it can have no control and about which it will have no means of ensuring that it is fully informed. I could not, therefore, commend this clause to the House.
      The hon. Member for Hackney, Central quoted a number of cases which give rise to cause for concern. However, the defects in the new clauses are serious and there is potential unfair damage that could be caused by them. There are difficult problems involving the relationship of holding companies and their subsidiaries. Those problems deserve serious and measured consideration. The hon. Member for Hackney, North and Stoke Newington (Mr. Roberts) spoke of the problems of small companies in that respect. I am well aware of those problems, but I assure him that the clauses are not the proper way by which to protect the valid interests of small businesses.
      Mr. Ernie Roberts: In that case, does the Minister have a method in mind for solving the problems?
      Mr. Eyre: As the House and the hon. Gentleman know, a comprehensive review of the law relating to insolvency is being conducted by a distinguished com-
      1266
      mittee under the chairmanship of Sir Kenneth Cork. It would be wrong to pass new legislation in that area piecemeal in advance of the committee's report, which is expected to be published later this year. I assure the hon. Gentleman that some of the problems that he has raised will be considered carefully. I urge the House that it is entirely right and responsible for us to await the report. We shall then be in a much better position to produce proper solutions.
      Mr. Clinton Davis: That will be five years.
      Mr. Eyre: The hon. Gentleman is judging it against the time scale of the inaction of his Government. When he was in the Department of Trade in charge of company law, he did not act for about four years on company matters.
      Mr. Clinton Davis: That is quite wrong. There were Companies Bills in 1976 and 1978. The 1978 Bill was frustrated by the will of the House as a whole. I could never understand why it did not want the Bill enacted rather than have an election. That seemed totally absurd. The Minister was wrong to suggest that there will be a shorter time scale in this case. By virtue of the difficult concepts that will be embraced by the Cork committee, it will take a long time for the matter to be considered.
      Mr. Anderson: As the Minister reacted so vigorously to the suggestion that this will take five years, will he assist the House by giving an indication of when the report is expected, let alone when there will be legislation based upon it?
      Mr. Eyre: I am pleased to tell the House that the report is expected later this year. It is my intention that there should be legislation to deal with certain outstanding problems, and I believe that we will be helped by the committee's report on those matters. Certainly the legislation will take place in less than five years.
      I do not wish to be unfair to the hon. Member for Hackney, Central, because what he said illustrated the complexity of dealing with these matters. To get the important legislation right, we must have regard to the reports of expert committees. It is important that proper

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      consideration should be given to the terms of those reports and that proper consultation with all the parties affected by the legislation should be held. We shall do that as quickly as we can to deal with certain problems. In the meantime, I recommend hon. Members to resist and reject the proposals in the new clauses.
      Mr. Archer: A profound change came over the debate literally in the closing minutes. At the end of the Under-Secretary's speech it became clear that there was just one individual on the Government Benches who had grappled with the problem. Not one other speech from the Government Benches gave any indication that anyone else had appreciated the problem to which we are addressing our minds. The problem is that there are companies which trade through subsidiaries; the subsidiaries accumulate mountainous debts and the holding company then departs, leaving the company to go into liquidation and the creditors to grieve for their losses. That is the problem.
      If an individual does that, he may, in certain circumstances, at least be disqualified from acting as a director in future. But we cannot apply that sanction to companies. If an individual has been guilty of fraud he may be dealt with, but we may not be discussing fraud. We may not even be discussing culpability. The objection is to holding companies being prepared to accept whatever proportion of profits they can lay their hands on while seeking an avenue of escape from any of the risk.
      We had a succession of objections from Government Members to our proposals. The hon. Member for Grantham (Mr. Hogg) said that our proposals were oppressive to holding companies because, as he said, they might become liable for debts over which they had exercised no control and for which they were not to blame. I fully accept that. Our proposals do not rest on control or culpability. They rest on the fact that a holding company is prepared to take profits without risk but seeks to impose a limit on its losses.
      I take the point of the hon. Member for Grantham that our proposals might entail a holding company being liable for debts that had been incurred before
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      the date on which the holding company acquired its interest. That is a fair point and we are certainly prepared to listen to any solution that might emerge. But one does not eject the baby with the bathwater. Because that problem exists, it does not follow that the whole of our proposals should be scrapped.
      Mr. Nicholas Baker: I wonder whether the right hon. and learned Gentleman could explain how a holding company could be said—in the words he has just used—to be taking all the profit out of a company where, for example, it owns only 25 per cent. of the shares.
      Mr. Archer: I thought that what I said—I was listening to myself, at least, and we can check it in Hansard—was that a holding company takes all the profits which it can lay its hands on. Of course, it cannot take a higher proportion of the profits than the proportion it has of the equity capital. But holding companies are prepared to take all the profits they can lay their hands on while seeking an avenue of escape from the risk of losses. That is the point that I was making.
      As to the objection of the hon. Member for Grantham, we would be prepared to listen to solutions to that problem.
      Mr. Keith Stainton: The right hon. and learned Gentleman is wrong. There could be an agreement between the said holding company and the subsidiary company in respect of the shareholding. By that process the holding company could take the bulk of, if not all, the profits. That illustrates and underlines the complexity of the matter to which my hon. Friend the Minister drew attention and the need to move with great caution and deliberation.
      Mr. Archer: I should have thought that that underlined the force of our argument. We could perhaps argue about the relevance of the perfectly proper point made by the hon. Member for Sudbury and Woodbridge (Mr. Stainton). Clearly, all sorts of deals can be done behind the backs not only of the shareholders but of the creditors, and we are particularly concerned here with the creditors. The very fact that such deals can be done behind the creditors' backs emphasises the need to protect them.

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      The hon. Member for Wolverhampton, South-West (Mr. Budgen) had another objection. He said that this proposal would discourage a company from investing risk capital. I fully accept that. However, I thought that the question put by my hon. Friend the Member for Hackney, North and Stoke Newington (Mr. Roberts) was very relevant. It is easy to talk about risk capital, but whose risk are we talking about? We are talking about the risk to the creditors. It is easy for us all to take risks with other people's money.
      We really come back to the concept of limited liability. We discussed this on Second Reading. Limited liability is a substantial concession, an inroad on the basic rule of law that people are responsible for the debts that they incur. Limited liability says that in certain circumstances people may try for the profits, but if debts are incurred in the process they will not be liable up to the limit for those debts. In certain circumstances they can leave the creditors to whistle.
      9.30 pm
      I am not objecting to the concession being made. It is a fundamental part of our law and it exists for good reasons. However, we are entitled to make it subject to proper safeguards. The hon. Gentleman's objection is that people will not be prepared to take risks with other people's money if they may have to meet the consequences out of their own pockets. Surely, there is nothing basically wrong with that.
      The creditors that we are speaking about may not be wealthy financiers or large companies. They may be individual customers who have answered an advertisement in the evening newspapers. They may be small companies which are not in a position to lose their money.
      The hon. Gentleman produced another objection. He said that the provision is not needed because an honourable holding company will pay without any such provision. The answer to that is "In those circumstances, why should we not include the provision?" If we are talking about honourable holding companies which will pay in any event, surely they will not object to such a provision. If we are talking about dishonourable holding companies, or companies which claim
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      that they are entitled to evade their obligations as a matter of law, it is for such companies that we are legislating.
      My hon. Friend the Member for Hackney, Central (Mr. Davis) was taken to task for the example that he gave. It was argued that the holding company coughed up under pressure. The important words were "under pressure". In my hon. Friend's example, a great deal of pressure had to be applied before the money was disgorged by the holding company.
      If I may say so, the hon. Member for Dorset, North (Mr. Baker) fell below the standards that we have come to expect from him.
      Mr. Budgen: A very high standard.
      Mr. Archer: Indeed. However, on this occasion I think that he fell below his usual standard. His basic argument was "Because you were not sure of getting one clause right, you stuck three in." That is not true as a matter of fact. We offered three possible solutions to the problem. If the Government had said "We do not like this solution and that solution but we accept your third one", we would have been happy. Surely, we cannot be criticised for offering three possible solutions.
      I am not sure that the Under-Secretary of State met our arguments head on as he is accustomed normally to do. He took refuge in defective draftsmanship. We are prepared for our draftsmanship to be corrected, though if we are to swap allegations of that sort the Government's record throughout the Bill's passage is not beyond criticism. I am not sure why they should have a monopoly of defective draftsmanship.
      The Minister argued that we did not provide for the situation in which deficiencies stem from a subsidiary of a subsidiary. That was not something that we overlooked. We did not want to make the debate too complicated. We knew that if we managed to persuade the House of our case the draftsmen would be able to meet us subsequently.
      The Minister advanced two real objections to our proposals. First, he said that it would not help to talk about giving notice in relation to contractual obligations because the holding company would not know about every contract that the

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      subsidiary made. That may be so. We thought that we would give it an oportunity where it was aware that there was a contractual obligation. If the holding company is happy to accept profits when it has not directed its mind to the contracts, it can hardly complain if it is landed with the losses that are sometimes incurred. If it is prepared to benefit from its ignorance, it can hardly plead its ignorance as a defence against being landed with the losses.
      I do not believe that the Government think that there are no difficulties. If I had not turned over three or four pages of my notes at once, I was going to quote what the Minister of State said in Committee on 11 December. I did not have the quotation before me because I had turned over three pages at once. At that stage the Minister of State said that section 332 had its problems. I am sure that he would not seek to resile from that comment. My attention has now been drawn to the passage to which I referred. As I paraphrased it, I do not need to delay the House by reading it.
      The other objection advanced by the Minister was that the threshold was too low. He said that we should not land a holding company with all the debts of the subsidiary if the holding company owned only 25 per cent. of the equity capital and received only 25 per cent. of any profits. I do not think that we would go to the wall on 25 per cent. We could probably do a deal about the appropriate proportion if the Government said what proportion of the profits a person should be able to claim before he should bear the losses and not leave the creditors with them. We could probably meet that halfway.
      "We are waiting for the Cork report." This is not the first time that we have heard those magic words. Let more creditors meanwhile be left to stew in their own juice until Cork reports. I am not sure that that is a complete answer to every problem. All Governments do it. They wait for whatever it is—the Royal Commission, the inquiry, the interdepartmental committee report. This is not a complete solution to every problem.
      New clause 8 represents what is reported to be the solution preferred by Sir Kenneth himself. I am not sure whether the report is accurate. We attempted to
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      paraphrase what was reported as his preferred solution.
      We do not complain that we have been taken to task for defects of which we may have been guilty. We complain that the contributions by Government supporters did not show any appreciation of the problem. If they demonstrated that they appreciated the problem, perhaps we could discuss the solution. As they did not do so, we must agree to differ and let it be so recorded.
      Question put and negatived.

    New Clause 10

      DISGORGEMENT
      'Any person who contravenes the provisions of sections 65 or 66 of the Act shall be deemed to be a trustee of the company in respect of any profit which he may take as a result of such contravention'.—[Mr. Archer.]
      Brought up, and read the First time.
      Mr. Archer: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker (Mr. Richard Crawshaw): With this it will be convenient to take the following amendments:
      No. 114, in clause 68, page 81, line 39, leave out subsection (3).
      No. 115, in page 81, line 41, at end insert
      'but the obligation to comply with these sections are duties owed to any person who may suffer loss by a contravention of them and any breach of such duty is actionable accordingly subject to the defences and other incidents applying to actions for breach of statutory duty'.
      Mr. Archer: We have on occasion debated, as we shall debate tomorrow, provisions that make it a criminal offence to make an improper profit by insider dealing. However, the question arises whether the offender should be permitted to bury his ill-gotten gains so that when his sentence is served and the heat is off he may return, dig them up and enjoy them. The Opposition believe that if the offender and gains are identified he should be made to disgorge them. It is not a unique proposal. There are many situations in which the criminal courts have power, after a conviction, to order restitution of the loot.

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      In Committee my hon. Friend the Member for Swansea, East (Mr. Anderson) pointed to section 35(2) of the Restrictive Trade Practices Act 1976, which provides that
      "the obligation to comply with that paragraph is a duty owed to any person who may be affected by a contravention of it and any breach of that duty is actionable accordingly subject to the defences and other incidents applying to actions for breach of statutory duty."
      The author of an article on insider trading in the Law Society's Gazette of 6 February argues that as the real purpose of the insider provisions is to prevent a general undermining of confidence among investors, the question of restitution to the individual who suffered is of secondary importance. I am not sure that I follow that argument, even given the premise. One way of bolstering the confidence of investors, surely, is to assure them that they will not be left, directly or indirectly, to bear their individual losses. One way to deter wrongdoers from undermining these operations is to persuade them that they will not be allowed to retain their profits.
      The principle appears to us to be so clearly what justice requires that we waited to see what was the Government's objection to our proposals. The explanation of the Minister of State in Committee was admittedly rather different from the objection advanced by the learned author of the Law Society's Gazette article. The Minister said that the difficulty was to link the person who made the profit with the person who made the loss. The question that the hon. Gentleman asked was, how does one show that a person is poorer by the amount represented by the profit?
      Our first answer is fairly simple and obvious. Why not permit the victim to recover if he can establish that he has suffered a loss and that it is related to the wrongdoer's gain? When such a relationship cannot be established, there need be no cause of action. The Government seemed to go out of their way to reject that solution even where a relationship could be established between the loss and the gain. In Clause 68(3) the Government provide that
      "No transaction shall be void or voidable by reason only that it was entered into in contravention of section 65 or 66 above".
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      Our amendment No. 114 proposes simply to delete those words and, having provided a clean sheet, to substitute the words in our amendment No. 115. That is one possible solution to the difficulty. We would want to provide that if someone can establish that there is a wrong by an indentifiable wrongdoer, that there is a loss suffered by an indentifiable victim and that there is a clear relationship between them, the wrongdoer should have to disgorge his loss to the victim. We accept that if he cannot relate the loss to the profit, that provision will not apply. Not everyone in every situation will be able to establish a cause of action. That does not seem to be a reason for denying the remedy to someone who can establish it. Often, the victims of accidents leading to personal injuries find difficulty in establishing a right to compensation. No one suggests that the answer to the problem is to abolish the right of action for damages for personal injury.
      If that solution does not commend itself to the Government, we are not dismayed. As in the last debate, we have an alternative solution. I hope that we shall not be criticised again for putting forward alternative solutions and that it will not be suggested that this represents a weakness in either of them. Our alternative solution is to suggest that the wrongdoer should be compelled to disgorge his loot to the company. That is the purpose of new clause 10, which we see as an alternative to amendments No. 114 and No. 115.
      In Committee the Minister of State objected that the company might not have suffered any identifiable loss. He said that disgorgement would simply be a windfall to the company. We make two answers to that argument. First, we believe that the company is always damaged by insider dealing. It is damaged in its reputation and in its future dealings. It is damaged in the credit that people are prepared to offer to it and the confidence that they are prepared to repose in it.
      We are comforted by the support of the New York court of appeal in the case of Diamond and Oreamund in 1969 quoted in Committee by my hon. Friend

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      the Member for Hackney Central (Mr. Davis). In that case, it was said, admittedly obiter, that insider dealing inevitably undermined public regard for a company's shares. A company simply would not be receiving a clear profit or an undeserved windfall. It would be compensated for a loss even if it were not a readily quantifiable loss.
      9.45 pm
      Secondly, if the offender is seen as a trustee for the company, it does not matter much whether or not the company has suffered a loss. If a trustee uses his position to make a profit for himself, normally the beneficiary is entitled to that profit. It is not a question of compensating the beneficiary for a loss. The question is, who should benefit from the profit? We are fortified by the fact that that was pointed out in Committee by the right hon. Member for Crosby (Sir G. Page). That is what the clause seeks to provide.
      If someone offends against the insider provisions, we see no reason why he should pay the penalty but still retain his swag. Those are our arguments. We have not yet heard the arguments against.
      Mr. Parkinson: As the right hon. and learned Member for Warley, West (Mr. Archer) said, we debated these subjects in Committee. I expressed the view in Committee that I was not opposed to sensible, workable, civil remedies if they could be properly defined, but I pointed out that the Government had decided that insider dealing was a public wrong and that the right remedy lay in making it a criminal offence and seeking punishment through the criminal law.
      I did not offer my statement about sensible, workable remedies as a way of getting out of the Committee stage; I made it as an offer to the right hon. and learned Gentleman and I looked forward to seeing how he and his colleagues would respond to it on Report. Their attempt to produce sensible, workable remedies has strengthened my conviction that we are right to treat insider dealing as a criminal offence, because I do not think that the remedies proposed by the right hon. and learned Gentleman are sensible. By the time I have explained my reasons for that remark, I hope that he will agree with me.
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      I know that in some countries there has been an attempt to link civil remedies with the criminal law in this area. While we must not turn our backs on the experience of other countries, I do not think that because other people do it it is necessarily right or valid in the circumstances of our company law.
      The main case is clause 65, which covers insider dealing in relation to stock exchange transactions. As I said in Committee, in practical terms it is not possible to link buyers and sellers in a meaningful way so as to provide for civil remedies. In stock exchange transactions it is the jobber who makes the market and people are dealing not directly with each other but through the jobber. It is therefore difficult to forge a direct link between the person who sold a block of shares and the person who bought that block of shares, because the shares have been through the market and through the jobber's hands in the interval. That is one of the difficulties of linking up the two parties to the transaction in clause 65.
      The Goverment's approach to the problem is to say that they agree that this should be a criminal offence and the punishment should be, first, the possibility of prison and, secondly, the possibility of a substantial fine, so that there is a way of robbing the person who makes the profit and of putting the proceeds into the Exchequer for the benefit of the public, because we believe that it is an offence against the public rather than against the individual.
      That is the heart of the matter. The legislation contains all the powers needed to make criminal sanctions an effective penalty. The person who makes a gain—which will become an illegal gain if the Bill becomes law—cannot put away his profits and serve his time in gaol in the happy knowledge that the profits are waiting for him. We have built into the law the ability for the courts to strip him of that profit and to ensure that he does not benefit financially from his activities.
      There is a difficulty in linking the criminal with the person from whom he has made the gains. The way round the problem is to treat it as a criminal offence and to take away the profit by means of a fine.
      It is against that background that I turn to the new clause. It operates as

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      an extension of the existing equitable rules. It is established in cases such as Boardman v. Phipps that those who have a fiduciary duty of good faith to a company, such as directors, employees and certain professional advisers, have to account to the company for any profit that they make by reason of the information belonging to the company that they possess, and that it is a duty to account for profits made and not a liability to pay damages for loss.
      Frequently, in insider dealing cases the company will suffer no loss as it cannot deal in its own shares. The hon. Member for Hackney, Central (Mr. Davis) attempted to argue in Committee that the company suffers a loss because an insider deal damages the company's name and reputation and undermines public regard for the company's securities. He demonstrated the extent of his knowledge by quoting an obiter dictum in the New York court of appeal in 1969.
      There have been more solid foundations on which to build a major case for a change in the law. A chance remark made in a relatively minor court in New York 11 years ago, which nobody else has seen fit to take up or develop, was held up by the hon. Gentleman as a major reason why we should make a change in our law. I have found more convincing cases.
      Mr. Clinton Davis: The Minister's extraordinary arrogance is quite uncharacteristic of him. It is an impertinence. A reputable court of appeal in New York considered the matter. It was not a chance remark but a highly considered judgment. The hon. Gentleman should not get away with that sort of rubbish.
      Mr. Parkinson: One of my hon. Friends put his finger on the matter by saying that the hon. Member for Hackney, Central was showing off. I am sure that it was an earth-shattering event when the judge made his obiter dictum 11 years ago, but no one other than the hon. Gentleman appears to have been moved by it.
      Mr. Archer: If my hon. Friend the Member for Hackney, Central (Mr. Davis) and I withdraw the reference to the New York court of appeal, will the Minister accept that our statement was patently, self-evidently, obvious?
      Mr. Parkinson: The hon. Gentlemen deny themselves the only support that they have found to date. The new clause is based on the present law, but it goes far beyond that. It talks of a "trustee for the company" without specifying which company.
      I cite a simple case that could arise under clause 65(2). A person connected with company A—perhaps its managing director—knows that it is about to make a takeover bid, well above the market price, for company B. He buys shares in company B to make an improper profit for himself. Is he to be a trustee for company A, the company with which he is connected, or company B, the company in whose securities he dealt? Th new clause is silent on that question. I suggest that that is a major defect in it.
      Again, the new clause covers contraventions of clause 66, which deals with Crown servants. Let us suppose that a Crown servant knows that certain duties are to be removed from, say, tobacco and he buys the shares of a tobacco company before the announcement. The new clause would make him a trustee of his profits, not for the Crown whose information he had misused but for the company whose shares he had bought. That cannot be right.
      The new clause talks of
      "profit which he may take".
      But what happens if he is dealing as an agent for a family trust of which he is not a beneficiary? Is there to be no obligation to account because he himself has taken no profit? Again, the new clause seems to have no application if he counsels a person to deal, although counselling is an offence. Similar arguments apply in the case of procuring and passing information.
      I suggest that the right hon. and learned Gentleman forgets about the New York court of appeal and realises that, even if one strips him of that most valuable evidence and support, the new clause is defective for the reasons that I have just given.
      Amendment No. 114 proposes the omission of clause 68(3). That subsection provides:
      "No transaction shall be void or voidable by reason only that it was entered into in contravention of section 65 or 66 above."

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      We thought very carefully about the amendment, but we think that it would cause total and utter chaos in the markets. I should like to explain why. Person A sells shares to person B. Person B does not know that any offence has been committed, person A being the insider. He passes on the shares to person C. That person has quite legitimately dealt in the shares. If the amendment were to be accepted, the whole transaction would have to be unscrambled, and person C, a bona fide purchaser for value, could, through no fault of his own, find himself involved in a voidable transaction. I suggest that such uncertainty introduced into the markets would cause chaos and confusion. In truth, that is why subsection (3) was inserted.
      We believe that it is wrong that an innocent third party should be affected if he has made a perfectly straightforward transaction. Therefore, we believe that subsection (3) was properly inserted in the Bill and that if it were omitted it would do considerable damage. From the way in which the right hon. and learned Gentleman is nodding—I hope that I read him right—I take it that our objections are valid.
      Mr. Archer: As the hon. Gentleman has referred to the way in which I was inclining my head, I should point out that we could restore subsection (3) without affecting the validity of the rest of our argument.
      Mr. Parkinson: As the amendment seeks to remove subsection (3)—and that is the issue which we are debating—I am glad to have the right hon. and learned Gentleman's agreement that it should stay in the Bill.
      As a result, I can move on to amendment No. 115, which is the final amendment in this group. It arises from a point which the hon. Member for Swansea, East (Mr. Anderson) raised in the debate when he talked at some length and interestingly about the provisions of section 35(2) of the Restrictive Trade Practices Act 1977. I have already explained why we feel that this attempt to introduce civil remedies into this area of insider dealing is one of which we do not approve.
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      However, I should like to deal with the specific point which I regard as a major defect in the hon. Gentleman's thinking and in his trying to equate the restrictive practices legislation with the insider dealing legislation. On conviction, the court has the power to impose an unlimited fine. Thus, there is a clear, effective means for ensuring that the insider is deprived of his illicit profits.
      By contrast, section 35(2) of the Restrictive Trade Practices Act provides civil remedies for breach of duty, after specifically ruling out criminal sanctions. That underlines the major difference between those two cases. Under the restrictive practices legislation, criminal sanctions are ruled out and civil law is pointed to as the right course for seeking a remedy.
      It being Ten o'clock, the debate stood adjourned.
      Ordered,
      That, at this day's sitting, the Companies Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Berry.]
      Question again proposed, That the clause be read a Second time.
      Mr. Parkinson: We have specifically said that criminal sanctions should be the right approach. We have pointed in that direction. To that extent, the two cases are different, and I do not think that the restrictive practices legislation is as relevant as the hon. Member for Swansea, East indicated in Committee.
      For the reasons that I have explained, we have firmly reached the conclusion that insider dealing is an offence against the public and, therefore, the correct penalty for it is a criminal sanction and conviction in serious cases, with substantial fines. We believe that there are practical difficulties of the sort that I have outlined in seeking to line up civil sanctions and civil rights with those criminal sanctions. I urge the House to reject the Opposition's proposal.
      Mr. Anderson: The Minister concluded his remarks by citing my attempt to import the formula into the Restrictive Trade Practices Act 1976 in an attempt

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      to find a proper formula for civil remedy. He said that it was inappropriate, because criminal sanctions were expressly ruled out in that Act. In his view there were adequate criminal remedies under the insider trading provisions put forward by the Government. I suggest that that is not so, and I hope to show that the formula on which the Government rely—that there are adequate criminal remedies available—is open to doubt.
      The Committee then discussed the general area of disgorgement and civil remedies, and the question of whether civil remedies might have been even more appropriate and more effective than the criminal remedies that the Government proposed. In clause 68 (3), the Government have expressly ruled out civil remedies by making such transactions neither void nor voidable. One might almost say that the Government do not accept that there is a problem in respect of civil remedies. By contrast, the Opposition have sought to provide for civil remedies by way of assistance by every possible formula—either by way of the Restrictive Trade Practices Act, by using the formula of breach of statutory duty from that Act, or by using the concept of a trustee, which the Minister has expressly excluded.
      Essentially, the Minister's argument was that the offence of insider dealing is by its nature a public offence, and therefore the remedy must be via criminal law. We must therefore ask ourselves whether the criminal sanctions that are proposed by the Government are sufficient to make insider dealing a practice that is not worthwhile.
      The whole basis of the Government's approach rests on their assumption that criminal sanctions are an effective remedy. I hope to show that there are considerable deficiencies in compensation in criminal cases, which might lead one to suspect that the Government have not properly thought through the difficulties.
      For example, if an offence of insider dealing is committed on many occasions there may in a criminal indictment be a specimen count. One knows that compensation has to be linked to a specific offence that is proved or admitted. Hence,
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      if there are several counts in an indictment, some of which will almost certainly be stronger than others, leading counsel may well advise that a plea be accepted perhaps to one of these counts, particularly when the Government have created an enormous obstacle race towards the possibility of any successful criminal prosecution. With that offer, leading counsel, seeing the possibility of a plea on the most strong of several counts that may be in the indictment, will almost certainly heave a mighty sigh of relief and accept the one, feeling that the chance of succeeding on the others is remote and that he might possibly even not succeed on that one if he pressed ahead with the prosecution. It may suit the Crown to do so, if only to obtain at least one conviction. The unlikelihood of a conviction was mentioned earlier, given the extremely technical nature of the offence that the Government have set out and the general desire to simplify proceedings.
      A further difficulty, which I suspect the Government have not thought through in their total reliance on criminal proceedings, is that the defendant may not accept offences to be taken into consideration, or the evidence may well not be sufficient for such offences to stick. If that is so, and since compensation in criminal cases must relate specifically to offences that are proved or admitted, there will be no possibility of compensation in respect of those matters that might well have been taken into consideration.
      A further factor, which again I suspect the Government have not properly thought through, is the difficulty of obtaining compensation in the criminal courts in any event. I do not need to underline the problem at length, but on numerous occasions the Court of Appeal has said that the criminal courts are not the proper courts for compensation, save in the most straightforward of cases. Powers are available under the Powers of Criminal Courts Act 1973, section 35.
      However, it has been underlined again and again by the Court of Appeal that these powers of compensation in criminal cases are a quick and simple machinery that should only be used when dealing with claims in straightforward cases. There is ample authority to support that,

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      and I rely on the case of Daly, reported in 1974, 1 All England, at page 290, and the case of Lester, reported in the Criminal Appeal Reports 144, at page 146.
      Further, the Court of Appeal has said that the loss or damage must fairly stem from the offence, and the court should hesitate to embark on any investigation of complicated issues of fact. The authority for that is the case of Kneeshaw, reported in 1973, 1 All England, at page 89.
      By their nature these prosecutions in respect of insider dealing must be complicated issues of fact. That underlines the shaky basis on which the Government rest in suggesting that compensation can adequately be dealt with by means of the criminal law. We should therefore conclude that compensation cannot be pursued as effectively as the Government have maintained through the criminal courts.
      What are the positive advantages of a civil remedy? The very nature of the standard of proof in civil proceedings is an advantage. One need look only at the clauses that follow clause 65 in order to realise the virtual impossibility of successful prosecution. In criminal cases the burden of proof means that the case must be proved beyond all reasonable doubt. That will scupper any chance of success in the criminal courts. However, in civil proceedings the standard of proof falls upon the balance of probabilities. It is therefore more likely that a defaulter will have to disgorge that which he has improperly obtained.
      Civil proceedings are more appropriate to the insider trading provisions. That is emphasised by the self-interest factor. The only appropriate trigger mechanism for bringing a case of insider dealing to the attention of the courts is that of the aggrieved individual's self-interest. If he finds that he may gain as a result of bringing it to the attention of the authorities he will do so. He will recognise the impossibility of successful prosecution under criminal law. He is likely to cooperate with the authorities only if civil proceedings are involved, where a different standard of proof is used.
      Mr. Nicholas Baker: Does the hon. Gentleman agree that civil remedy might
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      give rise to an excess of highly undesirable litigation?
      Mr. Anderson: That is a possible objection. One does not know. If litigation were vexatious or frivolous the court would have remedies to stop it. However, if insider dealing is wrong, it should be stopped. We should therefore provide a proper remedy. The Government have not provided a proper remedy with which to attack this practice.
      If the Minister wishes to look at the balance of consideration between civil and criminal proceedings, he should examine sections 48 and 49 of the Companies Act 1948. I also commend him to examine section 54 of that Act. That section refers to purchasing shares. There is a civil remedy that a director must recoup the company for any loss. If we say, as we do, that insider dealing is wrong, why should there not be a civil sanction?
      The Minister was very scathing about the United States court of appeal.
      Mr. Parkinson: I referred to the New York court of appeal.
      Mr. Anderson: Is the Canadian Parliament worthy of any more respect? I only pray that the the term of office of the previous Conservative Government in Canada will be reflected in Britain.
      10.15 pm
      The Canadian Dominion Companies Act 1952 makes it an offence for a director to speculate in any of the company's securities. I accept that it is not wholly clear whether a civil remedy is available in those circumstances, but in Canada it was accepted that these provisions were inadequate. The Kimber committee was appointed, which recommended that it was improper for an insider to use confidential information in order to make profits by trading in his company's securities. The committee recommended that there should be full and public disclosure of all transactions effected by insiders in their companies' securities, and, more important, that there should be remedies for failure to make disclosures, and rights of action for the company concerned and the shareholders in respect of certain improper transactions.
      These recommendations of the Kimber committee were enacted by the Securities

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      Act 1966 and, in the province of Ontario, by similar provisions in the Ontario Corporations Act. Thus, in addition to disclosure provisions comparable to those in the Companies Act 1967, the Canadian Act provides that if an insider makes use of any confidential information for his own benefit or advantage, which, if generally known, might reasonably be expected to affect the price of the shares, he must compensate any person or company for loss suffered as a result of that transaction, unless that person knew or should have known of the information. In addition—and this is the relevant aspect of our new clause concerning the trustee provision—he is accountable to his company for any benefit or advantage that he has gained through the use of such information. Having been so scathing about a New York appellate court, perhaps the Minister, who is a Commonwealth man, will have more respect for a Dominion court in this case.
      Who should have the benefit? One accepts that there are real difficulties in civil remedies. One must consider the effect of saying whether the company as such has suffered a loss, and the danger that the offending insider might be a substantial shareholder in the company and therefore might indirectly gain from any compensation that might be obtained from the company. There are difficulties too, following the rule in Foss and Harbottle, of shareholders taking action. This is a real problem, which the Government have not fully taken on board. The problem has not been solved by the Government's proposals, which rely wholly on the criminal remedy. We believe that they have not fully thought through the drawbacks that inevitably result from that dependence.
      Mr. Douglas Hogg: I wish to give limited support to the proposal made by the hon. Member for Swansea, East (Mr. Anderson). If one looks at the concept of insider dealing one sees at once that the objectionable aspect of such dealing is that it is an abuse of a fiduciary relationship. If one looks at section 66 one sees that what is described is essentially a fiduciary relationship.
      The courts have long recognised that people who abuse a fiduciary relationship should have to account for what the law
      1286
      calls their secret profit. This arises in many fields. For example, if an employee misuses his employer's money and makes a secret profit he is liable at law to account for that profit to his employer. Similar considerations apply to a trustee who misuses a beneficiary's money and makes a secret profit. He is liable to account to the trust. Therefore, there are very good precedents. I find it rather difficult to distinguish between the principles advanced by Labour Members on this matter and the principle that the courts have long applied to cases where a fiduciary relationship has been abused.
      Mr. Nicholas Baker: Does my hon. Friend agree that there is a difficulty in deciding what is a fiduciary relationship? In suggesting that the person in question should be a trustee of the company, new clause 10 is not anywhere near touching the core of the problem.
      Mr. Hogg: I do not agree with that, though it is an interesting point. If one examines the categories of people who may not embark on what we have described as insider dealing, I think that with all of them the relationship that exists between them and the company to whose information they are privy is essentially a fiduciary relationship. Therefore, I believe that it is unwise to ignore existing precedent which justifies the proposals being made by Labour Members. I must also say—
      Mr. Parkinson: Has my hon. Friend read the proposals being made by the Opposition? We are not discussing the general question whether we ought to be thinking of making changes. We are discussing specific proposals on Report for changing the Bill. None of the three suggestions that have been outlined stands up. I hope that that is the point to which my hon. Friend will address his mind.
      Mr. Hogg: My hon. Friend the Minister is getting a little impatient. The point that I am making is that we must recognise that there is merit in what Labour Members are saying. We must look at the precedent and consider the likely effects and then decide whether the proposals are good or bad.
      I believe that there is a great deal of merit in the proposals, and what I was about to say to my hon. Friend was not

      1287
      that I will vote against him today but rather that he would be wise to look at this matter afresh. I find the argument attractive. I was about to conclude, before I was interruped, by saying that one of the most attractive features of the argument put forward by the Opposition is the deterrent effect. I entirely agree with the hon Member for Swansea, East on that point.
      Mr. Clinton Davis: I entirely adopt the remarks of the hon. Member for Grantham (Mr. Hogg). There is a real issue here and it was incumbent upon the Government to grapple with it. They have declined to do so and are relying upon criminal sanctions exclusively. My hon. Friend the Member for Swansea, East (Mr. Anderson) has already explored that argument and dealt most effectively with the difficulty about whether such sanctions are an appropriate deterrent.
      The Minister was uncharacteristically arrogant and dismissive about these points, which were also made emphatically in Committee by the right hon. member for Crosby (Sir G. Page). By implication, therefore, the Minister was being dismissive of the remarks of his right hon. Friend as well. That attitude is without justification. There is a problem here, and it is no use the Minister's
      hiding behind the argument of defective draftsmanship.
      The Government should put forward their own propositions. The situation demands that the Government should act but the Minister has been so idle and inert over this problem—or too busy with the 150 amendments correcting his own mistakes—that he has missed this important issue altogether. In view of the totally unsatisfactory way in which the Government have dealt with this argument the Minister has earned our contempt for the way in which he has dealt with the matter and his dismissive attitude towards the New York court of appeal. There will be another obiter dicta dealing with that in due course.
      The Minister totally ignores the experience of United States federal law, the Canadian experience and the New South Wales Securities Industry Act, all of which have dealt with these matters. Perhaps there were difficulties, but we tried to deal with them. The Government have chosen not to try at all. For that reason we believe that we are right in seeking to force a Division on this matter.
      Question put:—
      The House divided: Ayes 140, Noes 194.

      Division No. 197]

      AYES

      [10.24 pm

      Anderson, Donald

      Douglas-Mann, Bruce

      Horam, John

      Archer, Rt Hon Peter

      Duffy, A. E. P.

      Howells, Geraint

      Beith, A. J.

      Dunn, James A. (Liverpool, Kirkdale)

      Hudson Davies, Gwilym Ednyfed

      Benn, Rt Hon Anthony Wedgwood

      Dunnett, Jack

      Hughes, Robert (Aberdeen North)

      Bennett, Andrew (Stockport N)

      Dunwoody, Mrs Gwyneth

      Hughes, Roy (Newport)

      Booth, Rt Hon Albert

      Eadie, Alex

      Janner, Hon Greville

      Brown, Hugh D. (Proven)

      Eastham, Ken

      Jones, Rt Hon Alec (Rhondda)

      Brown, Ron (Edinburgh, Leith)

      Edwards, Robert (Wolv SE)

      Jones, Barry (East Flint)

      Callaghan, Jim (Middleton & P)

      Ellis, Raymond (NE Derbyshire)

      Kilroy-Silk, Robert

      Campbell-Savours, Dale

      Ellis, Tom (Wrexham)

      Lambie, David

      Carmichael, Neil

      Evans, Ioan (Aberdare)

      Lamborn, Harry

      Carter-Jones, Lewis

      Evans, John (Newton)

      Lamond, James

      Clark, Dr David (South Shields)

      Ewing, Harry

      Leighton, Ronald

      Cocks, Rt Hon Michael (Bristol S)

      Field, Frank

      Lewis, Ron (Carlisle)

      Cohen, Stanley

      Fletcher, L. R. (Ilkeston)

      Lofthouse, Geoffrey

      Conlan, Bernard

      Fletcher, Ted (Darlington)

      Lyons, Edward (Bradford West)

      Cook, Robin F.

      Foster, Derek

      Mabon, Rt Hon Dr J. Dickson

      Cowans, Harry

      Foulkes, George

      McCartney, Hugh

      Craigen, J. M. (Glasgow, Maryhill)

      Fraser, John (Lambeth, Norwood)

      McGuire, Michael (Ince)

      Cryer, Bob

      Freeson, Rt Hon Reginald

      McKay, Allen (Penistone)

      Cunliffe, Lawrence

      Gilbert, Rt Hon Dr John

      McKelvey, William

      Cunningham, George (Islington S)

      Ginsburg, David

      MacKenzie, Rt Hon Gregor

      Dalyell, Tam

      Gourlay, Harry

      Maclennan, Robert

      Davies, Ifor (Gower)

      Graham, Ted

      McMahon, Andrew

      Davis, Clinton (Hackney Central)

      Hamilton, James (Bothwell)

      McNamara, Kevin

      Davis, Terry (B'rm'ham, Stechford)

      Hamilton, W. W. (Central Fife)

      Marshall, David (Gl'sgow, Shettles'n)

      Dean, Joseph (Leeds West)

      Harrison, Rt Hon Walter

      Marshall, Jim (Leicester South)

      Dempsey, James

      Haynes, Frank

      Mason, Rt Hon Roy

      Dewar, Donald

      Heffer, Eric S.

      Maynard, Miss Joan

      Dixon, Donald

      Holland, Stuart (L'beth, Vauxhall)

      Mikardo, Ian

      Dobson, Frank

      Home Robertson, John

      Millan, Rt Hon Bruce

      Dormand, Jack

      Homewood, William

      Miller, Dr M. S. (East Kilbride)

      Douglas, Dick

      Hooley, Frank

      Mitchell, R. C. (Soton, Itchen)

      Morris, Rt Hon Charles (Openshaw)

      Robertson, George

      Thomas, Jeffrey (Abertillery)

      Morton, George

      Rooker, J. W.

      Thomas, Dr Roger (Carmarthen)

      Moyle, Rt Hon Roland

      Ross, Ernest (Dundee West)

      Wainwright, Edwin (Dearne Valley)

      Oakes, Rt Hon Gordon

      Ross, Stephen (Isle of Wight)

      Walker, Rt Hon Harold (Doncaster)

      Orme, Rt Hon Stanley

      Sever, John

      Welsh, Michael

      Palmer, Arthur

      Silkin, Rt Hon John (Deptford)

      White, Frank R. (Bury & Radcliffe)

      Parker, John

      Silverman, Julius

      Williams, Rt Hon Alan (Swansea W)

      Parry, Robert

      Smith, Cyril (Rochdale)

      Wilson, Rt Hon Sir Harold (Huyton)

      Pavitt, Laurie

      Smith, Rt Hon J. (North Lanarkshire)

      Winnick, David

      Penhaligon, David

      Soley, Clive

      Woodall, Alec

      Powell, Raymond (Ogmore)

      Spearing, Nigel

      Woolmer, Kenneth

      Prescott, John

      Spriggs, Leslie

      Young, David (Bolton East)

      Race, Reg

      Stallard, A. W.

      Rees, Rt Hon Merlyn (Leeds South)

      Steel, Rt Hon David

      TELLERS FOR THE AYES:

      Richardson, Jo

      Stoddart, David

      Mr. Donald Coleman and

      Roberts, Ernest (Hackney North)

      Thomas, Dafydd (Merioneth)

      Mr. James Tinn.

      NOES

      Adley, Robert

      Goodhew, Victor

      Mudd, David

      Aitken, Jonathan

      Goodlad, Alastair

      Murphy, Christopher

      Alexander, Richard

      Gorst, John

      Myles, David

      Ancram, Michael

      Gow, Ian

      Neale, Gerrard

      Arnold, Tom

      Gower, Sir Raymond

      Needham, Richard

      Aspinwall, Jack

      Gray, Hamish

      Nelson, Anthony

      Atkinson, David (B'mouth, East)

      Grieve, Percy

      Neubert, Michael

      Baker, Nicholas (North Dorset)

      Griffiths, Peter (Portsmouth N)

      Newton, Tony

      Benyon, Thomas (Abingdon)

      Gummer, John Selwyn

      Normanton, Tom

      Berry, Hon Anthony

      Hamilton, Hon Archie (Eps'm&Ew'll)

      Page, Rt Hon Sir R. Graham

      Best, Keith

      Hamilton, Michael (Salisbury)

      Page, Richard (SW Hertfordshire)

      Bevan, David Gilroy

      Hampson, Dr Keith

      Parkinson, Cecil

      Biggs-Davison, John

      Haselhurst, Alan

      Patten, Christopher (Bath)

      Blackburn, John

      Havers, Rt Hon Sir Michael

      Pattie, Geoffrey

      Blaker, Peter

      Hawkins, Paul

      Percival, Sir Ian

      Body, Richard

      Heddle, John

      Porter, George

      Bonsor, Sir Nicholas

      Hicks, Robert

      Powell, Rt Hon J. Enoch (S Down)

      Boscawen, Hon Robert

      Higgins, Rt Hon Terence L.

      Price, David (Eastleigh)

      Braine, Sir Bernard

      Hogg, Hon Douglas (Grantham)

      Proctor, K. Harvey

      Bright, Graham

      Hooson, Tom

      Renton, Tim

      Brinton, Tim

      Hordern, Peter

      Rhys Williams, Sir Brandon

      Brocklebank-Fowler, Christopher

      Howell, Ralph (North Norfolk)

      Ridsdale, Julian

      Brotherton, Michael

      Hunt, David (Wirral)

      Rifkind, Malcolm

      Brown, Michael (Brigg & Sc'thorpe)

      Hunt, John (Ravensbourne)

      Roberts, Michael (Cardiff NW)

      Browne, John (Winchester)

      Hurd, Hon Douglas

      Roberts, Wyn (Conway)

      Bruce-Gardyne, John

      Jessel, Toby

      Rossi, Hugh

      Buchanan-Smith, Hon Alick

      Jopling, Rt Hon Michael

      Sainsbury, Hon Timothy

      Buck, Antony

      Kaberry, Sir Donald

      St. John-Stevas, Rt Hon Norman

      Budgen, Nick

      Kellett-Bowman, Mrs Elaine

      Shaw, Michael (Scarborough)

      Bulmer, Esmond

      Kimball, Marcus

      Shepherd, Colin (Hereford)

      Butler, Hon Adam

      King, Rt Hon Tom

      Silvester, Fred

      Cadbury, Jocelyn

      Knight, Mrs Jill

      Skeet, T. H. H.

      Carlisle, John (Luton West)

      Knox, David

      Speed, Keith

      Chalker, Mrs Lynda

      Lamont, Norman

      Speller, Tony

      Channon, Paul

      Lang, Ian

      Spicer, Jim (West Dorset)

      Clark, Hon Alan (Plymouth, Sutton)

      Lawrence, Ivan

      Spicer, Michael (S Worcestershire)

      Clarke, Kenneth (Rushcliffe)

      Lawson, Nigel

      Sproat, Iain

      Cockeram, Eric

      Le Marchant, Spencer

      Squire, Robin

      Cope, John

      Lennox-Boyd, Hon Mark

      Stainton, Keith

      Costain, A. P.

      Lester, Jim (Beeston)

      Stanley, John

      Cranborne, Viscount

      Lloyd, Peter (Fareham)

      Stevens, Martin

      Critchley, Julian

      Loveridge, John

      Stewart, Ian (Hitchin)

      Crouch, David

      Lyell, Nicholas

      Stradling Thomas, J.

      Dean, Paul (North Somerset)

      McCrindle, Robert

      Tebbit, Norman

      Dickens, Geoffrey

      Macfarlane, Neil

      Thompson, Donald

      Dorrell, Stephen

      MacGregor, John

      Thornton, Malcolm

      Douglas-Hamilton, Lord James

      MacKay, John (Argyll)

      Townend, John (Bridlington)

      Dover, Denshore

      Marlow, Tony

      Trippier, David

      Dunn, Robert (Dartford)

      Mates, Michael

      Vaughan, Dr Gerard

      Dykes, Hugh

      Mather, Carol

      Wakeham, John

      Eggar, Timothy

      Mawby, Ray

      Walker, Rt Hon Peter (Worcester)

      Eyre, Reginald

      Mawhinney, Dr Brian

      Walker, Bill (Perth & E Perthshire)

      Fairbairn, Nicholas

      Mellor, David

      Waller, Gary

      Fairgrieve, Russell

      Meyer, Sir Anthony

      Ward, John

      Faith, Mrs Sheila

      Miller, Hal (Bromsgrove & Redditch)

      Wells, Bowen (Hert'rd & Stev'nage)

      Fenner, Mrs Peggy

      Mills, Iain (Meriden)

      Wheeler, John

      Finsberg, Geoffrey

      Miscampbell, Norman

      Wickenden, Keith

      Fisher, Sir Nigel

      Mitchell, David (Basingstoke)

      Wilkinson, John

      Fletcher-Cooke, Charles

      Moate, Roger

      Winterton, Nicholas

      Fowler, Rt Hon Norman

      Molyneaux, James

      Wolfson, Mark

      Fraser, Peter (South Angus)

      Montgomery, Fergus

      Young, Sir George (Acton)

      Fry, Peter

      Moore, John

      Younger, Rt Hon George

      Gardner, Edward (South Fylde)

      Morgan, Geraint

      Garel-Jones, Tristan

      Morris, Michael (Northampton, Sth)

      TELLERS FOR THE NOES:

      Gilmour, Rt Hon Sir Ian

      Morrison, Hon Charles (Devizes)

      Mr. David Waddington and

      Glyn, Dr Alan

      Morrison, Hon Peter (City of Chester)

      Mr. Peter Brooke.

      Question accordingly negatived.

    New Clause 12

      INSIDER DEALING ON A RECOGNISED STOCK EXCHANGE: INVESTIGATIONS, ETC.
      '(1) If it appears to the Secretary of State that there are circumstances suggesting that there may have been a contravention of sections 65, 66 or 67 above, he may appoint one or more competent inspectors to carry out such investigations as are requisite to establish whether or not any such contravention has occurred and to report the results of their investigations to him.
      (2) The appointment under this section of an inspector may limit the period to which his investigation is to extend or confine it to particular matters.
      (3) If the inspectors consider that a person to whom this subsection applies is or may be able to give information concerning any matter relevant for establishing whether or not any suspected contravention of section 65, 66 or 67 above in relation to securities of any company has occurred, they may require that person—

      (a) to produce to them any books or documents in his custody or power relating to the company or its securities;

      (b) to attend before them; and

      (c) otherwise to give them all assistance in connection with the investigation that he is reasonably able to give;

      and it shall be the duty of that person to comply with that requirement.
      (4) Subsection (3) above applies to any person who—

      (a) is connected with the company in relation to whose securities the contravention is suspected to have occurred or was connected with it at the time of the suspected contravention or at any time during the preceding six months; or

      (b) is connected with one of two companies (one of which is the company in relation to whose securities the contravention is suspected to have occurred) or was so connected at the time of the suspected contravention or at any time during the preceding six months and in the opinion of the inspectors would while so connected have had information relating to a transaction (actual or contemplated) involving both companies or involving one of them and the securities of the other.

      (c) if the suspected contravention is of section 66 above, is or, at the time of that contravention, was holding office under or employed by the Crown;

      (d) is a member of a recognised stock exchange or of a recognised association of dealers in securities who is an individual, or an officer (past as well as present) of a member of such an exchange or association who is a body corporate; or

      (e) is the holder of a licence granted under section 3 of the Prevention of Fraud (Investments) Act 1958 who is an individual, or an officer (past as well as present)
      1292
      or the holder of a licence so granted who is a body corporate; or

      (f) is an individual declared by an order of the Secretary of State for the time being in force to be an exempted dealer for the purposes of that Act and to an officer (past as well as present) of any body corporate so declared to be such a dealer; or

      (g) is an officer (past as well as present) of in investment exchange.

      (5) An inspector may examine on oath any person to whom subsection (3) above applies in relation to any matter relevant for establishing whether or not any suspected contravention has occurred and may administer an oath accordingly.
      (6) If any person to whom subsection (3) above applies—

      (a) refuses to produce to the inspectors any book or document which it is his duty under this section so to produce;

      (b) refuses to attend before the inspectors when required to do so; or

      (c) refuses to answer any question which is put to him by the inspectors with respect to any matter relevant for establishing whether or not any susected contravention has occurred, the inspectors may certify the refusal tinder their hand to the court, and the court may thereupon inquire into the case, and, after hearing any witnesses who may be produced against or on behalf of the alleged offender and after hearing any statement which may be offered in defence, punish the offender in like manner as if he had been guilty of contempt of the court.

      (7) Subsections (4), (5) and (6) of section 32 of the 1967 Act (interim and final reports of inspectors, printing and publication of reports, and saving for solicitors and bankers) and section 167(4) of the 1948 Act (examination of persons whom inspector has no power to examine on oath) shall apply in relation to an investigation under this section as they apply in relation to an investigation under the said section 32 or under sections 164 to 166 of the 1948 Act, as the case may be.'.—[Mr. Clinton Davis.]
      Brought up, and read the First time.
      Mr. Clinton Davis: I beg to move, That the clause be read a Second time.
      It is abundantly plain from the remarks that have already been adduced by my hon. Friend the Member for Swansea, East (Mr. Anderson) that the task of establishing that the criminal offence of insider dealing has been committed will be immensely difficult. It follows that the task of investigating the alleged offence will be immensely difficult, too. That is why my right hon. Friend the former Secretary of State—my right hon. Friend the Member for Lanarkshire, North (Mr. Smith)—and I believed that it was right that those invested with the

      1293
      task of seeking to detect such offences should have an expertise that was acquired because they were dealing with the specific matter and that was additional to that which is already provided by the companies investigation branch. That is in no way to deride the activities of the branch. It has multifarious duties to undertake. It is a hard-working branch of the Department of Trade, and it needs the extra assistance.
      If the Government's provisions for meeting insider dealing are to be taken seriously—I am not sure that they are—I think that the Government must establish that they are providing the resources and legislative powers to give effect to that intention. Ministers have not been convincing in that respect. We shall be dealing with the offence in much more detail on Report.
      The Minister says, in relation to the powers that appeared in the Labour Government's Companies Bill, that he does not think it right to provide such far-reaching powers which, as he puts it, can threaten individual rights. Therefore, he proposes to do nothing. He argues that if such powers are not generally needed for the investigation of crime they should not be needed in this area. I cannot believe that that was the advice tendered to the Minister for effecting detection and for the policing of these provisions by his officials, who at one stage felt that the Department and the police needed backup powers. I should like to know from the Minister whether the advice has changed and why he feels that extra legislative powers are no longer necessary.
      It cannot be that to recruit a small body of extra staff would impose a public expenditure burden. The Government have not found it impossible to recruit 1,000 inspectors to deal with allegations of fraud on the Department of Health and Social Security. On a liberal estimate, they can turn up with another £50 million over three years, to cite the Minister who is dealing with that matter.
      It is interesting that in respect of that kind of abuse the Government are full of activity, but in the case of abuses in the City and offences of the character that we are currently considering the Government are strangely inert. There are special powers. There are 1,000 extra inspectors to deal with social security
      1294
      abuses. I do not say that that is not important. Social security abuse is an offence. It must be dealt with. But why is there this disparity of approach between the two kinds of offence? We know that the Government are making substantial cuts in the staff dealing with Inland Revenue matters, and Customs and Excise cargo and passenger controls, but on the matter that we are discussing the Government are strangely inert.
      Mr. Nicholas Baker: Does the hon. Gentleman agree that the Opposition seem to be minimising the gravity of the penalties that we are discussing? Surely the existence of a criminal offence is the most powerful deterrent.
      Mr. Davis: I agree with that. The law must be capable of being implemented, or it will be regarded as unworkable and will no longer operate as a deterrent. Is not that correct? I do not see the hon. Gentleman seeking to disagree with that conclusion.
      The Government must establish that what they seek to do in this area is workable. I want it to be so. That was the purpose of our previous proposals. The Government have made them inordinately more complex. We are now dealing not simply with the offence but with the ability to detect the offence. Here the Government show a strange reticence. I do not think that they have a new-found reticence about civil liberties, but they are selective about that subject.
      It is not right to appoint 1,000 new people—with the Minister for Social Security as the new virility symbol—as the scourge of the people committing the abuse, who mostly come from the bottom pile of society. They are mostly deprived and neglected people. They are mostly carrying out frauds of insubstantial amounts. They are to be dealt with and subjected to the full rigour of the criminal law. A substantial amount of public expenditure is to be committed to deal with their offences. However, when it comes to the offences that we are discussing there will be nothing.
      I hope that the Minister will not say, as he did in Committee, that this is unimportant and that he can rely totally on the ability of the companies investigation branch. We are dealing with a new branch of the criminal law. The branch does not have expertise. No doubt it will

      1295
      acquire it. Special attention should be paid to the matter, especially in the initial stages of the implementation of the proposals, These resources must be made available to the Government. It will help to bolster the Government's credibility in seeking to implement these proposals in a sensible way.
      I hope that the Government will not pursue the line that they pursued in Committee, will recognise that there is a case for the proposal, and will not show their previous selectivity of approach.
      Mr. Budgen: The hon. Gentleman raised a serious point. He asked whether the Government were serious in wishing to enforce these criminal sanctions. It has seemed to me, since I first thought about the idea of criminal sanctions against insider trading, that it raised important questions about what were the condition precedents before Parliament created a criminal offence.
      10.45 pm
      The first necessity is widespread public consent for the proposition that the mischief at which the criminal offence is aimed should be designated by Parliament as a criminal offence. Although now, at this late stage, agreement has been reached between the Front Benches that insider trading should be a criminal offence, that agreement has been noticeably absent for many years. Indeed, the Tory Party has only recently become reconciled to the idea of there being a criminal offence of insider trading.
      To say that we are now all agreed is to disregard the fact that until recently the stock exchange and the professional bodies of the City were opposed to the idea of there being a criminal offence against insider trading. They took the view that it was likely to inhibit trading by directors in the shares of their own company and that it would once again be a distortion against risk-taking in particular fields of commercial activity.
      Perhaps a second consideration before Parliament makes a certain mischief a criminal offence is to ask whether it is enforceable. The hon. Member for Hackney Central (Mr. Davis) says that the Government are not serious in enforcing these provisions. Perhaps he is right. It may be the case—I do not know, and I am sure that the Government would not
      1296
      tell me—that the Government regard these criminal sanctions as no more than cosmetic. I hope not, very much. If these are brought forward as mere sanctions they do not merely damage this Bill; they damage the criminal law generally.
      It is exactly the same case as for those who persistently support legislation such as that on race relations, which they know to be unenforceable, in the main, but which they bring forward as a way of demonstrating public opinion generally. It is a most dangerous and damaging way to fiddle around with the criminal law. The essence of the criminal law is that it should be easily and clearly enforceable.
      A third criteria that I respectfully suggest should be applied before Parliament makes a certain mischief a criminal offence is that it should be capable of being precisely defined. For a mischief to be precisely defined, it is necessary to have a relatively static state of affairs to which the criteria can be applied. This is a serious problem in relation to the activities of the City. Those activities are immensely mobile, entrepreneurial and highly fluid, and involve going into markets and out of markets and changing methods of dealing overnight. For instance, two years beforehand no one could have foreseen the market that arose in Euro-currencies. No one could have foreseen that there would be activities in the Euro-markets that might be regarded by some as potential activities in respect of which criminal sanctions could be applied.
      So it is that there cannot be those stable circumstances that would allow Parliament to consider City activities carefully and slowly and, if necessary, change the law to make a new mischief a criminal offence.
      We shall have to choose between general legislation—which will be uncertain and therefore lack the public support that it should have—and rigid legislation, which will allow certain mischiefs to go unattacked by the criminal law. I suspect that the result will be that we shall undermine general respect for the criminal law by producing a political cosmetic and, more seriously perhaps, distorting the process of risk-taking in our capital markets.

      1297
      Some entrepreneurs who wish to be both managers and investors in their companies will say that they do not mind managing a company but are not prepared to hold a substantial shareholding in a public company if there is a risk, albeit an outside risk, that they might be subject to the sanctions of the criminal law if, for the sake of argument, they have to sell a large shareholding to become a Member of Parliament or, to take an extreme example, to become the Deputy Speaker of the House of Commons.
      There are people who will not be prepared to invest their money in a large public company and at the same time be a director of that company. I suspect that it will be another way of distorting capital markets unintentionally to make it more advantageous for people to invest in private companies. I fear that these measures may be cosmetic. If they are, I much regret them.
      Mr. Ernie Roberts: The clause in effect gives teeth to the action against insider dealing. It is widely accepted that insider dealing is wrong and should be penalised. The size of the reports on Peachey Properties, certain investment corporations, banks and other companies shows the extent of the investigations that had to be made.
      The discussion in the Chamber and in Committee has shown the difficulty in defining exactly what is insider dealing. In the United States of America it is put quite simply that an insider is one who has insider information.
      It is obvious that the problem cannot be left to self-regulation by the City. The fact that the problem still exists shows that the City has not been able to deal with it in the past.
      There is a lack of inspectors to deal with the problem, which costs individuals and the public purse hundreds of millions of pounds. We should have inspectors to safeguard both the public and public funds. It has already been said that we are prepared to engage 1,000 investigators to sort out £3 million worth of frauds in the DHSS. Even greater frauds are perpetrated as a result of insider dealing. We ought not to consider excluding certain categories of persons, such as shareholders, stock exchange jobbers, or trustees.
      1298
      Insider dealing legislation, and making the present legal practices illegal, are major problems. To buy cheap and sell dear is quite legal. To make a profit is legal. To make massive profits is legal. To make oneself very rich and, as a consequence, others very poor is legal. After all, business is business.
      The Bill, if unamended, will ensure that the Government do not interfere too much with the rules of the game. Speculators buy and sell shares to make a quick profit. It is a case of catch-as-catchcan. The clause is essential to ensure that there are stricter investigations, more inspectors, and tighter controls.
      I am not too happy about the size of the penalties that will be inflicted. We talk of heavy and strong penalties. Others who commit lesser crimes in our society receive heavier penalties. The penalties are by no means too high. All these measures are needed to deal with the problem of insider dealing.
      Mr. Parkinson: I am sure that the hon. Member for Hackney, Central (Mr. Davis), like myself, has the feeling that we have been here before. In digging up this new clause—old clause 62 of the 1978 Bill—he was arguing a case in which he patently believes. Had he been the Minister he would have ensured that it was included in company law.
      He asked what has happened in the Department. If he thinks of where he used to sit and where he sits now he will understand what happened. There was a change of Government. The people decided that. The net result is that where there was a difference of opinion—and there were many differences of opinion made openly and honestly—we are now in a position to suggest that the way for which we argued in opposition is the way in which things should be done now that we are the Government. We believe then, as we believe now, that old clause 62 was ill-conceived.
      I say to my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) that we do not think that this part of the Bill is a cosmetic operation. We have taken a great deal of trouble with the definitions and clauses to try to make them effective. We believe that insider dealing is a crime and that those who indulge in it should be aware that they run the risk of going to gaol, and

      1299
      that they face substantial fines. There is nothing cosmetic about these clauses.
      11 pm
      There is no fundamental disagreement between the hon. Gentleman and myself about the way in which enforcement should be organised. We both feel that it should be carried out by people who are experienced in criminal investigation and in looking into allegations of a type similar to the allegations that will need to be investigated under this legislation. I believe that that work can effectively be carried out by the prosecutions branch of the Department of Trade and by the police, both of them working in close collaboration with the stock exchange, the takeover panel and others possessing the relevant information.
      Where we differ is over the question of special powers. If the hon. Gentleman had his way the investigators would be designated as inspectors and given the right to question specified categories of people, with the possibility of the court's requiring those people to answer any questions that they have not answered voluntarily. The court could also decide which questions must be answered by people falling outside the specified categories. As the House will appreciate, powers of that kind are far reaching. Because of their implications for the liberty of the individual, in existing legislation they have been confined to situations in which it was considered that they were absolutely necessary to the carrying out of an effective investigation. As the hon. Gentleman said, for the investigation of most criminal offences no such powers are available.
      Mr. Douglas Hogg: I rise in support of what my hon. Friend has just said. He spoke of the wide powers given to inspectors to require people to answer questions. Does not he agree that powers that are as wide as that derogate from the fundamental proposition that people should not be required to answer questions that might incriminate them?
      Mr. Parkinson: I entirely agree with my hon. Friend. That is the basic point of argument between myself and the hon. Member for Hackney, Central. We believe that the people who will look into the questions raised by this new legislation will have sufficient powers. We believe that there is a strong argument that in
      1300
      some instances, where the far-reaching powers that the hon. Gentleman seeks have been given, there is a case for a re-examination of those powers.
      Of course, the hon. Gentleman has impeccable credentials as a person who has the scantest possible regard for the liberty of the subject. He was the cheerful supporter of a Government who gave tax inspectors the powers to break into the taxpayer's home and to question the wives and children of the taxpayers. He feels that anything that one does to the individual in one's search for what he would call "social justice" is entirely justifiable. Therefore, he is behaving entirely in character in seeking swingeing powers in this case.
      Mr. Budgen: Does my hon. Friend also agree that the whole system of investigations is a concept that comes from Continental law rather than British law, with an equal fight between prosecution and defence and no element of quasi-judicial investigation?
      Mr. Parkinson: I should like notice of that question. I should like to have the opportunity of taking advice before answering it.
      Mr. John Smith: If the hon. Gentleman is stuck for an answer, it might occur to him to tell his hon. Friend that there is no such thing as British law. Can I ask him to stop being a narrow Englishman?
      Mr. Parkinson: I heard the right hon. Gentleman's sedentary intervention, but I did not think that it was worth repeating. I should like to wind up this short debate. There is a fundamental difference of approach between us. The hon. Member for Hackney, Central and I have aired this difference on a number of occasions. We believe that it would be wrong to give the investigators the wide powers that new clause 12 seeks to give them, and I urge my hon. Friends to resist it.
      Mr. Clinton Davis: The Minister is again being extraordinarily selective in his arguments. He waxes indignant about the offences that I am supposed to have created against civil liberties by supporting the previous Labour Government in the powers that were given to tax inspectors. His Government are appointing 1,000 additional inspectors. How does

      1301
      he justify that? Why does he not leave it to the police to investigate social security frauds? Do not those inspectors question neighbours and friends of people who are alleged to have committed offences? Do they not rely upon hearsay evidence?
      Mr. Nicholas Baker: I should like to draw the attention of the hon. Member for Hackney, Central (Mr. Davis) to the considerable expertise that resides in the City of London fraud squad in investigating fraud. I should be happy to know that he feels confident in relying on that squad rather than on his new batch of inspectors.
      Mr. Davis: Of course, there is some expertise, but I do not believe that the Metropolitan Police have the resources and the expertise to the degree that the hon. Member for Dorset, North (Mr. Baker) claims. He will know from his experience that the delay that already occurs in prosecuting white-collar crime is intolerable. Apart from the fact that people have to wait so long to undergo their trial, it is intolerable from the point of view of the witnesses. There are massive delays in investigating that sort of offence.
      I believe that when a new and highly complex offence is introduced, it is necessary to recruit a new form of expertise. The Government seek to prosecute those people who abuse social security, but on matters that create infinitely more damage to the reputation of the City and to the commercial integrity of Britain they seem to think that it is no longer important. The proof of the pudding will be in the eating. It will remain to be seen whether the Government have been able to rely satisfactorily upon the expertise available.
      The Minister will be the first to agree that the Department of Trade's company investigation branch is a very small unit. It is already heavily over-worked. Now it is having to assume this additional work. The hon. Member for Wolverhampton, South-West (Mr. Budgen) has already poured scorn on the Government's proposals in their entirety. I do not go as far as that. However, I believe that we have a difficult series of new prosecutable offences and that they will require this additional expertise.
      1302
      The Minister says that there are far-reaching powers that threaten individual rights. There are also far-reaching powers in connection with the "fit and proper person" procedures under the insurance Acts. Does he intend to replace those Acts? Substantial powers are available to inspectors appointed by the Department under section 109 of the 1967 Act. Extensive powers are provided under sections 164 to 168 and 172 of the 1948 Act. These powers are invoked because it is felt necessary to provide inspectors with the ability to look swifty into the documents that may relate to various matters germane to their inquiries.
      Mr. Douglas Hogg: Will the hon. Gentleman confirm that as a general proposition he is in favour of the police cautioning a person who is being questioned to the effect that he is not obliged to answer questions? If he is, will he explain why these rules and powers given to inspectors will not provide for an analogous warning being given to the person being inquired into?
      Mr. Davis: By and large, I agree, but I believe that there are exceptions. The hon. Gentleman may well have a point in connection with the criminal offences that we are considering. He will recognise that many Conservative Members are not in favour of the privileges of silence, which he obviously supports and, by and large, I support. It may be something in respect of which we should be prepared to make a concession. I am impressed by the hon. Gentleman's point.
      We must deal with the principle as well as the detail. The Government are throwing out the whole principle of having a special force with special powers to deal with the situation. They could have thrown out our proposals, but I believe that it was inept of them to throw out all proposals. I believe that they are making a mistake, but only time will tell.
      Revenue frauds have been mentioned. They were involved in the Rossminster matter. It is noteworthy that on 27 March last year, Sir William Pile, the chairman of the Inland Revenue, said that the total earnings that evade tax might amount to as much as 7½per cent. of the gross domestic product, which would be about £10 billion to £l1 billion at that time. That is a strong allegation, made by a reputable source, yet the Government are

      1303
      diminishing their powers by casting out some of the people involved in that form of inquiry and saying that they do not need them. I believe that that is a mistaken view. The selectivity of the argument is quite abhorrent.
      Question put and negatived.

    New Clause 13

      REVIEW COMMITTEE
      '(1) There shall be a Committee appointed by the Secretary of State to keep company law under review and to make recommendations to the Secretary of State as to any changes in company law that may from time to time appear to the Committee to be desirable.
      (2) The Committee shall consist of not less than eight and not more than ten persons appointed by the Secretary of State in accordance with subsections (4) and (5) below.
      (3) Before appointing the members of the Committee (other than the chairman) the Secretary of State shall—

      (a) as to two of them, consult such organisations representing employers as he considers appropriate;

      (b) as to two others, consult such organisations representing employees as he considers appropriate.

      (4) The remaining members of the Committee shall consist of:

      (a) a practising barrister;

      (b) a practising solicitor;

      (c) a practising accountant;

      (d) a practising banker; and

      (e) any persons appearing to the Secretary of State to have qualifications or experience that would be of value to the Committee in considering any matter with which it is concerned.

      (5) The Secretary of State shall appoint one member of the Committee to be its chairman.
      (6) It shall be the duty of the Committee:

      (a) to prepare and publish, as soon as possible after 31st March in each year, a report on the performance of its functions during the period of 12 months ending with that date; and

      (b) to deliver a copy of the report to the Secretary of State before it is published; and it shall he the duty of the Secretary of State to lay before Parliament copies of each report of which he receives a copy in pursuance of this section.'.—-[Mr. John Smith.]

      Brought up, and read the First time.
      Mr. John Smith: I beg to move, that the clause be read a Second time.
      Mr. Deputy Speaker (Mr. Bernard Weatherill): With this it will be con-
      1304
      venient to take new clause 32—Committee on company law—
      '(1) There shall be a Committee appointed by the Secretary of State to keep company law under review and to make recommendations to the Secretary of State as to any changes in company law that may from time to time appear to the Committee to be desirable.
      (2) The Committee shall include not fewer than four members who are currently engaged as directors or managers of public companies.
      (3) The Committee shall consist of not more than twelve members:.
      Mr. Smith: The purpose of new clause 13 is to set up a committee to advise the Secretary of State on the review of company law. I wish not only to argue the proposition but to make a small complaint about the Government departing from an excelltn idea, which announced on Second Reading of our Companies Bill.
      When one looks at the grave iniquities committed by this divided and dispirited Government in these nine short months one sees that this departure is not their most wicked act. None the less, it was an excellent idea to have a review committee. When it was announced I do not believe that there was a word of objection from the Conservative Party or from any of the bodies that would be affected. By and large, it seemed a good idea all round.
      When this Government came to office, the idea was departed from. Instead of a committee being set up to review company law and advise the Secretary of State in an open manner, the idea of a panel of advisers crept in, to be chaired by a professor of company law. He may be an excellent professor of company law. I believe that he is. However, the whole idea of a panel of advisers is less attractive than that of having a review committee.
      11.15 pm
      A panel of advisers to advise the Department is a very cosy arrangement. No doubt it will have interesting chats with the Department of Trade about any reform of company law. There is much to be said for not having a cosy arrangement. There is much to be said for having a proper committee, with independent experts. The Secretary of State could consult such independent experts and they, in turn, could bring things to the notice of the Secretary of State. Interested bodies could also communicate with it.

      1305
      If we have an open, public debate about possible changes in company law, all those who are interested will be able to contribute. That cannot be carried out as effectively by a panel of advisers, who are in a cosy relationship with the Secretary of State and with officials in the Department. The present Government have an enormous bias against any advisory body. It is almost a reflex action. However, when the Government went through their primal hunting exercise they discovered that many of the bodies had a distinct and useful value. Very often those people give their services without pay. They do so in the interest of developing the law and of making it more effective.
      I therefore suggest that the Government were wrong to dispense with the idea of a review committee. There is a great deal of merit in bringing in outside experts to advise the Secretary of State. There is much to be said for stimulating public debate about changes in company law. We should face some of the practical difficulties. In Committee objection was raised that the amendment would confer an obligation on the Secretary of State to consult a review committee. However, the Minister will have noticed that that obligation does not appear in this new clause. That shows how reasonable we have been about meeting the Government's objections.
      I hope that the Minister is prepared to think again about this issue. Everyone agreed that the review committee was an excellent idea. It has been the innocent victim of the Government's anti-quango drive. The Government may therefore be guilty of throwing out the baby with the bath water. This is not the most revolutionary proposal of modern times. Nor is it the greatest iniquity that the Government have committed. However, it is a small iniquity that needs to be put right.
      Sir Brandon Rhys Williams: By my vote in Committee I helped to keep an eye on the idea of a review committee. I hope that the Government will take that idea seriously. So many changes take place in company law—or should take place—and so many changes occur in our thinking about the future of private enterprise that it is probably unreasonable to ask the Department to embrace
      1306
      all the different aspects. Those aspects should be studied, and the Government will inevitably need to take advice.
      I shall not list all the aspects of company law reform, as I have referred to them previously in Committee, at conferences, and during debate. However, there is a general feeling that the 1948 Act has been left behind by social and economic changes. Of course, it is still a landmark. Company law is no longer relevant to present times, or to the 1980s. Tomorrow we may deal with the clauses that follow clause 46. That puts a new emphasis on the role of directors. Many people have campaigned for that. However, when the clause is on the statute book it will give rise to a great change in attitude. It will accelerate the pace at which the 1948 Act becomes obsolete.
      I hope that we shall end the games of Normans and Saxons. Such games are still played between management and workers. The background of company law envisages that directors work only for the investors and that they do not have responsibilities to the workers. That background is rapidly coming to an end.
      There is a developing concern for small businesses, not just on the Government Benches. All over the country people know that small business is important but that it is being crushed because it cannot be adapted to bear the burdens which are placed on larger companies under company law. We need people to advise the Department on the whole future relationship between company law and the small business.
      In one of his inspired moments—and he has many—my hon. Friend the Under-Secretary suggested that we should consider splitting table A so that we have one set of standards for large public companies and a different set of standards for small businesses. I think that that is exceedingly important and urgent, and I wonder whether the Department, left to itself, could go to work quickly and produce some vital suggestions for Parliament to consider and the nation to follow.
      I could touch on many other aspects of company law reform which should be taken into new areas. We are coming to the end of the cult of the equity. Trade union pressure, social forces and inflation have acted on public companies in such a way that the great majority of them are not in a position to pay a dividend.

      1307
      If they had taken current cost accounting principles seriously they would have stopped paying dividends, because they are at the point where their margins are too narrow even to replace existing assets, let alone re-equip themselves for more highly capitalised competition in the future.
      Table A does not envisage the possibility that equity will receive no share of the turnover. We must look ahead to the needs of institutional investors called upon to provide new capital for companies that are not in a position to meet their equity dividend. I do not think that this is disastrous—it is a challenge, and I wonder whether the Department has ideas ready for the new classes of capital that will be needed, which perhaps have a prior claim on the turnover and will enable investment to continue in the situation where the directors have fully accepted their responsibility to the employees. These are speculations that we could keep making all night. I am sure that the arguments will continue for at least another 10 years.
      Will we have an advisory committee or review body supporting the Department which will consist of people of practical experience, or will it consist only of people who have learnt about industry out of books and magazines? This is important, because many experts on company law have never actually earned their living in companies that have to compete in the real world. They have served in an advisory capacity to companies. They have learnt about companies through public relations, through law, or through other very important functions that are part of the creation of wealth, I admit. But I believe that the provision in my new clause that the Minister should seek to be advised by people who are currently directing or managing companies is worthy of consideration.
      I do not know whether Labour Members intend to press this matter to a vote. If they do, I do not think that I shall be able to support them. I am not happy with the composition of the review body that the Opposition recommend. My own suggestion is only a sketch. Nevertheless, I hope that in this debate we shall have sown the seeds that may grow into something useful to help modernise our company law over the next few years.
      Mr. Selwyn Gummer: I wonder whether we get very far by setting up bodies that have a continuous and undefined desire to make proposals and to press changes. I noted carefully what my hon. Friend the Member for Kensington (Sir B. Rhys Williams) said about the changes in company law, but there are many other areas of life in which changes are likely to be made and in which all kinds of alterations come about. I do not suggest that the whole world should be in commission—the concept of a series of committees, constantly concerned to press forward alterations. I suggest that the committee would—as it does—contain a whole series of people who may or may not have a real understanding of the way in which companies work in actuality. The committee would be of less value and importance than almost any suggested in recent propositions by the Opposition.
      The members are to be a practising barrister, a practising solicitor, a practising accountant, a practising banker, two persons who will arise from consultations with employers' organisations or other appropriate people and two persons who will arise from consultations with employees or other appropriate people. Out of that, I suggest that we will have a collection of practising people and no real exponents. I should be happier if I felt that the Department was being advised by those people who do the job and by the House.
      It is that which has caused me to comment on the new clause. The proposition that it is improper for the House to take the information from outside and press the Government to make such changes as become appropriate cannot be right. There must be some other committee—
      Mr. Clinton Davis: Why are the two things mutually exclusive? It would be a committee of experts. The Government are seeking to enrol a panel of experts who will be closeted within the Department of Trade to advise. Obviously, they do not feel that they are getting sufficient stimulus—for the perfectly good reason that it is overworked—from the Department.
      Mr. Gummer: There is a clear distinction between the Government's drawing to themselves a series of experts—indeed, there is a distinction between

      1309
      experts and the list proposed here—for internal advice and the concept of an exterior committee. The point made by the Opposition is that the committee would be seen in public, so that it was constantly kept under review, but there is a fundamental difference. The people who should be keeping constantly under review the question of company law, as, indeed, the question of law in general, are the Members of this House. The fewer other bodies who have a statutory base in no man's land, constantly to keep change and pressure under review, the better.
      We need a company law that is informed by those who are active within companies—both employers and employees. We need those people to have ready access to the Government through the House. In so far as we are able to change the mechanisms of this House to do that job, we shall do the nation a good. In so far as we obfuscate and cover up the real purposes of Parliament by the production of synthetic committees that provide jobs for persons who clearly have not run businesses we do the country ill.
      Mr. Eyre: I do not propose to delay the House long with comments on the clause. It was discussed at some length in the Standing Committee. I note that the right hon. Member for Lanarkshire, North (Mr. Smith) has made a small change to the clause that his hon. Friend the Member for Hackney, Central (Mr. Davis) proposed in Committee. The right hon. Gentleman recognised the force of our previous arguments and dropped his subsection (2), which quite unreasonably required the Secretary of State to consult his suggested review committee before proposing any changes in company law.
      New clause 13 requires the establishment of a new body of fixed composition with full independent powers of review, replete with the power to publish recommendations. As right hon. and hon. Gentlemen know, the Government already consult widely on proposals for changing company law. I shall shortly come to the points that my hon. Friend the Member for Eye (Mr. Gummer) raised.
      We do not consider that the role of an advisory body should be to replace the existing process of consultation. It
      1310
      cannot, for example, replace the detailed comment which the Department typically receives from the broad spread of interests which it consults. The Green Paper on company accounting and disclosure, for example, published last September, has so far attracted comment from more than 100 different bodies and individuals. I should like my hon. Friend the Member for Eye to study those views, because I think that such study would temper his confidence that every Member of Parliament necessarily understands and is aware of the implications of some of these problems.
      11.30 pm
      Mr. Clinton Davis: Will the Minister please explain why his party, when in opposition, pressed the case for an insolvency rules committee to be established comprising a wide variety of people? Will he explain why his party persists in having the Criminal Law Revision Committee, and why it insists on retaining the Lord Chancellor's Legal Aid Advisory Committee? Further, will he explain why his own Department only recently insisted on retaining the Pilotage Commission? What is the distinction?
      Mr. Eyre: I should be only too glad to deal with all those matters in detail, but I think that you would rule me out of order, Mr. Deputy Speaker—or at least I hope that you would.
      The new clauses on directors' conflicts of interest which were tabled last November were sent out to nearly 40 recipients for comment, while as regards ideas at a different stage of development, the Department last year sent to 20 bodies a questionnaire on the subject of audit committees and non-executive directors. I stress that all this consultation was necessary.
      The Department is well aware of the important issues in company law. Indeed, given the volume of representations made it would be difficult for Ministers and officials not to be in touch with developments as they occur—which is as it should be. What the Department lacks, however —I think that this will appeal to my hon. Friend the Membr for Kensington (Sir B. Rhys Williams)—is a continuing forum and sounding board for the testing and trying out of ideas and possible solutions when they are at an early stage of development. There is, therefore, a place

      1311
      for a small body of advisers available on a continuing basis who can, by virtue of their experience, give authoritative advice on the choices available for solving particular problems.
      I stress to my hon. Friend the Member for Eye that the purpose of this advisory body, which, I assure him, has to deal with very complex matters, is to be able to pose the right choices, which ultimately have to be settled by Members of Parliament. I entirely agree with the principle that my hon. Friend enunciated so firmly about the importance of reference to Parliament for the decisions. The purpose is really to get them organised in a proper form to be given to Parliament, so that the appropriate decisions may be made in good order. There is no question of any intention in the minds of Ministers in the Department to take that great function away from Parliament. We respect it highly, and we want to make it work well.
      The purpose of the advisory panel is not to publish its own proposals for company law reform. Nor do we look to it necessarily to produce an agreed view. Its merit will lie in its expression and consideration of individual proposals and approaches. As for making public expressions of view or recommendations of the panel, let us wait to see how the panel works out in practice.
      I should add that the panel members will not be constrained to avoid referring to their advisory work, because much of it will be consulted on in due course, although there may, of course, be occasions when matters of some sensitivity will need to be treated in confidence.
      I hope, therefore, that hon. Members will recognise that our new company law advisory panel will provide the external advice that the Department needs in a far more flexible way than would flow from some statutory quango, with, no doubt, a new bureaucracy and obligations to publish reports.
      The terms of reference of the company law advisory panel that we have established are:
      "To assist the Department of Trade, as and when so requested, in reviewing the desirable development of company law and proposals for change; similarly, to advise the Department on changes designed to improve the operation of the Companies and related Acts in the light of modern conditions and practices; and to advise on such other par-
      1312
      ticular matters concerning company law as the Department may refer to them from time to time."
      I am pleased to tell the House that the first meeting of the panel will take place shortly and will be under the chairmanship of a deputy secretary of the Department. The panel's membership consists of individuals nominated by the Law Society, the Law Society of Scotland, the Stock Exchange, the Consultative Committee of Accountancy Bodies, the Chartered Institute of Secretaries and Administrators, the Confederation of British Industry and the Bank of England. The Department's research adviser, Professor Gower, will also be a member of the panel.
      It will help the House if I mention the names and present positions of the nominated members of the panel. They are Mr. Fearn, secretary of Allied Breweries Ltd.; Mr. Higginson, former senior partner, Herbert Smith and Co.; Professor Jack, professor of mercantile law, University of Glasgow and a senior partner of McGrigor, Donald and Co.; Mr. Keir, group secretary of Unilever; Mr. Gold, head of accounting research, Shell International Petroleum Co. Ltd.; Mr. Pope, finance and planning director, Eldridge, Pope and Co. Ltd.; Mr. Knight, deputy chief executive, Stock Exchange; and Mr. Rutteman of Arthur Young McClelland Moores and Co.
      Mr. Clinton Davis: Was the TUC asked? If so, what was its reply?
      Mr. Eyre: I am not confident that I can answer that question with complete accuracy. The hon. Gentleman need not be so dismissive. I shall find out and give him the answer as soon as I can.
      Mr. Gummer: Will my hon. Friend confirm that he has read out a fine list of people who are active in the business of companies? Does it not show the sort of advisers that it is proper for a Government to have, in contrast to the advisers that we get when we set up the sort of review committee that we are discussing?
      Mr. Eyre: Was my hon. Friend approving the list?
      Mr. Gummer: Yes.
      Mr. Eyre: I am grateful for that. I should emphasise that we chose the bodies

      1313
      from which the nominations have been sought not with an eye to establishing a particular spread of membership but because we were confident that they could suggest persons whose advice would be intrinsically valuable. Having read out the list of those who will be serving on the panel, I believe that that view is justified.
      As the Minister responsible for company law, I can assure the House that I shall be kept closely in touch with the work of the research adviser and the panel. I am sure that, over a period, hon. Members will notice the benefit that we expect the panel to bring in the quality of the proposals that the Department will put forward for wider consultations and resolution by hon. Members.
      I believe that we have devised a system of advice that, by its informality and flexibility, will be of great advantage to our scrutiny of company law, and I commend the proposals to the House. I hope that my hon. Friend the Member for Kensington will be pleased with the proposals. I have indicated the bodies from which we invited nominations and I hope that my hon. Friend will note with approval that two of the eight members of the panel are currently engaged in senior positions in public companies. I think that that will help to make a contribution in the area that my hon. Friend mentioned. They will bring the benefit of their first-hand experience of industry.
      I hope that my hon. Friend will find little difference between his approach and that of the Government and will feel content to ask leave to withdraw the clause knowing that we shall be well equipped to deal with the problems. He made his usual positive contribution to these debates by listing a whole series of difficult problems and we hope to grapple with them with the help of this advisory panel, the contribution of which will be justified.
      Mr. Clinton Davis: Of course the panel is better than nothing, but there was no real reason why the Government, except out of pure prejudice, should have dismissed the other idea announced by my right hon. Friend in 1978. Indeed, the membership of the panel would have been similar, except that we would have had the courtesy to ask the TUC to play a part. The Government clearly do not
      1314
      think that that is appropriate. That is a significant omission. The TUC has an interest in commerce and company law. It is another indication of sheer prejudice, or at best oversight, on the part of the Government.
      If I can attract the attention of the Minister, I should like to ask him whether he will reconsider that omission or oversight. I am prepared for the Minister to intervene.
      Mr. Eyre: As the hon. Gentleman knows, it was customary for the previous Government always to appoint someone from the TUC to everything. He knows that we shall have consultations with the TUC on the proposals that come from the panel of experts.
      Mr. Davis: The answer is "No".
      Mr. Eyre: If the hon. Gentleman will let me explain I shall try to do so. He knows well the complexity of the discussion among members of such a panel. It is essential to have a great deal of experience of the kind of problems with which the panel will have to grapple. Once the panel has brought forward its detailed recommendations we shall have wider consultations and include the TUC and all kinds of other worthy bodies in those consultations. Earlier I mentioned the great number of consultations that we have had with different bodies. If the TUC said to me "Look here, we have someone who is especially interested in this particular exercise" naturally I would consider that.
      The hon. Gentleman is becoming excited about the fact that a member of the TUC was not automatically invited to serve on the panel, but the expertise required is of a special kind. I think that the point that I make is very valid. We shall consult the TUC.
      Mr. Davis: That was a long intervention simply to say "No". It was a lot of blather. The TUC has much legal and commercial expertise. After all, it represents a large number of trade unionists who have an interest in the reform of company law. Therefore the TUC has a locus in this matter and the Minister should have invited the TUC to be represented. It is part of the Government's philosophy, of course, to behave in this way, even on so small an issue. The

      1315
      value of the Government's undertaking to consult the trade unions is not worth a candle.
      When the Minister says that he supports the arguments of his hon. Friend the Member for Eye (Mr. Gummer) his attitude is completely inconsistent with the whole experience of this Government and the previous Conservative Government. Why have these continuing committees that are doing valuable work? Surely it is conceded, especially by all lawyers in the House, that the Criminal Law Revision Committee and the Lord Chancellor's Legal Aid Advisory Committee have valuable roles. When we are dealing with company law, is it not of vital importance to the commercial prosperity of this country that we should keep it under close scrutiny? Why should it be any different?
      11.45 pm
      The Government have sanctified that sort of arrangement by having a Pilotage Commission. Judging by the scoffing that we have heard from some Conservative Members, the composition of the commission will be not dissimilar from the panel of advisers. There is scoffing because the Opposition refer to a practising barrister and a practising solicitor, but they are involved in the panel of advisers. If the argument of some Conservative Members had any merit those working on the Pilotage Commission, for example, would have nothing to do with pilotage. That would be absurd. Any Government would draw from an area capable of offering relevant expertise.
      That is not the argument between us. The argument is whether the panel should sit publicly. If it does not sit publicly, it should at least publish its reports. In that way it could stimulate discussion in a much more direct way than by sitting in the Department of Trade under the chairmanship of someone in the Civil Service.
      The deputy secretary in the Department of Trade is a capable civil servant. I worked with him for over five years and I know his qualities. However, we should not have that form of chairmanship. We need an independent chairman, who is capable of carrying out consultation with the Department. We should deal with this issue in the way suggested by my right hon. Friend the Member for Lan-
      1316
      arkshire, North (Mr. Smith). The Government are making a great mistake.
      The hon. Member for Eye says that in effect we are to establish another quango. He did not use the word but that is his argument. I hope that I have indicated that that would not be the result. Even if it were, why did Conservative Members not object to the proposition when they were in opposition? It is a proposition that has been warmly supported by every professional body. Every body that we consulted when in government supported the concept. There has been no opposition to it.
      Mr. Nicholas Winterton: Oh.
      Mr. Davis: I shall give way to the hon. Gentleman if he thinks that there has been. Can he cite any examples? Of course, the answer is that he cannot.
      The Government have missed a chance. The idea has been sacrificed on the ground of pure party dogma. It is a great pity, and it is manifestly absurd that the TUC has been excluded.
      Sir Brandon Rhys Williams: I should like to say a few words, Mr. Deputy Speaker, as my new clause is one of the clauses that has been selected. I am delighted that the Department has collected a galaxy of talent and that it will be able to benefit from its collective advice in future.
      I sympathise very much with my hon. Friend the Member for Eye (Mr. Gummer), who feels that the Department should be open to pressures from Parliament. However, there are not many Members who are seriously concerned about these matters. I introduced my first companies Bill in 1969. I have introduced at least one companies Bill in each Session since then. I have made no progress. That is not because I have not had support from eminent men, including those who have been prominent Ministers in the Department from both sides of the House. We must not be too enthusiastic about the possibility of changing company law by parliamentary pressure. I am not saying that I shall not continue to try because I shall do so.
      I join the hon. Member for Hackney, Central (Mr. Davis) in urging the Government to agree that the panel should publish its reports. It will not succeed

      1317
      in stimulating a general debate—that is what we need on company law—or catching the attention of hon. Members unless it puts into writing what it is saying to the Department. We should have access to regular reports from it on major subjects of concern. If reports are not forthcoming, we cannot be sure that it is doing all that it should in this area.
      I shall look with reserve at the work of this body. If one confines the consultations to men who have done well under the established order, one might well find that they are well disposed towards the continuation of the establishment and are not sufficiently receptive to the need for change.
      Last, I come to the possibility that the work force, middle management—most important of all—and the TUC might be represented on this committee. In the Bullock committee the TUC had a great opportunity of making a major contribution to company law reform, but it fouled it up in a way that has set us back 10 years. I would support the Department if it were chary of inviting a representative from the TUC, if that led to a repetition of that disastrous process. In principle, it would be proper that consultations should take place with people who are genuinely able to speak for the work force. The Minister might put his mind to that problem for the future.
      I wish the body well. I feel more confidence tonight that we shall see real change in company law in the next few years than perhaps I have felt since I started in 1969.
      Question put and negatived
      Further consideration of the Bill adjourned.—[Mr. Eyre.]
      Bill, as amended (in the Standing Committee), to be further considered tomorrow.

HEALTH AND SAFETY AT WORK
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Wakeham.]
11.51 pm
Mr. Bob Cryer: I am grateful to have this opportunity to speak about a subject of great importance to the nation—that is, health and safety at work. It is a subject that is largely ignored by the media except when there is a massive incident on the Flixborough scale. The Government have paid less attention to it than it deserves.
It is interesting that when strike action takes place there is an immediate demand for legislation by certain narrow representatives of the employers. The Government have responded very willingly and introduced legislation. They organised masses of police against pickets. Yet on a general, average year-by-year record, more days are lost through industrial injury than by strike action. For example, in 1976, according to figures published in the Employment Gazette, 3·2 million days were lost in strikes, while 15 million days were lost through industrial injuries.
In 1977 the days lost in strike action went up to 10·1 million. The days lost through industrial injury went up to 15·7 million. In 1976 five times the number of days were lost through industrial injuries as opposed to strike action.
Industrial injury figures are based on the DHSS survey. They exclude certain categories of sufferers and those who were off work for longer than six months, due to injury. In spite of this massive disparity between days lost in strike action and industrial injuries the inspectorate currently are facing financial cutbacks at the critical area of inspection.
In the Nuclear Installations Inspectorate the shortfall in inspectors is a massive 53 per cent., according to an answer given today by the Minister to my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley). Yet at the same time the Government announced the appointment of 1,000 social security investigators. The Nuclear Inspectorate is 53 per cent. short of inspectors to work in the field. That is against a background of the warnings by Sir Alan Cottrell that were reported in

1319
The Guardian of Thursday 21 February as follows:
"MPs were told yesterday that if Britain now goes ahead with a programme of American-style nuclear power stations using pressurised water reactors (PWRs) they may later have to be shut down at great cost if the engineering techniques to ensure their safety prove impossible to develop. The warning came from the Government's former chief scientific adviser, Sir Alan Cottrell, who said he would advise sticking to the British-designed advanced gas cooled reactor (AGR). He was giving evidence to the Commons Select Committee on energy.
Sir Alan pointed out that the PWR design was the same basic type of reactor as was involved in the near-catastrophic accident at Three Mile Island, Pennsylvania, last March. The Committee also heard further evidence on this point. I refer again to The Guardian report, which states:
"Giving evidence to the committee later, the French-trained nuclear engineer, Mr Shoja Etemad, who has written articles in The Guardian on the PWRAGR issue, suggested that the position on PWR cracking may be more serious than Sir Alan believed."
The cracking is the area that is revealed by proper, continual and careful inspection. The Government have embarked on a programme of expanding nuclear generation with a design that is by no means proven and is subject to severe criticism at a time when the nuclear inspectorate is 53 per cent. undermanned. The Minister has pointed out that any future position of the inspectorate is determined by the cutbacks, affecting all Departments, that the Government are making.
There have been cutbacks in inspections in the other areas of the Health and Safety Executive Inspectorate. This was admitted to me by the Minister on 31 January, when he said, in answer to a parliamentary question:
"There has been some curtailment of travelling in some Health and Safety Executive inspectorates due to increases in the costs of travelling not fully covered by increased funds and to the need to economise in the use of fuel."—[Official Report, 31 January 1980; Vol. 977, c. 740.]
In practical terms, this means, for instance, that in the Shrewsbury office of the Health and Safety Executive, the agriculture inspector, who covers Coventry, cannot investigate two serious accidents on site until April, when some
1320
moneys are available at the start of a new financial year.
These problems are emphasised by the executive's bulldozing through a reorganisation of the inspectorate against its wishes in 1975–76 with the rubber stamp of the Health and Safety Commission and the then Minister. District offices were closed in my area at Shipley, Bradford, Halifax and Huddersfield. This now means a 50-mile to 60-mile return journey between Leeds and Keighley. When the district office at Shipley was open, travel to Keighley could be effected in half the time, over half the distance.
Under reorganisation, Preston now covers Carlisle. The Bristol office covers Penzance, Falmouth, Redruth and Camborne. I warned at the time, in an Adjournment debate, that it would mean more travelling and less inspection. Now, under the Government's savage cutbacks, inspection is even further curtailed, because travelling is cut back.
The decision to move the executive to Bootle was welcome from the point of view of regional dispersal, but it raises the question why 300 office staff are to stay in London. What is the justification for this move? The executive appears willing to reorganise virtually everyone except itself. This will involve more travelling not on inspection to factory sites, where it counts, but between London and Bootle and back. I understand that Mr. Locke has made no secret of his determination to stay south of Milton Keynes. One wonders who is in final charge of the Health and Safety Executive and the Health and Safety Commission.
What are needed are more people to make inspections and not a massive head office staff spending much of its time travelling between its office and regional headquarters at Bootle. Some areas of inspection give cause for concern. In replies to parliamentary questions, I discovered that between 1975 and 1978 7,255 accidents occurred in quarries, causing workers to have three or more days off work. In other words, they were of a relatively serious nature.
During that period 58 people died, and the Quarries Inspectorate managed a total of four prohibition notices, three improvement notices and three prosecutions.

1321
Those 10 actions resulted from more than 26,000 inspections. I cannot believe that from that number of inspections, that number of accidents and that number of deaths, there was justification only for that small number of actions.
There is a marked contrast between the attitude of the Government towards social security scroungers and employment scroungers who do not obey the legislation, who cut corners on safety and do not provide proper standards. They get away with it. Yet the Government are to employ another 1,000 social security inspectors while people who work in quarries, mines and factories are dying and very little action is being taken by the inspectorate. In answer to a question that I asked, the Minister said that he was satisfied. The reality on the ground is different.
There is a quarry at Bridgwater which in 1978 excavated a barrowload of stone each week so as to come under the Quarries Inspectorate rather than the Factory Inspectorate, which was thought to be more scrupulous. There is need for action on that score.
The Minister might say that I should discuss these matters more often with the Health and Safety Executive. I did that several years ago, with disappointing results. In 1976 I raised the matter of the lifting of heavy weights, following an unsuccessful application for a Ten-Minute Bill. In proposing that Bill I pointed out that the position regarding weight limits was confused. The Agriculture (Lifting of Heavy Weights) Regulations 1959 provide for any workers employed in agriculture to lift any load consisting of a sack or a bag together with its contents lifted or carried unaided a maximum of 180 lb. Yet the Woollen and Worsted Textiles (Lifting of Heavy Weights) Regulations 1926 put the maximum, where the yarn, cloth, tool or appliance is reasonably compact, at 150 lb. or where it is not a rigid body, 120 lb.
Section 72(1) of the Factory Act 1961 limits the load for any employed person to any load so heavy as to be likely to cause injury to the person lifting, carrying or moving it.
There are three standards, but there are not three standards of people working in agriculture, textiles and factories. It
1322
is not surprising that, on average, 50,000 people a year suffer from accidents involving strains and sprains to the trunk, including slipped discs.
Following my unsuccessful application for a Ten-Minute Bill I met the chairman of the commission in September 1976. A promise was made to provide guidance notes to the inspectors by the following December, and a code of practice in the lifting of heavy weights was promised by April 1977. Neither has materialised. Nor have regulations been produced to bring the lifting of heavy weights into common form in the hope of reducing the number of injuries that occur each year.
I received from the Minister a reply to my question as follows:
"The Health and Safety Commission is considering proposals prepared by the Health and Safety Executive concerning regulations and guidance on manual handling. The Chairman of the Commission will inform me of the results of its deliberations."—[Official Report, 17 December 1979; Vol. 976, c. 101.]
That is nearly four years after the matter was raised in the House and subsequently with the commission. That is not good enough, because people are being injured all the time. Over that period about 200,000 suffered back injury, at least in part because of the inadequacy of the regulations.
Many of those injured, when seeking compensation, will be denied it by virtue of the judge relying on the very high limits laid down by the agriculture regulations.
The lack of care and competence of the executive and commission extends further. Various items of legislation require notification of processes to various named inspectors. The executive has chosen to qualify inspectors universally. Now, 1,465 inspectors hold full warrants and 323 hold part warrants. That causes some confusion, because section 19(1) of the Health and Safety at Work etc. Act 1974—the Minister will no doubt vividly recall that we served together on that Committee—states that every enforcing authority may appoint as inspectors
"such persons having suitable qualifications as it thinks necessary for carrying into effect the relevant statutory provisions within its field of responsibility".
Subsection (2) states that
"Every appointment of a person as an inspector under this section shall be made by

1323
an instrument in writing specifying which of the powers conferred on inspectors by the relevant statutory provisions are to be exercisable by the person appointed."
Every inspector now has a universal warrant, so that a factory owner can notify an agriculture inspector, or a person occupying premises where nuclear plant is operating can notify an agriculture inspector, that the terms of the legislation have been carried out. That was not the intention of the legislation.
Only today, the Select Committee on Statutory Instruments examined the position of the Whitwell Mine (Teleplatform Haulage and Refuge Holes) Regulations 1980, which are not the main bone of contention in the House. We reported the matter because the instrument requires elucidation. We pointed out that the expression "inspector for the district" in regulation 4 has no legal meaning any longer. We said
"It would appear to the Committee however that, as drafted, the inspector referred to in Regulation 4 need not be an inspector appointed specifically for mines and quarries for the provisions of this Regulation to be complied with. The Committee consider that the Explanatory Note to this Instrument should have clarified the matter."
The question is simply one of administrative organisation. I do not think that the legislation has been carried out effectively. The Health and Safety at Work etc. Act 1974 is not a private manual of guidance; it is a Public Act of Parliament. It should be carried out more accurately.
I hope that it will not prove to be the case, but the matter may well be tested in the courts. I think that it would be preferable for the Minister to issue some sort of guidance to the executive and commission rather than face that alternative.
I have covered a broad range because the opportunities for debating health and safety at work—a vital and important topic—are limited. I suggest to the Minister that there should be more expenditure on inspectors, the restoration of district offices, and a more vigorous approach by the executive and commission, especially on the lifting of heavy weights. Perhaps a more vigorous approach could be betokened by the production of the 1978 annual report, which is well overdue. The clarification of the procedure of notification to inspectors, and the author-
1324
isation of those inspectors, should be clarified and separated one from another.
I believe that the Minister has a good background to the matter. He served on the Committee. He has legal experience on the question of obtaining compensation. He knows as well as I do that it is people's lives and limbs that we are discussing. It behoves the House, and the Minister, to take action on the lines that I have suggested to reduce the enormous number of days lost through industrial injury, which is a more important question before the nation than the days lost through strike action.
12.9 am
The Under-Secretary of State for Employment (Mr. Patrick Mayhew): The hon. Member for Keighley (Mr. Cryer) has selected a broad subject for an Adjournment debate. He will understand if a somewhat fragmented reply has to be given to the wide variety of subjects that he touched upon in his speech. As the House knows, the hon. Gentleman has a close interest in this matter. However, I think that he does the subject less than justice by condemming the Health and Safety Commission and Executive for lack of care and lack of competence in the discharge of their duties.
Similarly, he does the Government less than justice—which perhaps will seem to him a less important matter—when he accuses them of devoting less interest than the subject of health and safety at work deserves. It is worth remembering that the Health and Safety at Work etc. Act was the product of all-party support deriving from the report of the Robens committee. The commission and the executive that were set up under it have the task of embodying, and giving effect to, the policy of that Act. The Government attach great importance to the whole subject of maintaining proper standards of health and safety at work, for the precise reason that the hon. Member gave, namely, that in an average year—it so happens that it is not the case this year—more days are lost through accidents than through strikes. The toll that that takes in terms of human suffering, to say nothing of the economic loss to the country as a whole, is very great.
The hon. Member ought not to give the impression that all is for the worst, and getting worse in the worst of all

1325
possible worlds. I thought that he gave a misleading impression of the state of affairs in the Nuclear Installations Inspectorate when he said that it was 53 per cent. under strength. He will know from the answer that he received—I do not have that answer with me, and I speak from memory—that it is true to say that a shortfall of that order currently exists in the lowest ranks of the inspectorate, that is to say, the inspectors. Their establishment is considerably lower than that of the next rank up, where the shortfall is considerably less.
While I am on that subject, I am advised that at present there are 18 vacancies out of an existing complement of 104 nuclear inspectors in the Nuclear Installations Inspectorate. There, no doubt unwittingly, it was misleading to say that the nuclear inspectorate as a whole is 53 per cent. under strength. That is not the case.
Similarly, the hon. Gentleman dwelt with some force upon the policies adopted by the Quarries Inspectorate when it comes to deciding whether or not to prosecute in respect of breaches of quarries law. What ought to be borne in mind is that over the last 10 years there has been a fairly consistent and maintained reduction in the number of deaths each year, as well as in the number of quarry injuries. I gave the hon. Gentleman the figures on 21 January. In 1960 there were 38 deaths and 2,601 injuries, resulting in more than three days' absence. Coming down year by year to 1979, the figures for which are provisional, that number has been reduced from 38 to 12 fatalities and for injuries from 2,601 to 1,846.
Whereas I do not doubt that the hon. Gentleman accurately sets out the answers that I have given in the past about the numbers of prosecutions, prohibition orders and enforcement notices, they must be seen—if he is to castigate the inspectorate in the manner in which he has castigated it—against that satisfactory record of decline both in deaths and in serious accidents.
The reorganisation of the inspectorates that took place in 1976 was carried out for a particular purpose. The reorganisation replaced 130 district offices by 21 area offices, with 14 sub-offices in locations that were a long distance from the area office. Inspectors were then posted
1326
to industry groups, and each group specialises in a number of industries. It was known that there would be a penalty for that reorganisation in the form of increased travelling by inspectors but it was thought that proper organisation of work by inspectors would reduce the lost time considerably and that the increased expertise deriving from specialisation would be worth the extra cost.
The primary objective was to increase the inspectors' knowledge of the health and safety problems of the industry and their solution—not to produce inspectors who were as knowledgeable about the operation of the industry as those who ran it. That objective is, in the view of the chief inspector, Mr. Hammer, well on the way to achievement. It is not possible to cost the extra travelling involved, either in time or in money, but the objective must, in my view, be right. We are faced with industry of increasing complexity, as new technology becomes available. The risk of accidents and disasters of the type to which the hon. Gentleman referred—the Flixborough disaster a few years ago—is such that we face increasing risk through the development of new and perhaps less familiar technology that will increase. Therefore it is important that the inspectorates should be grouped, so that there is a grouping of expertise and an ability on a wider scale than was possible before reorganisation to master the special knowledge of safety procedures that is required to provide the degree of safety and supervision that the Act requires. That was the purpose. The hon. Gentleman is right to point out the penalty in increased travelling time, but it was a penalty that was foreseen, and it is one that is worth paying.
Mr. Cryer: It is not a penalty that is worth paying, because it cuts out the number of inspections before the reorganisation specialist services can be called upon readily, and where necessary, to meet advanced technology. Does the Minister not recognise that by limiting expenses, the reorganisation, coupled with a cut-back in expenses, has savagely cut back the number of visits that can be made?
Mr. Mayhew: I do not accept that emotive way of putting the case, or the comparative way of putting it. I do not think that it is right to say that there has

1327
been a savage cut. It is right to say the Health and Safety Executive, in common with the rest of the public sector, is subject to the Government's policy of reaucing public expenditure. However, because of the importance attached to this work by the Government, the proposed money cuts are less than those proposed for many other areas of expenditure.
The Government have not made any bones about the likelihood that some visits will be cut in consequence. However, it should be borne in mind that the Health and Safety Executive—if I can put it this way—has come off better than many other areas of expenditure for the very reason that I gave at the outset: the Government attach great importance to the executive's ability to carry out its work properly. The commission and the executive are at present examining the effects of the proposed cut in the HSC budget on the work of the various divisions.
I should mention perhaps that the 3 per cent. cut in salaries and related expenditure imposed in 1979–80 was a cash cut of almost £1 million. For 1980–81, this new level is being taken as a base and is further reduced by £0·6 million as a first stage of the further reduction by 1982–83 of £2·2 million in staff costs. In 1982–83, the cuts announced by the Government in our statement of 6 December will amount to £2·23 million or about 260 jobs.
1328
Until the review is complete, it is premature to speculate about the effect of those cuts on the number or types of visits paid by inspectors. The commission and the executive are conscious of the important role of inspectorates in carrying out their functions in health and safety matters. I am certain—I have been assured of this—that they will bear that in mind in their deliberations.
An important point to remember is that the inspectorates will from now on have to give less of their time to training than they have in recent years. The training load is now diminishing and the overall effectiveness of the inspectorates' field force will therefore be enhanced.
The hon. Gentleman mentioned warrants and drew attention to the fact that notification of accidents, for example, may be made to any type of inspector, whether or not he has a specialist knowledge of the matter complained of. Technically, that is correct, but I hope that the hon. Gentleman will accept that assurance that I gave, in a written answer, that internal—
The Question having been proposed after Ten o'clock on Tuesday evening and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at twenty-one minutes past Twelve o'clock.

  PRIME MINISTER (ENGAGEMENTS)
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  DENT
  DENT
  UNITED STATES OF AMERICA (PRESIDENT)
  UNITED STATES OF AMERICA (PRESIDENT)
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  CHANCELLOR OF THE EXCHEQUER (SPEECH)
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    Departmental Circulars
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    Council Houses (Sales)
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    Local Authorities (Manpower)
    Local Authorities (Manpower)

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of SouthWell.
The Marquess of Dufferin and Ava —Took the Oath.

EEC SUGAR EXPORTS
Baroness ELLIOT of HARWOOD: 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 increase in net exports to the Free World market in both volume and percentage terms supplied by the EEC since the coming into force of the current EEC sugar regulations.
The MINISTER of STATE, MINISTRY of AGRICULTURE, FISHERIES and FOOD (Earl Ferrers): My Lords, in 1975–76, when the current EEC sugar regulations came into effect, the Community was a net importer of 582,000 tonnes of sugar. The figures for net exports of sugar to third countries since then are: in 1976–77, 69,000 tonnes; 1977–78, 1,346,000 tonnes; and 1978–79, 976,000 tonnes. The figure for 1977–78 represents an increase of 1,851 per cent. compared with the previous year, while that for 1978–79 represents a decrease of 27 per cent. over the previous year. Final figures for 1979–80 are not available but are estimated at 1,214,000 tonnes, which would be an increase of 24 per cent. over 1978–79.
Baroness ELLIOT of HARWOOD: My Lords, I thank the Minister very much indeed for going to so much trouble to give me all those figures. In view of the great complications which are going on in the world of sugar, I wonder whether the Minister could explain why the EEC has not joined the International Sugar Agreement, and would it not simplify things
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for all the world sugar producers if everyone belonged to the International Sugar Agreement?
Earl FERRERS: My Lords, I quite agree with my noble friend that it is highly desirable that we should join the International Sugar Agreement, but at the moment it is very difficult for the Community to do this when they are a surplus producer. The fact that they are intending to cut down the production of sugar should make that a more likely possibility.
Lord DOUGLAS of BARLOCH: My Lords, can the noble Earl say what the internal price of sugar is in the EEC, and at what price it is exported?
Earl FERRERS: My Lords, the world price of sugar at the moment is about £250 a tonne. Three weeks ago it was £300 a tonne. The intervention price of EEC sugar is £255 a tonne, so at the moment the intervention price is very similar to the world price.

COMMON FISHERIES POLICY: QUOTAS
2.40 p.m.
The Earl of KIMBERLEY: 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 progress has been made on quotas in the Council of Fisheries Ministers in the renegotiation of the Common Fisheries Policy.
Earl FERRERS: My Lords, there has been no substantive discussion of quota allocations since the Commission last tabled proposals in January 1978. However, as my right honourable friend the Minister of Agriculture, Fisheries and Food explained in another place on 29th January, the issue is likely to be placed on the agenda of the next Fisheries Council.
The Earl of KIMBERLEY: My Lords, while thanking my noble friend for that Answer, may I ask him whether he is aware that off Falmouth presently there are still 20 foreign factory ships, which

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are going to be joined shortly by some Danish ships, and that they are still processing mackerel because the closure for fishing applies only to the British and not to the Irish, the Dutch and the Danes, who have not yet exhausted their EEC catch quota? Secondly, is he aware that, with the ever-decreasing stocks of mackerel, even large trawlers are finding it uneconomic, and that next year may well prove disastrous to the fishing industry if some control is not exercised forthwith?
Earl FERRERS: My Lords, I think there are two points in my noble friend's supplementary question. The first is with regard to the factory ships. I would merely point out to him that they are not of course catching fish; they are processing fish caught by other people—and the factory ships represent an important market for our own fisheries catch. The second point to which my noble friend draws attention is of course the urgency for getting a Common Fisheries Policy. It is perfectly true that we have stopped fishing because our quota has been caught and that other members of the Community have not ceased fishing because their quota has not yet been caught. The total allowable catch is of course agreed by the Commission. What are not agreed are the quotas between members, as to how that catch should be made up, and that is what we wish to see agreed.
Lord BALFOUR of INCHRYE: My Lords, may I ask my noble friend this question: Will the Minister give an assurance that when North Sea quotas come to be considered the Atlantic salmon has some representation—it has been entirely neglected so far by those considering quotas—particularly as of the nine EEC countries, only three produce any salmon and the other six are avid consumers and will therefore need a lot of persuading in order to agree to preservation measures?
Earl FERRERS: My Lords, I shall certainly see that my right honourable friend, who is responsible for discussing this in the Community, takes note of my noble friend's point. All I would tell him is that I in fact have here a list of different catches, total allowance catches, and they run to four or five pages of different types of fish and different types of areas. It is a very complicated process.
Lord LOVAT: My Lords, would the Minister reassure the House that the mackerel catches off the South-West coast of England are not in many cases being ground into fishmeal because of the unnecessary destruction of immature fish?
Earl FERRERS: My Lords, I cannot give my noble friend that assurance without notice.

TANZANIA AND UGANDA: SPORTS POLICY
2.43 p.m.
Lord PAGET of NORTHAMPTON: 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 advise British athletes to consider whether in view of Tanzania's invasion of Uganda they ought not to play games with Tanzanians until Tanzania has withdrawn her invading troops.
Lord TREFGARNE: No, My Lords, there is no parallel between the situation in Uganda and that in Afghanistan. The question of offering advice to British athletes does not arise.
Lord PAGET of NORTHAMPTON: My Lords, why is there no parallel? The two expelled Amins seem to have been about equally objectionable; the armies of invasion are equally foreign. The distinction between them is that the Tanzanian army is behaving a good deal worse, by all accounts, than the Russian army and is equally, or, perhaps, even more, unwelcome to the inhabitants.
Lord TREFGARNE: My Lords, the noble Lord is misinformed. The invasion—it was not an invasion. The arrival—
Several noble Lords: Oh!
Lord TREFGARNE: My Lords, I asked for that! The arrival of Tanzanian troops in Uganda was, by all accounts, very much approved of by the Ugandan people at the time. I do not think that the same could be said for the Afghans.
Lord ELWYN-JONES: My Lords, is it not also the case that the Afghanistan Amin was murdered?
Lord TREFGARNE: My Lords, so I believe.
Lord BROCKWAY: My Lords, is it not a fact that the Ugandan troops attacked Tanzania before the Tanzanian troops went into Uganda; and is it not the view of the British High Commissioner in Nairobi that those killed in Uganda were killed not by Tanzanian troops in the first instance but by a mutinous regiment opposed to Amin?
Lord TREFGARNE: My Lords, it is certainly the case that the Ugandans, before the Tanzanian troops entered Uganda, had attacked Tanzania. As for the disorder that reigned in Uganda prior to that time, I think that the noble Lord is quite right.
Lord PAGET of NORTHAMPTON: My Lords, surely it is the Russian view, well supported, that the Afghans were attacking Russian territory across that border—just as they attacked us when w e were the local Empire—and that, according to the Russians, at any rate, the casualties are caused by the Afghans who resented the Soviet domination in the same way as the casualties were caused in Uganda by the Ugandans who objected to Tanzanian occupation. Is there any difference here apart from the general proposition that so long as it is black then, morally, it is right? After all, we cannot say anything to a man like President Nyrere, to whom we are so indebted for the advice he has given us about free elections.
Lord TREFGARNE: My Lords, if the purpose of that lengthy supplementary question is to suggest that the Russian invasion of Afghanistan was a response to an Afghan invasion of Russia, that assertion is absurd.
The Earl of SELKIRK: My Lords, can the noble Lord say whether there are still Tanzanian troops in Urganda, and whether there is still any hope of holding elections in that country some time during the coming summer?
Lord TREFGARNE: My Lords, I do not have the precise numbers of
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Tanzanian troops presently in Uganda but I understand that it is proposed to hold elections in the summer of 1981.
Lord STEWART of FULHAM: My Lords, has the noble Lord noticed that recently there have been parliamentary elections in the Soviet Union? Does it not look as if my noble friend Lord Paget has somehow missed his vocation and got into the wrong Legislature?
Lord CORK and ORRERY: My Lords, can the noble Lord say whether it is proposed to hold Olympic Games in Tanzania?
Lord TREFGARNE: Not that I have heard of, my Lords.
Lord HARMAR-NICHOLLS: My Lords, will my noble friend keep in mind that the important thing is that the invasion of Afghanistan was part of a recognisable pattern? That is not the case in Tanzania, and we hope that it will be something that will be rectified locally rather than making it the world issue that Afghanistan could develop into.
Lord TREFGARNE: My Lords, I think it is right that the invasion of Afghanistan threatens the security of the whole world. The same cannot he said of the troops now in Uganda.
Lord MILVERTON: My Lords, if it is considered right and proper to compete in sport against the Russians (and even, possibly, in Moscow), would the Minister not consider that it is about time that we let ourselves and the rest of the world compete with the South Africans in sport?
Lord TREFGARNE: My Lords, that is rather another matter. Our view is that if the Olympic Games were to continue in Moscow, it would provide a propaganda coup for the Russians which would be quite against world interests.
Lord WIGG: My Lords, has the noble Lord's approval of Tanzania extended to cover President Nyrere's statement yesterday that he wholly disapproves and is sceptical of the integrity of British Government policy in Rhodesia?
Lord TREFGARNE: My Lords, that is another question; but we have taken note of what President Nyrere said.

PROPOSED EUROPEAN NUCLEAR-FREE ZONE
Lord BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will support the proposal that a nuclear weapons-free zone should be established for Europe, extending from Poland to Portugal.
Lord TREFGARNE: No, my Lords. In present circumstances, such a proposal would be one-sided in its application and unverifiable. It would undermine the security of the United Kingdom and her allies, and would do nothing to stabilise the current European military situation.
Lord BROCKWAY: My Lords, is the Minister aware that this proposal has been supported by leading spokesmen in Western Europe, and by dissidents in Poland and even in East Germany whose names may not he mentioned? We all denounce the infamous treatment of Sakharov in Moscow. But is the noble Lord aware that one of Sakharov's alleged crimes is to oppose the extension of nuclear arms? If Latin America can have a free zone, why should we not seek it in Europe as well?
Lord TREFGARNE: My Lords, the great bulk of the Western nuclear deterrent —apart of course from the maritime submarines and the like—is based in Europe. Does the noble Lord really think it right that we should agree to the complete removal of all those nuclear forces while the Russians make no similar proposal with regard to their nuclear forces just the other side of the Iron Curtain?
Lord GORONWY-ROBERTS: My Lords, would the Minister like to confirm that it has been and is the policy of successive British Governments to regard with constructive sympathy all proposals for regional arms control and disarmament, including nuclear-free zones?
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We showed this in New York and in other places regarding, for example, the Latin American proposals. Those progressed very far indeed and, while not being perfect, they are at least a contribution to a solution of this question. Would the Minister also confirm that we are always willing to look at proper proposals, subject to clarification and the give and take between the participants which the Minister touched on just now, as precursors of global arrangements which would take us very far indeed in regard to nuclear arms control? It would be helpful generally if the Minister would respond to this question and say that we are always willing to look constructively at such proposals as my noble friend Lord Brockway mentioned this afternoon.
Lord TREFGARNE: Yes, indeed, my Lords. I am very willing to respond to that. Such zones can make a positive contribution to international and regional security, to the cause of non-proliferation of nuclear weapons and the reduction of the risk of nuclear war; but they must be properly conceived.
Lord SHINWELL: My Lords, am Ito understand that the proposal emanates from Her Majesty's Government or is it a handover from the previous Government? Are we to understand that in the event of a nuclear war—we do not want one, naturally—nations can contract out?
Lord TREFGARNE: No, my Lords. It was not a British proposal. So far it is only a proposal, anyway.
Lord BROCKWAY: My Lords, the Minister has, unusually, asked me a question. May I ask him whether he is aware that I have not suggested that Western Europe alone should declare this free zone? Is he aware that I have suggested that Poland and Eastern Germany should be included? Is he also aware that there are dissidents in both those territories who are supporting this proposal?
Lord TREFGARNE: My Lords, I understand what the noble Lord says; but I can only repeat that we have to judge this proposal as we see it in relation to our own security.
Lord AVEBURY: My Lords, can the noble Lord say what may be the total amount of fissionable material locked up in nuclear weapons in the zone to which the noble Lord refers, and what this would represent in terms of kilowatt-hours if it were used for electricity generation?
Lord TREFGARNE: No, not without notice, my Lords.

BUSINESS OF THE HOUSE
Lord DENHAM: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m. my noble friend Lord Cullen of Ashbourne will be repeating a Statement which is being made in another place on the Lambeth, Southwark and Lewisham Area Health Authority.
It may also be for the convenience of the House if I tell your Lordships that dinner will be available tonight at the usual time. There will be no adjournment, so it is hoped that those of your Lordships who are interested in the Report stage of the Criminal Justice (Scotland) Bill will choose your own moments to acquire what refreshment you may need.

HIGHWAYS BILL [H.L.]
The LORD CHANCELLOR (Lord Hailsham of Saint Marylebone): My Lords, I beg to introduce a Bill to consolidate the Highways Acts 1959 to 1971 and related enactments, with amendments to give effect to recommendations of the Law Commission. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a. —(The Lord Chancellor.)
On Question, Bill read la; and to be printed.

STATUTE LAW REVISION (NORTHERN IRELAND) BILL [H.L.]
The LORD CHANCELLOR: My Lords, I beg to introduce a Bill to revise the statute law of Northern Ireland by repealing obsolete, spent, unnecessary or susperseded enactments. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read la. —(The Lord Chancellor.)
On Question, Bill read 1a; and to be printed.

HOUSE OF LORDS' OFFICES
2.56 p.m.
The CHAIRMAN of COMMITTEES (Lord Aberdare)The CHAIRMAN of COMMITTEES (Lord Aberdare) rose to move, That the Fourth Report from the Select Committee be agreed to.
The Report was as follows:
1. REFRESHMENT DEPARTMENT
The Committee have considered a recommendation of the Refreshment Sub-Committee that. following the incorporation of the Refreshment Department of the House of Commons as a full Department of the House under the Commission and the establishment of the catering staff, similar steps should be taken by the House of Lords. The Committee see no viable alternative to this recommendation, which should ensure that catering arrangements in both Houses are treated on an equal basis. They have, therefore, invited the acting Leader of the House to discuss the recommendation, as a matter of urgency, with the Treasury with a view to implementation from 1st April 1980.
2. FACILITIES FOR MEMBERS OF THE EUROPEAN PARLIAMENT
The Committee have again considered what facilities of the House might be made available to Members of the European Parliament. They received a report from the Chairman of Committees on the consultations he had had with the appropriate authorities of the House of Commons to determine a joint approach to this question. The Committee re-affirm their belief that, if possible, both Houses should continue to act in parallel in granting facilities at Westminster to Members of the European Parliament.
The Committee agreed in principle to grant Members of the European Parliament limited access to parts of the House on a trial basis, but reserved their final decision until the views of the Services Committee of the House of Commons were known.
3. STAFF OF THE HOUSE
A report from the Sub-Committee on the staff of the House was received.
4. PARLIAMENT OFFICE
The Committee were informed of the appointment of J. E. Turnbull as temporary Clerk.
5. DEPARTMENT OF THE GENTLEMAN USHER OF THE BLACK ROD
The Committee were informed of the resignation of Lt. Commander D. E. Brock and the appointment of Captain F. P. Horsfall, MBE, to the post of Staff Superintendent.
6. SUPERANNUATION
The Committee were notified of the following awards:—

(a) Pension and lump sum to Mrs. B. Warner, Cleaner, who formally retired on 4th January 1980;

(b) Pension and lump sum to Mrs. D. Chandler, Cleaner, who formally retired on 30th January 1980;

(c) Pension and lump sum to Mrs. J. V. Gulley, Cleaner, who formally retires on 9th March 1980;

(d) Short service payment to Miss R. J. Stebbing, Personal Secretary, who resigned on 31st January 1980;

(e) Short service payment to Mrs. S. J. Ellison, Personal Secretary, who resigns on 22nd February 1980;

(f) Short service payment to Mrs. M. J. Clark, Cataloguer, who resigned on 31st December 1979;

(g) Transfer Value payment to European Parliament in respect of Mr. NI. F. Joyce, Doorkeeper, who resigned on 13th November 1977.

The noble Lord said: My Lords, I should draw your Lordships' attention to the second item, facilities for Members of the European Parliament. When we last discussed this matter, I was asked to keep in very close touch with what was going on in another place. This I have done and I reported in detail to the House of Lords' Offices Committee. It was as a result of that that the Committee reaffirmed their belief that it is important to act in parallel with what is being done in the House of Commons. They therefore came to the conclusion that any final decision should be taken after it was known what decision had been arrived at by the parallel committee, the Services Committee, in another place. In the meantime, as your Lordships will see, the Committee agreed in principle to grant Members of the European Parliament limited access to parts of this House. I beg to move.
Moved, That the fourth report from the Select Committee be agreed to.—(Lord Aberdare.)
Baroness PHILLIPS: My Lords, may I ask the noble Lord what are these limited facilities, bearing in mind that there are those of us in this House who have sought unsuccessfully for some time actually to spend our own money in the dining room of the House of Commons? There are certain noble Lords who feel
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that it would be very hard if the European Parliamentarians were granted access to both Houses of Parliament and all facilities without this being very fully discussed. The noble Lord referred to limited facilities, perhaps he will tell us how limited these are.
Viscount SIMON: My Lords, may I, for clarification, ask the noble Lord this? When we speak about Members of the European Parliament, do we mean only United Kingdom Members?
Lord ABERDARE: Yes, my Lords, only British Members of the European Parliament. So far as the point made by the noble Baroness, Lady Phillips, is concerned, I cannot go any further at the moment because the Offices Committee thought it inappropriate to go into detail until they knew what decisions had been arrived at by the Services Committee. Although the Services Committee have met, their report has not yet been published. As soon as it is published, we shall know what facilities they are granting at the other end of the corridor. We can then make up our minds what facilities we grant here. It will of course have to come back to the House before any final decision is made.
Lord SHINWELL: My Lords, may I ask the Chairman of Committees a question'? If we are to provide facilities —limited or expansive—for Members of the European Parliament in your Lordships' House and the precincts, is there a quid pro quo? Are we to be allowed to use the facilities available in the European Parliament?
Lord ABERDARE: My Lords, if I may speak again with the leave of the House, I can assure the noble Lord that he will be very welcome at any time to visit the European Parliament. They will be delighted to see him. I do not think I should speak any more.
Lord SHINWELL: My Lords, may I be informed what are those facilities of which I could avail myself?
On Question, Motion agreed to.

CRIMINAL JUSTICE (SCOTLAND) BILL [H.L.]
3 p.m.
Report received.
Clause 1 [Suspect or potential witness may be required by constable to identify himself]:
The MINISTER of STATE, SCOTTISH OFFICE (The Earl of Mansfield)The MINISTER of STATE, SCOTTISH OFFICE (The Earl of Mansfield) moved Amendment No. 1:
Page 1, leave out lines 19 to 26 and insert—
(" ( ) The constable may require the person mentioned in paragraph (a) of subsection (1) above to remain with him while he (either or both)—

(a) verifies any name and address given by the person: Provided that the constable shall exercise his power under this paragraph only where it appears to him that such verification can be obtained quickly;

(b) notes any explanation proffered by the person.").

The noble Earl said: My Lords, with the indulgence of the House, I shall speak to Amendments Nos. 1, 2, 3 and 5 together. Before doing so, as this in fact is the first amendment or the first series of amendments to be considered in this long and somewhat complex Bill, perhaps I might be permitted to point out that these amendments represent the first part of the undertakings which were given by my noble and learned friend and I at the Committee stage of the Bill, to the effect that the Government's mind was by no means closed to suggestions which might be made by noble Lords in any part of the House and that we were very anxious to produce in the end a Bill which hopefully would receive from all parts of the House the greatest possible agreement that we could devise. I hope therefore, without being too presumptuous, that our deliberations may proceed on that basis. I have no doubt that there will be moments when entrenched attitudes will be taken up, but by and large I hope that these amendments will be seen to be a manifestation of the Government's goodwill over this matter which is, as I have said, a difficult and complex one.
These particular amendments fulfil an undertaking which I gave during our consideration of Clause 1 in Committee. I said then that, having heard the anxieties voiced by noble Lords both on Second
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Reading and in Committee, I accepted it was undesirable to subject a potential witness to the same compulsion as a suspect faces under Clause 1. However, we still consider that it is reasonable to reinforce the moral duty of a potential witness to identify himself to the police by making that a legal obligation, as indeed the Thomson Committee recommended.
Amendments I and 5, therefore—the others are essentially drafting points—remove the obligation on a witness to remain with a police constable while he verifies his name and address and notes any explanation that is proffered. There is therefore no penalty on a witness who fails to remain with a constable but if he fails, without reasonable excuse, to give his name and address when asked, he would be guilty of an offence and liable on summary conviction to a fine not exceeding £50. I recognise this may not go so far as some noble Lords might have wished, but we are concerned to try to balance the interests of the innocent bystander, on the one hand, who may wish to go about his business, with, on the other hand, the interests of society and its protection against crime.
The requirement for a potential witness to identify himself to a constable is a very minimal extension of the legal duties of the citizen. Noble Lords will, I am sure, accept that the imposition of such a requirement does not extend the moral obligations of the citizen at all. I therefore consider that we have now achieved a proper balance in this respect between the interests of the individual and the wider interests of society. I beg to move.
Lord ROSS of MARNOCK: My Lords, I think we are all very grateful indeed for what the noble Earl the Minister has said, and certainly I was very pleased at the attitude taken up both by him and by the noble and learned Lord the Lord Advocate. It showed a willingness to be flexible with which I have not hitherto credited Lord Advocates; but then, although my experience of them in another place was long, it may be that my experience here is going to be much more pleasant.
That being so, I was rather taken aback by what the noble Earl said just now about having reached a balance. I would ask:

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Do not let him make up his mind too quickly. At one moment he is offering to be flexible and to listen to everything that is said, and then saying that he himself is getting into an entrenched position. Certainly I am grateful for the changes that have been made, for the redrafting and particularly for the easing of the position of the innocent bystander who becomes a witness and who will not now be subjected to certain things, including the fact that the constable no longer has power to detain him. That overtakes one of the amendments that I have on the Marshalled List, No. 2. I regret that he has not gone as far as my Amendment No. 5, but we will come to that later. It may well be that in the course of time the Government will see the light there.
I should like to raise the following point in connection with Amendment No. 1. There has been a change in the drafting. Part of the amendment now reads:
"…the constable shall exercise his power under this paragraph only where it appears to him that such verification can be obtained quickly ".
Originally it was drafted as follows:
"…Provided that the requirement to remain with the constable shall cease to apply if there is unreasonable delay in obtaining such verification ".
That has become subjective as far as the constable is concerned. It was fairly objective originally; so it is the constable who has to make up his mind about the time taken for verification. This is a hardening of attitude as far as the witnesses or the people who are detained are concerned. I hope the noble Earl will look at that again. I think we are giving far too much power to the constable involved. He has got to determine whether his suspicions are justified and whether enough time has passed in respect of verification. It is a small point, but an important one, as regards the attitude of the Government towards this. I think that where we can we should bend on the side of the people who are stopped and who probably start by being willing to co-operate but when they discover all that is involved in co-operation it might make life difficult. That is the only point I wish to make. I hope the Government proceed through the rest of the Bill with the same willingness to co-operate that they have suddenly shown here.
Lord FOOT: My Lords, may I join
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with the noble Lord in what he has just said in expressing the appreciation of the whole House for the way in which the Government have so far during the passage of this Bill shown the greatest moderation and willingness to listen to the arguments advanced. I am also greatly encouraged by what the noble Earl has just said about the fact that that is going to continue and that we have not necessarily reached the end of the road in these matters we have been discussing.
The noble Earl, when he was replying to my amendment at the Committee stage on Clause 1, concluded by saying three things. He said that the Government felt obliged, as they were at present advised, to stand firm upon transforming the moral obligation of a witness to give information—or, at any rate, his name and address—to a policeman, into a legal obligation. The noble Earl made it clear at that time that as he was then thinking, and as he obviously thinks now, he could not give way on that point. He went on to say that he would have regard to another matter to which he has not, I think, referred; that is, whether it might be possible to draw a distinction in the case of a witness between a serious crime and a minor offence. The noble Earl might be able to tell us what has been his thinking upon that point in the meanwhile.
Another matter which he undertook to look at again, and which he has now done, is the question of whether it is desirable or necessary to impose the same compulsions upon the witness as upon the suspect. I readily acknowledge that the noble Earl has come up with something which is certainly a relaxation of what appeared in the original Clause 1. Of course, it does not go very far, as I expect the noble Earl will be prepared to acknowledge, because there were four obligations on the witness under the clause as it was originally drafted.
The first power given to the police was the power to require the witness to remain with him while he verified his name and address. The second was that the police officer has the right to use reasonable force in order to make the witness comply. The third was that if the witness failed to give his name and address, or gave a false one, he would then be committing an offence. The fourth was that if the police constable reasonably supposed

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that he was committing an offence by failing to give his name and address, or by giving a false one, then the police officer has the right to arrest him there and then. Those last two remain and what has disappeared is the right of the police officer to require a witness to give his name and address, and the power of the police officer to ask a witness to remain with him; as well as of course, the corresponding power to use reasonable force to make him do so. I readily acknowledge that that is an amendment and a relaxation.
In the debate during the Committee stage, which the noble Earl said at the time had been a very useful one, various views were expressed as to how this clause might be mitigated and it was evident then that there were powerful arguments on both sides. I hope that the arguments which I advanced on that occasion come within that category. I took the view, on balance, and I adhere to that view now, that giving the police this power to demand the name and address, and, if it is not given, to arrest the witness and to bring him before the court as committing an offence, is undesirable, because it will increase the sense of alienation between the public and the police. But I am not going to argue that matter again.
However, I should like to say this by way of comment. I take the view, if the Government insist, as they are now insisting—and there are powerful arguments in favour of it—that a witness shall be subject to legal sanctions if he fails to give his name and address, or gives a false one, that there must be legal sanctions to back that up. If you make it a legal duty upon the witness to give his name and address, then I think, logically, that you cannot refrain from making the not giving of the name and address an offence and that you must go on to provide that there shall be a power of arrest. That is a matter which we shall be discussing in a minute upon the noble Earl's subsequent amendment.
Finally, on this matter of the possibility of drawing a distinction between the minor offence and the serious crime, I am bound to say, if the Government have had difficulty in finding a way of introducing a distinction of that kind, of finding a way in which you can by statute define the difference between a serious
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offence and a minor offence for these purposes, that I appreciate that difficulty and it may be incapable of solution. But I should be interested to hear from the noble Earl what he has to say about that, and what is the Government's thinking upon that matter.
Lord GALPERN: My Lords, the amendment seeks to amend Clause 1. The marginal note states,
"Suspect or potential witness "—
in the singular—
"may be required by constable to identify himself".
I can easily see how a constable could handle a situation when there was a single witness. But let us assume the practicalities of what is a common occurrence. There is a disturbance in a disco hall and the police have been asked to appear and to investigate it. There is bound to be far more than one witness. I should be obliged if the noble and learned Lord the Lord Advocate could indicate how a constable would deal with such an incident in a disco hall, where many witnesses are involved. Furthermore, such an incident would mean that the period of detention which the police would require could extend to quite a long period, until such time as all the witnesses had given their names and addresses, had had them verified and had their comments on the situation noted, as the constable is required or permitted to do. Therefore, while the single witness is all right, how would the amendment apply in the situation that I have just illustrated?
3.18 p.m.
The Earl of MANSFIELD: My Lords, perhaps I may reply very briefly. The noble Lord, Lord Ross, made the point that, to him at any rate, the amendment gives more power to the individual police officer who comes across a situation and is expected to deal with it. I think that he mentioned the phrase "subjective test". Of course, inevitably, the test must be subjective whether one takes the clause as originally drafted, or as it is under the amendment which I have moved. The duty upon the officer is now not to exercise his power, unless it appears that verification can be obtained quickly, and I should have thought that means, in plain English, that the boot is now on the other foot.

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Whereas before there was a question of undue delay, which might prevent the officer from exercising his power, now he is not allowed by the words of the amendment to exercise his power unless such verification can take place quickly. I should have thought, quite contrary to what the noble Lord, Lord Ross, has said, that this is something in favour of the accused person and the suspect, and not something which detracts from their rights.
The noble Lord, Lord Foot, put a number of points. May I take the most important, which is the distinction which he would have liked to see written into the Bill as between serious crimes and minor offences. Again, if one takes the situation which, in a way, was postulated by the noble Lord, Lord Galpern, of an officer who comes upon a scene which may well be one beset with a number of people and a situation in which he does not know at that stage how it is going to develop and what will emerge from it, this is very different from the situation in which an officer comes across a motor car that is parked in a dangerous place, contrary to the Road Traffic Act. There the officer has got to apply the tests —and they are subjective—as quickly as he can.
The Government have given consideration—and I can say earnest consideration—as to how one could make some sort of a distinction between what might be a minor offence and what could turn out to be a serious crime. We do not see that there is a distinction which can be drawn which can fruitfully be put into a statute. I think that on reflection most noble Lords will agree that it is impossible to do so in a satisfactory way which will not lead to a great deal of difficulty for police officers who have to carry out their duty—and not least the suspects who are going to be the subject of it.
The noble Lord, Lord Galpern, has not, if I may say so, totally comprehended the effect of my amendment. In the case of potential witnesses, verification is now out. There is no question of them having to remain in the presence of the police officer until verification takes place. Their duty is to give their name and address, and that is all. There are sanctions—I quite agree that there are sanctions, and these the noble Lord, Lord Foot, referred to—
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if they fail to carry out that obligation, which I think most noble Lords are agreed is a moral obligation and which under the terms of this Bill and as a direct recommendation of the Thomson Committee, we are making into a legal obligation.
So far as what I might call the multitude of potential witnesses are concerned, if one reads the clause in plain English and says that the lesser includes the greater—in other words, for "witness" read "witnesses" or for "suspect "read" suspects"—then I think the noble Lord will perhaps agree that the clause is reasonably worded. I quite agree that there may well be practical problems in one individual officer asking a large number of people for their names and addresses when he comes across a scene which may well prove to be unpleasant. Nevertheless, the power is there in the clause for him to use.
I quite agree with the noble Lord, Lord Foot, that one regards the imposition of a legal duty on somebody who might become a witness with a great deal of hesitation before one writes it into a Bill, but in the circumstances this is something which has not been done without, as I have said, a lot of thought and a lot of consideration and with, as I have also said, the blessing of the Thomson Committee. In these circumstances, I can only commend the amendment to your Lordships.
On Question, amendment agreed to.
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendments Nos. 2 and 3:
Page 2, line 2, leave out ("or (b)")
line 5, leave out ("the said paragraph (a) or (b)") and insert ("paragraph (a) or (b) of subsection (1) above ")
On Question, amendments agreed to.
Lord FOOT Lord FOOT moved Amendment No. 4:
Page 2, line 9, at end insert ("; and the constable shall inform the person mentioned in paragraph (b) of subsection (1) that

(a) the reason for his requiring the person's name and address is that the constable believes that the person has information relating to the suspected offence, and

(b) it is an offence for such a person to fail without reasonable excuse to give his name and address or to give a false name or address.").

The noble Lord said: My Lords, this is a small matter but perhaps not entirely unimportant. Under subsection (3) of Clause 1, it is provided that where a constable is exercising these powers to

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require a person to give his name and address and so on—whether he is exercising that power against a suspect or whether he is exercising it against a potential witness—it is required of him that he shall inform that person, whether it be witness or suspect, of his suspicions; that is, the suspicion that an offence has been committed or is being committed, and that, secondly, he shall tell the witness or the suspect of the general nature of the offence which he thinks has been or is being committed. In addition to that, in the case of the suspect only he is required to tell the suspect why he is requiring the suspect to stay with him.
The question which I have raised in the amendment is this. The object of those requirements seems to me, in common sense, to be this: it seems to be desired that where a policeman asks somebody for his name and address and so on the person asked for that information shall know what it is all about. If that is right, I should have thought that the police constable, in the case of the witness, ought then to be required to go on to tell the witness two things, the things which are set out in my amendment. The constable should inform the person mentioned in paragraph (b) of subsection (1)—that is, the potential witness—that:
"(a) the reason for his requiring the person's name and address is that the constable believes that the person has information relating to the suspected offence "—
that is, he should tell the potential witness that he wants his particulars because he thinks he may be a useful witness; and, secondly, he should inform the person concerned that:
"(b) it is an offence for such a person to fail without reasonable excuse to give his name and address or to give a false name or address ".
I seek to put that in only in order that we shall not have the situation arising where a witness fails to give his name and address because he does not understand that he is under any obligation to do so. We are, after all, changing the law of the land from what it is has been for, goodness knows! countless decades in the past, certainly so far as England is concerned, that an ordnary individual is not under an obligation to give a policeman any information if he does not want to do so. We are changing all that and introducing this new legal duty. It seems to me to be only a reason-
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able precaution that the person who is now asked to give his name and address because he may be a witness should be informed of the reason for it.
That is all I have to say about the amendment. However, I wonder whether I might, with the leave of the House and, indeed, with the leave of the noble Earl, raise a new matter. The matter which has occurred to me in the time that has elapsed between the Committee stage and now is this. As I have already said, under subsection (3) a police constable in these circumstances is required to go through a certain routine. He has got to give the suspect information about his suspicions and the general nature of the offence which he thinks has been committed.
The question I want to raise with the noble Earl is this: supposing that the police constable—and very often of course he will be acting in conditions of some disturbance—fails to comply with those requirements; supposing he fails to tell the suspect or the witness what his suspicions are, or fails to tell either of them the general nature of the offence which he thinks is being or has been committed, what is the result? Does it mean that then everything that happens subsequently is invalidated?
I raise this question because the noble Earl may remember that under the Road Safety Act in this country there has been a whole host of cases where it has been held by the courts that certain processes have been invalidated by the failure of a police constable to go through the necessary procedures, to put the right questions, and so on. The questions which I should like to ask the noble Earl, if it is appropriate for me to do so at this stage, are these. If the police constable does not comply with those requirements, has the person then who fails to give his name and address, or whatever it may be, committed an offence at all? Again, if the police constable fails to comply with these routine procedures is the subsequent arrest invalid? If it is invalid has the person who is purported to have been arrested a right of civil action against the chief constable, or whoever it may be, for wrongful arrest?
I raise this matter at this very late stage because I am anxious that this new procedure should work. I do not want to

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see it break down but I am also anxious to see that under this Bill we do not create some of those very considerable difficulties that have arisen particularly under the Road Safety Act. I am sorry that I have not given the noble Earl earlier notice of this, but I shall be interested to hear if he can make any observations about it. I beg to move.
The Earl of MANSFIELD: My Lords, it may be helpful if I intervene at this stage because the noble Lord may be pleased to know that he is pushing at an open door. I am grateful to the noble Lord for having put forward this amendment. If your Lordships look at the Marshalled List you will find that the amendment is starred; I do not say that in any sense of reproach, but the fact that it is so recent has meant that the draftsmen have not been able to give the amendment quite the consideration which they would like. Therefore, I am not now in a position to accept the amendment because there are doubts and difficulties about the quality of the draftsmanship.
Having said that, may I say that the Government accept the principle that a witness should be told why his name and address is required, and that it will be an offence to fail to give his proper name and address. What I propose to do is to consider, in consultation with the draftsmen, how provision can best be made in this clause to give effect to this principle. Therefore, in the light of this undertaking, which will lead to some sort of an amendment to the Bill at a later stage—whether in this House or in another place, I will not at this stage specify—I hope that the noble Lord will withdraw his amendment.
I will just respond to the questions that he put to me. As a practitioner himself the noble Lord will know the effect on one's mind of being asked off the cuff questions which may have difficult legal consequences. As I read the clause, if the constable does not go through the proper procedures and does not carry out the requirements of what will become the section, then if the witness fails to comply he will not be guilty of a criminal offence. I think that must be so. But I would point out that if he does give his name and address, and if at the end of the day he is in a position where he is able
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to help by making a statement or giving evidence or whatever it may be, he will to that extent have helped the administration of justice.
Lord FOOT: My Lords, before the noble Earl leaves that point he has told us what he thinks is the position with regard to the witness; I wonder if I may now ask what he thinks the position is with regard to the suspect if the police officer fails to carry out the proper routines.
The Earl of MANSFIELD: My Lords, I think that, too, matters here and again I am diffident about giving this sort of reply except that I have the consolation that when the moment comes sheriffs—and indeed judges—will look at the statute and not at Hansard. What I will say about suspects is this. So far as criminal proceedings are concerned the same will apply. If the statute has not been complied with he will not be guilty of an offence. But in Scotland we have this further check or balance, if I may so describe it, that the procurator fiscal who is responsible for the prosecution of these cases, if it appears to him that the procedures have not been complied with, I should think at least in the case of a witness and very probably in the case of a suspect, will not allow the prosecution to go further forward. That is the sort of way in which procurators fiscal behave in my admittedly brief and somewhat humble tenure of the Scottish bench. I hope that will satisfy the noble Lord.
Lord ROSS of MARNOCK: My Lords, can the noble Earl make one point clear to me? The only obligation upon the potential witness is to give his name and address, I gather, and there is no obligation on him to make any explanation at all. The explanation arises only if he himself willingly gives one?
The Earl of MANSFIELD: Yes, my Lords, that is right. Will the noble and learned Lord the Lord Chancellor put the question?
The LORD CHANCELLOR: The Question is that Amendment No. 4 be agreed to. As many as are of that opinion will say Content; to the contrary, Not-Content?
The Earl of MANSFIELD: My Lords, I apologise—I am totally out of order. I invited the noble Lord, Lord Foot, to withdraw his amendment and he has not done it.
Lord FOOT: The fault was mine, my Lords, I did not get up in time to withdraw the Amendment. I am very much obliged for what the noble Earl has said and I am quite content to leave it in the way he suggests.
Amendment, by leave, withdrawn.

LAMBETH, SOUTHWARK AND LEWISHAM AREA HEALTH AUTHORITY (TEACHING)
3.37 p.m.
Lord CULLEN of ASHBOURNE: My Lords, with the leave of the House, it might be convenient if I were now to repeat a Statement made in another place by my right honourable friend the Secretary of State for Social Services on the Lambeth, Southwark and Lewisham Area Health Authority (Teaching). The Statement is as follows:
"With permission, Mr. Speaker, I wish to make a Statement on yesterday's judgment on the appointment of commissioners in Lambeth, Southwark and Lewisham.
"In August 1979 I gave directions under Section 86 of the National Health Service Act 1977, in effect appointing commissioners to manage the affairs of the Lambeth, Southwark and Lewisham Area Health Authority (Teaching). My action was intended to ensure that the AHA (T) should keep its spending for the year 1979–80 within the cash limits laid down by my predecessor.
"Although the court expressly held that I acted reasonably and in good faith in giving those directions, and moreover accepted that the situation which faced me did require immediate action, the learned judge found that in giving directions without specifying the duration I acted outside the power conferred by Section 86. He went on to suggest that there was an alternative course I might have taken.
"I shall study the judgment in detail
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when I receive a copy and any question of an appeal must wait until then.
"However, my first thought is that proper respect for the courts and the rule of law meant that I must give urgent consideration to the early restoration to the members of the authority of their powers. I shall therefore this afternoon be considering with the chairman of the Regional Health Authority and the chairman of the commissioners the steps which might now be taken. All this must be done in a way that ensures that the progress made by the commissioners in establishing financial control will be maintained.
"The judge said that it is in the public interest that the commissioners should continue in the interim to act, and I know that the House will applaud what they have done to bring the financial affairs of the area under control."
My Lords, that concludes the Statement.
Lord WELLS-PESTELL: My Lords, I am sure the entire House is grateful to the noble Lord for repeating a Statement made in another place by his right honourable friend the Secretary of State for Health and Social Security. I think we on this side of the House are somewhat inhibited because the Secretary of State has not yet decided whether or not he is going to appeal against the decision of the learned judge, and while I recognise that one is perfectly free and entitled to make any comment one wishes to make, because there is no actual appeal pending, nevertheless one must have in the forefront of one's mind that this is a possibility. I should like at this stage to ask the noble Lord the Minister whether he knows now whether his right honourable friend is going to appeal—whether a decision has in fact been made?
Whatever the final outcome of this matter, it is rather a sorry story, because here we had a decision which was of supreme importance to the community being made on what would appear to be bad legal advice; that is, if the learned judge's view is to be accepted. My second question to the noble Lord the Minister is, by whom was his right honourable friend the Secretary of State advised? Was he advised by the Law Officers, and did he in fact consult them? We on this side are concerned because we feel that all this

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could have been avoided. It could have been avoided if the Secretary of State had taken notice of Section 17 of the National Health Service Act 1977, a point the learned judge made when he said that the making of emergency powers could have been avoided. It seems to us that this could be looked at as a kind of determination on the part of the Secretary of State to make an early impact, and to demonstrate the intention to start as he intends to go on, with what some of us feel were rather devastating results.
The Secretary of State was also wrongly advised that he could suspend the authority's powers indefinitely, and I think it has now been decided by the learned judge that he had no such power. This in itself makes the direction invalid, and as a result a very serious situation has come about. Two hospitals have been closed since the commissioners took office, and we on this side of the House find it extremely difficult to subscribe to the words in the penultimate line of the Statement, which says that the House will applaud what they have done. What they have done is to close two hospitals, at considerable risk to the communities in those areas. I ask the noble Lord the Minister: What is the Secretary of State going to do now? Will he reappoint the Health Authority, and can he give an undertaking that the two hospitals, St. Olave's and St. John's, which were closed by the commissioners, will now be reopened, or, if not both of them, one of them?
3.44 p.m.
Lord BANKS: My Lords, I should like to join in thanking the noble Lord for repeating this Statement made in another place. There would appear to be two inter-related but separate issues here: first, the dispute between the Secretary of State and the Area Health Authority over the cuts in expenditure; and, secondly, the legality of the action taken by the Secretary of State when faced with this confrontation. Today, as I understand it, we are concerned with the second of those issues, and I should like to put these questions to the noble Lord.
Can he say, following yesterday's decision, what is the position with regard to the legality of the decisions taken by the
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commissioners during their period of office, including the closure of the two hospitals to which the noble Lord, Lord Wells-Pestell, has referred? Are the members of the authority to be free to reconsider all these actions; and must consideration of these matters wait until it is decided whether to appeal? The Statement said that all this, that is the early restoration to the members of the authority of their powers, must be done in a way that ensures that the progress made by the commissioners in establishing financial control will be maintained. Is the Statement suggesting there that the restoration of their powers to the members of the authority can be made conditional on ensuring that the progress made by the commissioners in establishing financial control be maintained? Must the restoration not be unconditional, and are there not other, though lengthier means, than those which the Secretary of State used which can be used by him in the future to achieve his aim with regard to financial control?
3.46 p.m.
Lord CULLEN of ASHBOURNE: My Lords, I am grateful to both noble Lords for what they have said, though I realise that they regard this as being a serious situation, which it is. As the noble Lord, Lord Wells-Pestell, will well know, the previous Administration had considerable difficulty with this Area Health Authority, which at one point was something like £5.3 million in the red, and they did press the authority to economise, which they agreed to do. After the Budget in 1979 it was realised that not sufficient economies had been made to put the position right. So there has been quite an ongoing situation here for some time.
The noble Lord asked me whether my right honourable friend was going to appeal. I cannot answer that, because he has not yet seen the judgment and he will not decide until he has read the judgment. Unfortunately, I cannot say whose legal advice he took; I simply do not know the answer to that question. The noble Lord suggested that my right honourable friend was trying to make an early impact in the way that he wanted to go on in the future. I should like to say here that this is the first time these powers have ever been used. I think it was difficult to know whether the route

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Section 17 and Section 85 was right—that was giving a direction, and, if that direction was not followed, acting to replace the authority—or whether to regard it as being an emergency, which meant using Section 86. My right honourable friend took the view that as recommendations to economise had been rejected by the Area Health Authority it was unlikely that a direction would change their mind. He did regard it as an emergency situation, and it was for that reason that he took the Section 86 route.
As to the duration, that was an unfortunate matter. No doubt my right honourable friend could have put a duration, of either a short or long time, and that would, I think, have made the position all right. In fact he left it open, and I think he took the view that it would be some long time before he would know whether the situation was being cleared up or not. That was perhaps unfortunate.
So far as the two hospitals are concerned, I should like to point out to the noble Lord, Lord Wells-Pestell, that these are temporary closures, and anything in the nature of a permanent closure would, of course, entail the usual consultation. I find the questions asked by the noble Lord, Lord Banks, a little difficult to answer because I am not sufficiently knowledgeable on the subject. I am very sorry and I apologise to the House for being unable to answer these questions.
3.50 p.m.
Lord HALE: My Lords, surely, in view of what the noble Lord has just said, it will be necessary for another early Statement to be made. I appreciate his difficulty, which is a perfectly fair one from his point of view. But surely we should know that this was an unconstitutional decision. It is a matter on which it was almost inevitable that the advice of the Law Officers should be taken. In the absence of information and from what the noble Lord has said, one almost assumes that the advice of the Law Officers was not taken. This is a very worrying situation. No doubt in the judge's decision the learned judge as far as possible wisely left the situation not immediately altered, because no one would know who was an authority, who
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was to give directions, who was responsible for any malfeasance that took place, by accident or design, in the meantime. He thought it right not to attempt to remove the officers appointed by the Minister.
Several noble Lords: Question!
Lord HALE: My Lords, this is a question. I accept the rebuke. There are a whole range of unanswered questions.
Lord CULLEN of ASHBOURNE: My Lords, will the noble Lord please tell me what is his question?
Lord SHINWELL: My Lords, I thought that this was Question Time.
Lord HALE: My Lords, I should like to know why the Minister has not found out whether or not the advice of the Law Officers was taken, and why he could not know that within 10 seconds of this decision.
Lord CULLEN of ASHBOURNE: My Lords, the noble Lord pays me a great compliment in thinking that I am so very well-advised on what is happening in my department. I am the spokesman here and this matter cropped up literally just now. Unfortunately, I cannot give the noble Lord an answer to the questions he has asked me. I am sorry.
Lord SHINWELL: My Lords, I should like to ask the Minister a question. I can understand that, having been asked questions, he naturally sought to make what he regarded as satisfactory answers. I want to ask him a simple question. Are we to have a legal wrangle over this matter? Are we to ignore the political implications? Is the noble Lord aware that, in spite of explanations, the Minister was responsible for a blunder of remarkable magnitude? We must consider the political implications because Members of your Lordships' House will recall that when this incident occurred sections of the Press were delighted and referred to the Clay Cross case, saying: "Now we shall deal with these people as they deserve", only to discover—never mind about who gave them advice—that the Minister made a mistake. I ask a simple question: What will happen to the Minister? If it had been a Labour Government and a

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Labour Minister, I can imagine the rows that would have ensued; there would have been cries of "Why don't you resign?"
I want to add one further comment, and no more. It is in the form of a question: Is the Minister aware that the last thing I would do—and I have been in the political business for a long time—is to take advantage of a mistake and call on the Minister to resign? However, the Prime Minister must accept responsibility. I want to know what the Prime Minister will do.
Lord CULLEN of ASHBOURNE: My Lords, I must say I am getting a great many compliments today. I am afraid I do not know what the Prime Minister will do. I think that the noble Lord is greatly exaggerating the enormity of the crime that he thinks my right honourable friend has perpetrated. In fact, the judge himself said that he acted in absolute bona fides. If the noble Lord would like to read the judgment, I think he will find that he has greatly exaggerated the picture.
Lord WELLS-PESTELL: My Lords, in view of the fact that this is of some great significance as far as the community and the public at large are concerned, will the Minister arrange for a Statement to be made in your Lordships' House as soon as possible, telling us who advised the Secretary of State? This is a serious matter. The House should know whether this decision was taken at departmental level or whether it was taken in consultation with the Law Officers of the Crown. I ask the Minister to take this back and see whether such a Statement can be made at an early opportunity. We, on this side, are not unmindful of the difficulties or of the fact that there may be an appeal. If there is, to some extent this will cause the matter to be shelved.
Lord CULLEN of ASHBOURNE: My Lords, I am sure that the House will not expect me to do more than take note of what the noble Lord has said, and to take the matter back and discuss it with my right honourable friend.

CRIMINAL JUSTICE (SCOTLAND) BILL [H.L.]
3.58 p.m.
Consideration on Report resumed.
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 5:
Page 2, line 10, leave out from ("person") to ("not") in line 19 and insert (" mentioned in—

(a) paragraph (a) of subsection (1) above who—

(i) under that subsection is required to give his name and address and who either fails, without reasonable excuse, to do so or gives a false name and address; or

(ii) under subsection (1A) above is required to remain with a constable but fails, without reasonable excuse, to do so, shall be guilty of an offence and liable on summary conviction to a fine not exceeding £200;

(b) paragraph (b) of the said subsection (1) who under that subsection is required to give his name and address and who either fails, without reasonable excuse, to do so or gives a false name and address shall be guilty of an offence and liable on summary conviction to a fine").

The noble Earl said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord ROSS of MARNOCK Lord ROSS of MARNOCK moved Amendment No. 6:
Page 2, line 23, after ("(4)") insert ("(a)").
The noble Lord said: My Lords, this amendment is simply to test the Government's willingness to go a little further. Do not let us think that we are being all that kind to potential witnesses, because under Amendment No. 5 if they either fail, without reasonable excuse, to give their name and address or give a false name and address, they will be guilty of an offence and liable on summary conviction to a fine of up to £50. Now, just to make things right, we say, "You are going to be liable to arrest, without a warrant as well" because it says so in subsection (5):
"A constable may arrest without warrant any person who he has reasonable grounds for suspecting has committed an offence under subsection (4) above ".
Subsection (4) includes both the suspect and the potential witness. I do not know why, having given this whole clause a going over, the draftsmen have left the words "grounds for suspecting" in the Bill. There is no question of suspicion—if a man does not give his name and address, he does not give his name and address. There is no suspicion about that. Suspicion can only possibly arise

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on whether one has given a false name and address.
If that offence is committed—and these are the only offences—a constable may arrest without warrant. Therefore, when the Government come to reconsider the amendment that was withdrawn by the noble Lord, Lord Foot, I hope they will consider the fact that they must give the information to the potential witness that if he does not give his name and address he is liable to be arrested without warrant as well as being liable, thereafter, to be charged and fined £50. I wonder how much co-operation we shall get from the public when they realise what all this involves. A person may be in a hurry for some reason—he may want to catch the train—and decide not to give his name and address. Although we have taken away the power to detain by the use of force, there is no greater use of force than the power to arrest. No doubt force could be used in arresting. We do not need to say it here. It virtually means "thanks for nothing" for what the Government did in respect of the amendment they have accepted.
I hope that they will think again about this business. You could get a position where there is somebody detained suspected of having been concerned in some crime and there is a witness there, and actually the suspect could get away. He gives his name and address, his explanation, and away he goes. But the witness who refuses to give his name and address can be arrested on the spot and later fined. It is a bit nonsensical.
While we are anxious to get the co-operation of everyone concerned in respect of playing the good citizen, I do not think this is the way to do it. Ministers have to face up to what is involved. You give a new power to the police, and then you have to back that up with these new offences and penalties. I do not know that it will work. I do not think what we have to do to effect all this is desirable. You get far more by co-operation and trust in the public than by this kind of thing. I beg to move.
4.2 p.m.
Lord FOOT: My Lords, if it does not embarrass the Government too much, I should like to say that I am on their side in this issue.
Lord ROSS of MARNOCK: A good lawyer.
Lord FOOT: I take the view that once you establish a principle—and the Government have adhered to this up to now—that the moral duty of the citizen to give information to the police should at any rate in this respect be turned into a legal duty, and that a citizen asked to give his name and address by a policeman should be under a legal duty to do that (and, of course, I do not like that assumption, but accepting it, and that is what is in the Bill), it seems to me entirely unreasonable to make that an offence and yet deprive the police officer of the power to arrest somebody who in fact commits that offence.
The ordinary circumstances in which this matter is going to arise are surely these. A policeman sees an offence being committed in some public place, or sees that some offence has just been committed in a public place. He wants to obtain the name of some person standing by who he thinks has seen what went on. If my earlier amendment is carried, he turns to that person and says, "Look, I suspect that an offence of assault has just been committed", or whatever you like, and then he says, "I have a legal right to ask you to give your name and address, and I have to tell you that if you do not give it to me you will be committing an offence". Supposing the person at that stage says, I am not interested". What is the policeman to do? If the person can just walk away and the policeman has no right to detain him by force, what can he do? The law is set at defiance. There is nothing worse in my view—even speaking as a lawyer, though I accept that rebuke—than to have laws that cannot be properly enforced. Therefore, I hope that the Government will stand firm on this. But I equally hope that at some later stage in the Bill they may reconsider the whole business of making the failure of a witness to give his name and address an offence at all.
The Earl of MANSFIELD: My Lords, I take considerable comfort from what the noble Lord, Lord Foot, has said. In fact to a degree he shot my fox. Between Committee and this stage we gave considerable thought to the position of witnesses under this clause. I think we

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have gone as far as we can to restrict to a minimum the application of the clause to witnesses. After all, the requirement on a potential witness is to give his name and address to a constable when asked to do so, and that is hardly onerous. Nevertheless, the information may be vital to the investigation, and hopefully to the solving of a crime.
Most of us, at any rate, are agreed that if the witness refuses to give his name and address there must be some sanction upon him, so that in fact one ensures that the reluctant witness does not easily escape the duty laid upon him to identify himself. I would ask the noble Lord, Lord Ross, what he expects a police officer to do if the potential witness is either uncooperative, or facetious. Supposing he gives the name Santa Claus or, dare I say it, the name of a former Secretary of State for Scotland, and an address. What is the police officer to do? Is he just to walk away? There will be no possibility of contacting that person again unless he is individually known to the police officer, and there is no possibility of serving a warrant on him for his arrest. I hope that on reflection the noble Lord will realise that this is an essential part of the legal back-up to the duty which is laid on a person to furnish his particulars in these circumstances, and I hope that he will withdraw his amendment.
Lord ROSS of MARNOCK: My Lords, what I sought to do by putting this amendment down is to highlight exactly the implications of making this a legal duty instead of leaving it as a moral duty on the citizen. This is not going to be the law of England; this is the law of Scotland we are talking about.
Lord FOOT: My Lords, in due course it may well be the law of England.
Lord ROSS of MARNOCK: My Lords, the noble Lord is a lawyer and he knows that what I am saying is right. We are talking about the law of Scotland. I am not concerned about "in due course". All that is hypothetical. He is laying down the law, or the Government or this House are laying down the law, so far as Scotland is concerned. I am not a lawyer. I am just a plain simple man in
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the street. I am the kind of person who is going to be caught in the toils of this kind of thing.
The trouble is that the policeman is not even going to ask my name and address; he has probably already got it written down. But I can conceive of situations where people just do not want to get involved in this way. I think that my noble friend Lord Galpern would be able to tell us of a considerable number of people in Glasgow who will know just exactly what is involved, and they are not going to be there when the policeman approaches to ask them.
This is not the only clause that affects witnesses. My plea is that you will get far more by seeking the co-operation of witnesses rather than by bludgeoning them in this way. It does not end there, because we have another clause where they are going to be interviewed not only by the prosecution but also by the defence. It will in many cases be a difficult thing to get involved in this as a willing witness. So in order to do this you create the offence, and then you have to create the back-up. All the difficulties that the noble Earl put to me he must put to himself, and he should put to himself, before he embarks on this new legal duty placed on witnesses.
I certainly have no desire to go forward with this particular amendment, but I hope that your Lordships realise what you are doing. This will create difficulties in the future. I realise that my own Government had this particular clause in their Bill. I had no responsibility for that; I was only a humble Back-Bencher. But if you ask my advice, I hope that the Government will look at this provision carefully and long. They have done so much redrafting here, and it is a terrible Bill. I do not know who the draftsmen were. I object to drafting and legislation by reference. As soon as this Bill is finished we shall need to have a consolidation, otherwise we shall not understand it. It is a pity that the Lord Advocate was not in another place about thirty or forty years ago. He would have been familiar with a speech of mine. I see that some noble Lords are familiar with it, and they have made the same speech themselves. It is a terrible Bill from this point of view. It is going to be looked at again, and so I hope he will look again at

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this clause and some of the other clauses. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 [Detention and questioning at police station]:
The DEPUTY SPEAKER (Lord Aberdare): My Lords, in calling Amendment No. 7, I have to point out that if this amendment is agreed to, I cannot call Amendments Nos. 8 and 9.
4.10 p.m.
The EARL of MANSFIELD The EARL of MANSFIELD moved Amendment No. 7:
Page 2, line 40, leave out from ("above") to end of line 43 and insert ("he shall not thereafter be detained, under that subsection, on the same grounds or on any grounds arising out of the same circumstances.").
The noble Earl said: My Lords, a number of noble Lords tabled amendments in Committee with the purpose of prohibiting redetention in respect of the same offence or a related offence. This amendment has therefore been tabled in order to meet the concern expressed by noble Lords on that occasion.
It may help if I explain the intention of the amendment as drafted. The word "grounds" in this amendment takes us back to subsection (1), which provides that the power of detention can be exercised only where the constable has "reasonable grounds" for suspecting a person of an offence. What will amount to reasonable grounds for suspicion will of course depend on the particular circumstances of each case, and a variety of factors, such as those listed by the Thomson Committee at paragraph 3.19 of their report, may be involved. In prohibiting redetention on the same grounds, the amendment goes further than it would than by prohibiting detention in respect of the same suspected offence, since more than one particular offence might be suspected on the same grounds. The amendment however goes beyond this to prohibit redetention "on any grounds arising out of the same circumstances". The effect of this is that where the police have had regard to certain grounds or factors in detaining a suspect —for example, his suspicious demeanour
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near a shop which had been broken into—and subsequently release him, they may not redetain him because some other ground or factor (for example, a witness's description) has come to notice in connection with the same incidents and gives cause for further suspicion. Other courses—such as arrest, if there was now sufficient information to charge—would remain open, but the option of detention, having been exercised once, would disappear. I hope that the noble Lords who originally put forward amendments on this matter, and the House as a whole, will welcome this amendment as an important safeguard for individuals who have fallen under suspicion. I beg to move.
Lord MISHCON: My Lords, the House will sympathise with somebody who has to follow a plain and simple man in the street, but I do so apologising on his behalf for the fact that my noble and learned friend Lord McCluskey is not able to be in the House today; he wanted very badly to speak to many of the amendments on Report, but urgent business has kept him away. I mention his name particularly in regard to this because he was, among others, extremely concerned about the power that was given under the clause as originally drafted for redetention if cause were shown and if a justice so certified. The amendment obviously meets the objection that was taken to the clause in Committee and on Second Reading, and I know that my noble and learned friend would have wanted in his usual gracious terms to have thanked the noble Earl for the amendment and for the way in which he has dealt with the clause.
Lord FOOT: My Lords, not only have the noble Earl and the Lord Advocate introduced a new reading of the clause but, as I read it, it goes even further and reads even 'better than anything that was proposed in Committee from this side of the House. It is only right to acknowledge that this is one more admirable example of the way in which noble Lords on the Government Front Bench have listened to the pleas made to them, and we are all hoping that we shall continue this stage of the Bill in the same happy spirit.
The Earl of MANSFIELD: My Lords, I thank both noble Lords for their kindly acceptance of the amendment, particularly in relation to what the noble Lord, Lord

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Mishcon, said about his noble and learned friend Lord McCluskey. Of course, he and I have in more senses that one changed positions by virtue of the accident of fate, if I may call it such, on 3rd May, and, whereas on Second Reading—this was reinforced by the noble Lord, Lord Mishcon—he wanted me, in his own graphic terms, to "Chuck it, Mansfield" and not to proceed with a particular part of the Bill, I am now able, pointing to him in his new chairman's role, to say, "Hail, Caledonia!" We continue to do our best in this House. I think I need go no further.
On Question, amendment agreed to.
[Amendments Nos. 8 and 9 not moved.]
4.16 p.m.
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 10.
Page 3, line 1, leave out ("When making a requirement under subsection (1) above the constable") and insert ("At the time when a constable exercises the power conferred by subsection (1) above, he").
The noble Earl said: My Lords, this is a drafting amendment which is necessary to remove the reference in Clause 2(4) to a requirement made under subsection (1). Subsection (1) no longer contains any reference to a requirement, as the noble Lord, Lord Foot, pointed out in Committee. I beg to move.
Lord FOOT: My Lords, I thank the noble Earl, Lord Mansfield, for having made this small drafting amendment; he was already aware of the error on the last occasion and it was not necessary for me to draw attention to it. However, I should like to take this opportunity of asking him a question not very dissimilar from one I asked in relation to some earlier admenments—namely, what is the position if a constable fails to comply with the requirements, as it were the preliminaries, before taking a person to a police station?
As the clause will read with the amendment, when a constable exercises the powers conferred by subsection (1), he shall do certain things. If one looks back at subsection (1), one finds that the powers he is there able to exercise are twofold as regards time. The first occasion when he exercises the power is when he takes
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a person to a police station or other premises. Later, he exercises the second part of the power when he detains that person there. I think there is a clear distinction in time between the one process and the other, and this is my question: suppose the constable, when he decides to start taking the person to the police station, fails to do the things that he is required to do under this clause—that is, to inform the person concerned of his suspicion and the general nature of the offence which he suspects has been or is being committed?
Suppose he fails to do that but nevertheless takes the person to the police station, and then goes all through these complicated procedures by which that person can be detained there in custody for up to six hours, can be interrogated, can have his fingerprints taken and can be searched. Are all those measures which are then taken, the whole of that process, invalidated in law by reason of the fact that the constable failed to give the warnings and information which he should have given when he started to take the person to the police station?
This is similar to the question I asked the noble Earl earlier, and I daresay his reply will be, "Subject to further consideration, yes, indeed; all these subsequent proceedings would be invalid, and indeed unlawful, unless the policeman had strictly complied with the routine requirements of this clause". If that is right—and the noble Earl may be right about that—is it not likely to present a series of cases of enormous difficulty where people have been taken into detention illegally, fingerprinted illegally, searched illegally and held illegally for six hours? If that is the situation, is not the public anxiety which has been expressed about the whole business of detention very much reinforced? I should like to ask the noble Earl what view he presently takes of the possibility of instances such as I have mentioned occurring if the clause, as amended, goes through.
4.20 p.m.
The Earl of MANSFIELD: My Lords, a number of different consequences may follow if a police officer takes someone into custody under Clause 2 of the Bill. I should like to take the detention part of the question first. I do not suppose

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that for the purposes of the actual six hours there will be any effect as a result of what the police officer does or does not do at the time that he asks the supect to accompany him to the police station (to quote a neutral phrase), or, under this clause, requires him to. I do not suppose that that will have any effect at all upon what subsequently happens: that is to say, the questions that he may be asked, the finger-printing, and the other matters to which the noble Lord has drawn attention.
If at the end of that time the person is then arrested and charged—and the process under Scottish law will then be complete—what happened at the time he was first taken into custody would not, I think, of itself vitiate his subsequent conviction, if that were proper under the evidence that was adduced at his trial. May I repeat this point, which is a cardinal point of Scottish law; it is a cardinal point of English law, too, but in a rather different way. It is that there is the overriding consideration of fairness. Therefore, if the procurator fiscal thought that something had happened in the street when it should not have happened, or that something had not happened when it should have happened (as the noble Lord has put it), I have no doubt that, first, the procurator fiscal would take account of such, and, secondly, the judge or the sheriff at the trial would do exactly the same. I do not think that I can answer any more fully on that side of the matter. If, when the person is released back into society, a question of unlawful detention arises and he wishes either to take civil proceedings or to raise matters under disciplinary procedures against the police, the question of whether or not the provisions of the clause had been complied with might or might not have a bearing on such proceedings. I hope that that reassures the noble Lord to some extent.
Lord HARMAR-NICHOLLS: My Lords, having listened to this very interesting question and the answer, I wonder whether what my noble friend says has been borne out in fact. We have an example of what I mean in cases of people who are breathalysed. At the end of the day there has been no doubt, in terms of the urine and blood tests, that the person was above the limit, but in some instances
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the whole matter has fallen to the ground because the proper procedures were not followed before the stage when it was known whether the person was above the limit. So I should have thought that my noble friend's answer did not quite cover the point any more than it was covered in the breathalyser instance that I have just mentioned. The mistake at the beginning could be not condoned simply be cause the result of the tests seemed to prove that the decision to arrest was the right one.
The EARL of MANSFIELD: My Lords, with the leave of the House perhaps I can answer that point. My noble friend, with respect, is not comparing like with like. In breathalyser cases something untoward might occur at the beginning of procedures and it might be held, for instance, that police officers not in uniform were not authorised to administer the breathalyser test. The entire course of the trial and subsequent conviction is then vitiated. Many extremely tortuous points have been raised in such instances by defence advocates, particularly in the English courts—I raised a few myself in my time—and they have resulted in triumph and acquittal for the client. However, here we are talking about something entirely different; we are concerned with the power of detention under Clause 2 of the Bill. My noble friend will see that we are concerned not with part of the offence or the trial, but with a stage at which the police are given, in certain circumstances, a right of detention which they do not have at the moment. We debated this at very considerable length both at Second Reading and in Committee, and it is a matter which the Government seek to have regularised in statutory form.
Lord MISHCON: My Lords, I wonder whether I dare try to help the noble Earl and possibly other noble Lords who are worried about this clause. If, instead of helping him, I say something with which he disagrees, I am sure he will say so. Is not the answer in regard to this clause as follows? If evidence comes out regarding a wrongful use of procedures as set out in the clause, then the noble Earl's amendment which we shall he taking later—which says that the whole clause is without prejudice to the existing law of evidence—would mean that the matters that came out in evidence would most

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likely be inadmissible, but otherwise the whole character of the trial would be unaffected. Is that not really the answer?
The EARL of MANSFIELD: My Lords, may I by leave address the House again, and in all humility remind your Lordships that this is the Report stage, not the Committee stage. I am grateful to the noble Lord. As I have already said twice, the overriding principle in all Scottish trials is the matter of fairness. If the procurator fiscal or the judge was convinced that what had or had not happened in the street made the matter unfair, I have no doubt that that would be reflected in the result of the trial, if there was one.
On Question, amendment agreed to.
4.27 p.m.
The EARL of MANSFIELD The EARL of MANSFIELD moved Amendment No. 11:
Page 3, line 5, leave out ("purpose of") and insert ("reason for").
The noble Earl said: My Lords, in moving Amendment No. 11 I propose, with the leave of the House, to speak at the same time to Amendment No. 12. These are both drafting amendments which deal with the same point. As drafted, Clause 2(4) requires the suspect to be informed and a record to be made of "the purpose of detention". However since Clause 2(1) makes clear that detention must be for the purpose of facilitating investigations into the offence and into whether criminal proceedings should be instigated, this requirement will have little effect if it is strictly interpreted. It might be regarded as sufficient to recite the wording of subsection (1). The purpose of these amendments is to clarify the clause by indicating what the "purpose of detention" really means in both places where it appears. The amendment to line 5 therefore requires the police to inform the suspect of "the reason for" his detention; this is what is most important from his point of view. The amendment to line 8 requires the police to record "the general nature of the suspected offence". This is what we believe should be formally recorded for future reference. I beg to move.
On Question, amendment agreed to.
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 12:
Page 3, line 8, leave out ("purpose of detention") and insert ("general nature of the suspected offence").
On Question, amendment agreed to.
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 13:
Page 3, line 10, after (" premises; ") insert—
("( ) the time when the person is informed of his rights in terms of subsection (7) below and the identify of the constable so informing him;").
The noble Earl said: My Lords, this amendment requires the police to record both the time when a detained person is informed of his rights under Clause 2(7) and the identity of the officer so informing him. It has been tabled in fulfilment of an undertaking which my noble and learned friend gave in Committee to noble Lords—particularly the noble Lord, Lord Ross of Marnock, and the noble and learned Lord, Lord McCluskey—that we would bring forward such an amendment to give effect to the substance of the similar amendment which they tabled at Committee stage. My noble and learned friend also undertook at that time to give further consideration as to whether the Bill should require the police to invite the detained person to sign the record. Further consideration has been given and we have come to the conclusion that it is unnecessary to legislate on this. It will, I understand, become a matter of police practice in appropriate cases. Of course, in many cases and for a variety of reasons the suspect will refuse to co-operate in this way, and I do not think that any particular significance could be attached to a refusal to sign. Equally, no great significance could be attached to the fact that the record has been signed. The suspect might claim that he had been intimidated. Therefore, I would prefer not to make this a statutory requirement at all. I beg to move.
4.31 p.m.
Lord MISHCON: My Lords, I wonder whether I may at once thank the noble Earl for the consideration which he and the noble and learned Lord the Lord Advocate have given to the submissions that were made at the Committee stage, and indeed on Second Reading of the Bill, in regard to this matter. However, could I revert to the remarks that he made

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as to certain matters being left to a code of practice and not incorporated in any enactment? With the leave of the House I would speak at this moment, at least partially, to Amendment No. 17, since that may in fact save the time of the House. Your Lordships will see that in Amendment No. 17, in addition to the safeguards of which the noble Earl has spoken, there is the inclusion of a requirement that the terms in which the suspect was informed, and his response, if any, thereto, should also be recorded at the time. Furthermore, the noble Earl talked about the difficulty in the event of a refusal by the suspect to sign the record. Of course, the amendment which I shall be dealing with hereafter, No. 17, merely records the necessity to invite him to sign the record.
I would have thought that this detention procedure is such that there should be all the proper safeguards without making the life of the police impossible, which I do not think any reasonable person in this House wants to do. I think the feeling of the House is quite the reverse, in fact, although there must be limitations, and proper limitations, on police power. But one feels that the necessary requirements here are for there to be a proper record of the fact that the suspect was told of his right to keep silent, which is really the subsection (7) point; the fact that he was told and the terms in which he was told should be recorded, and that he should be invited to sign. If he does in fact sign, then it is a complete record; if he refuses the invitation to do so, then quite obviously the statutory requirement has been satisfied by the invitation.
I hope the noble Earl, who has gone quite far in introducing these safeguards in response to the invitation to do so that was made to him at earlier stages of the Bill, will be able to decide that it is possible to include these other two requirements. Of the two requirements, the one that I would wish to emphasise, quite frankly, if the noble Earl is prepared to concede only one (although I hope he will concede both), is the requirement that the terms in which he was informed and the response of the suspect should indeed be recorded.
Lord DRUMALBYN: My Lords, I should like to ask the noble Lord this
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question. If the detainee refuses to sign, how can anybody know whether he had been invited to sign? What proof can there be?
Lord MISHCON: My Lords, I can speak a second time only with the leave of the House, I believe, but, with the leave of the House, I will try to answer. There are many occasions, of course, when the police record the caution that they gave to a witness, and so on. This is merely an invitation. If the suspect says he does not want to sign, then the officer concerned will obviously record the fact that he was invited to do so and did not do so. But if he does in fact sign, then the whole of the safeguard procedure is completed and there is at least prima facie evidence of the consent of the suspect to the whole procedure, and of it having been properly applied.
The Earl of MANSFIELD: My Lords, I am not really going to speak to Amendment No. 17, although I take the noble Lord's point that his reasons are very similar. I do not think I can really go very much further than I have gone. I think one must start from the premise that the police are likely to do what they are required to do in the interests of the detained person in the proper form, and there is really no reason why they should not. They are versed in the procedures already, and one hopes, and indeed one expects, that they will go through these procedures in the right way and in the right order. One has to ask oneself: What is gained by the signature of the detainee at the foot of the form? If he agrees subsequently with what happened—in other words, if he agrees that his rights were pointed out to him and that everything happened fairly and properly—then he will not worry as to the record and what has been put upon it. If he does not agree, if he says he was treated harshly or that the police acted unfairly or failed to go through the proper procedures, then, as I have tried to point out, the fact that his signature appears at the foot of the form will not entitle any court to say, "Ah!, yes, but you have signed the form", although no doubt it would be put to him; because, as I have said, he would merely say that he was intimidated and told that he would not be bailed, for instance, until he did sign it. For all these reasons—and I have reiterated them

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at perhaps too great length—we do not think that there is any point in having this particular requirement written into the Bill in statutory form, and for the reasons that we have given we prefer the Bill to remain as it is.
On Question, amendment agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 14:
Page 3, line 16, at end insert—
("Provided that this paragraph shall be without prejudice to any existing rule of law as regards the admissibility in evidence of any answer given.").
The noble and learned Lord said: My Lords, your Lordships will remember that in Committee the noble and learned Lord, Lord Wheatley, suggested that some clarification should be given of the relationship of the power to ask questions to the existing law of evidence, and we have proposed this amendment to make clear that the existing law, including the requirements of fairness, to which my noble friend Lord Mansfield has referred, will apply to any answers which are given as a result of the exercise of this power. I beg to move.
Lord MISHCON: My Lords, this amendment in fact fulfills the wishes of the noble and learned Lord, Lord Wheatley, as well as, of course, of my noble and learned friend Lord McCluskey, and for that I am obliged.
On Question, amendment agreed to.
4.38 p.m.
Lord FOOT Lord FOOT moved Amendment No. 15:
Page 3, line 29, at end insert—
("( ) All questions put to the person under paragraph (a) of subsection (5) above and all answers made by him to such questions shall be recorded on tape and no evidence of such questions and answers shall be admissible in evidence in any subsequent proceedings except as recorded on the tape and the transcript thereof.").
The noble Lord said: My Lords, I put forward this amendment with some little misgiving because I should explain and admit from the outset that this amendment is in precisely the same form as an amendment which I moved in Committee. I understand that it is permissible under the rules of the House to move at Report stage an amendment
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similar to one moved at Committee, even though it was carried to a Division on that occasion and defeated. I entirely agree that, whatever may be the rules as to what is permitted, it would normally be very undesirable that anybody should go on pursuing an amendment, in spite of its having been turned down, on a second occasion. I do so in this case with, as I say, some misgiving, but nevertheless with some assurance that this matter ought to be debated further than it has been, particularly because of something that was said by the Secretary of State in the other place in reply to a question some week or two ago, to which I shall. if I may, refer in a moment.
In order that the purpose of the amendment may be made quite clear, may I say that it refers to the point of time when, under the powers in Clause 2, a person has been taken to a police station and given all the necessary warnings, the police then having the right to interrogate him. This amendment is concerned to try to make it the law that that process of interrogation, the questions then asked and the answers then given, if there are any, shall be recorded on tape in order that there can be an objective record of what takes place. I referred just now to the Question and Answer from the Secretary of State in the other place on 6th February 1980. I am referring to column 476. I understand that one should not quote verbatim anything said in the other place but I think it permissible for me to say that Mr. Dewar asked the Under-Secretary of State—
The EARL of MANSFIELD: My Lords, I hesitate to interrupt the noble Lord. He is entitled to quote verbatim from Members of the Government. Perhaps I may suggest that he does so in order that we get it right. I hope he will not take that as an offensive request.
Lord FOOT: My Lords, I am obliged, I am glad to know I can do it. I do not want to misinterpret. I only wanted to quote the final question and answer. Mr. Dewar asked:
"Will the Minister give an undertaking that he will not implement the increased police powers of detention, and the interrogation that would follow from them, until tape recording in police stations is available? Will he recall that in connection with that, the present Solicitor-General for Scotland, then acting on the Opposi-

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tion Front Bench on the previous Criminal Justice (Scotland) Bill, gave some favourable notice to the suggestion that that part of the new Bill, if and when it becomes law, should not be implemented until tape-recording is available?"
To that. Mr. Rifkind replied:
"We are also anxious to see whether these tape-recording experiments will work, but I cannot give that particular assurance to the hon. Gentleman. The question of detention and the question of tape-recording are two separate issues. We shall consider each on its own merits. We hope that both will be implemented if the experiment proves to be a success".
I welcome that so far as it goes but, in my humble opinion, the view that these new processes of detention and interrogation are not linked up intimately with the question of achieving a proper record of the interrogation is entirely misconceived. I move this amendment again on this occasion not with the intention of pressing it to a Division, not with the intention of rehearsing the arguments which I addressed to the House on the last occasion, but because I am persuaded (and I remain of the view) that the failure to provide for an objective record of what takes place in the process of interrogation is a vital defect in Clause 2.
May I remind your Lordships of what we are doing under Clause 2? We are, first, creating an entirely new police power, something that we have not known before—that is, the legal right to take somebody into detention for a period of up to six hours when he is only in the position of a suspect. That is new not only to Scottish law but to English law, too. The second thing is that, during that time, the police are empowered to search the suspect, to take his fingerprints and so on and, most important of all, to interrogate. During that same time the individual concerned is held incommunicado.
Under Clause 3, he has the right, in certain circumstances, to have the fact of his detention at a police station passed on to a solicitor and to one other person; but he has no right to call for the solicitor to assist him or to speak to him. Up to six hours he is held incommunicado in the hands of the police. During that same time, there is no way as matters stand at the moment in which there can be an objective record made of the questions put to him and the answers he gives; although it is quite clear that, subject to the ordinary rules of evidence, the answers that he gives to the questions on that
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occasion can be given in evidence in subsequent proceedings. The final characteristic of this new process is that the only record which is going to be made of what takes place in that process of secret interrogation is the record which happens to be made by the police.
I do not suppose it will be disputed that this new procedure allows the possibility—especially in those circumstances of secret interrogation with no objective record—of grave abuses. That is recognised by the other provisions of the clause, because the other safeguards, as it were, which have been written into this clause—some of which we have been discussing—only serve to emphasise the importance that the Government rightly attach to seeing that this new procedure is set about with satisfactory safeguards. All sorts of safeguards are provided under this clause. The suspect must be informed of the police constable's suspicions; he must be informed of the general nature of the offence which it is suspected has been committed. Then he must be informed of the reasons for his detention and then all these matters must be duly recorded. including the place of his detention, the general nature of the offence and the time of his arrival and of his departure, if he departs at all. Finally, under the amendment we have just been discussing, there has to be recorded the time when he was informed that he was under no obligation except to give his name and address and the name of the constable who gave him that warning.
Why have all these safeguards been inserted in this clause? Is it not because the Government and the Thomson Committee rightly recognise that if you are going to create this new, novel, unheard-of power for the police to engage in secret interrogation of an individual who is utterly deprived of any assistance for a period of up to six hours, then it must be set about with the most careful of safeguards? Why is it that these safeguards have been thought to be necessary? First, because, plainly, under this new, secret process there is a danger of grave abuse. But there is another aspect of the matter which I would like to draw to the Government's attention. Where a person is detained in those circumstances, when he is wholly in the hands of the police, he is at an enormous disadvantage.

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With the leave of the House I should like to quote a short passage from the Thomson Committee's report which is, itself, a quotation from part of the judgment of Lord Justice-General Cooper in the case of Chalmers v. Her Majesty's Advocate in 1954. The passage I want to quote is contained on page 30 of the Thomson Report. What the Lord Justice-General was talking about at that time was the circumstances of a person who is suspected of an offence and has been taken to a police station, is in the hands of the police and is being interrogated.
What he said was this:
"However convenient the modern practice may be"—.
that is the practice of taking a person to the police station and interrogating him in that way—
"it must normally create a situation very unfavourable to the suspect. In the eyes of every ordinary citizen the venue is a sinister one. When he stands alone in such a place confronted by several police officers, usually some of high rank, the dice are loaded against him, especially as he knows there is no one to corroborate him as to what exactly occurred during the interrogation, how it was conducted or how long it lasted ".
The only thing which is included in this Bill which bears upon that is that we have now included a provision that there shall be recorded how long it lasted. None of the other apprehensions which were expressed by the Lord Justice-General on that occasion are met in this Bill in any sort of way.
I have already referred to the safeguards that have been written in. It seems to me that the absence of some objective record constitutes a glaring omission. None of the safeguards which I have quoted goes to the queston of getting a correct and objective record of what took place during the period of interrogation. It deals with everything else. It deals with what he must be told when he arrives; it deals with what must be recorded when he arrived, and all the rest. But there is nothing in this clause which affords him any protection whatever as to what goes on during the process of interrogation. That glaring omission is the more glaring, I suggest, because the Thomson Committee itself precisely and emphatically said that this power of detention ought to be subject to the objective recording on a tape.
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I quoted on the last occasion one or two passages from the Thomson Committee Report in order to bear that out. I will only trouble your Lordships with one today. They were dealing with the safeguards that ought to be written into this new power of detention and interrogation. They said this:
"Interrogation of suspects in police stations must be recorded on tape. We deal with this more fully in paragraph 7.
21. Tapes cannot easily be provided for questioning which occurs outside a police station. Our object"—
and these are the words to which I would draw your Lordships' particular attention—
"is to provide a safeguard for persons being interrogated in the privacy of a police station and also to protect the police against unjustified allegations".
They went on later in their report so far to emphasise the importance that they attach to the objective record by way of a tape recorder that they came to the really quite astonishing conclusion that if the tape recorder in the police station broke down, or there was some other misadventure so that it could not be produced, then no other evidence about what took place should be admissible in evidence. That was the degree of importance which the Thomson Committee placed upon the objective record.
Not only did the Thomson Committee say that they regarded this as an essential safeguard, but they went on to say, as the noble Earl and the noble and learned Lord, the Lord Advocate, will know, that after having considered all the problems, they thought that there were no practical problems in this matter which were not insurmountable.
I referred on the last occasion to some of the evil consequences which flow from the failure of our courts, whether it is in England or Scotland, to have an objective record of what goes on in a police station when somebody is being interrogated. It is not only that time after time courts are occupied with a trial within a trial in order to try and ascertain what took place, and what was said and done. ft is not only that, and not only the enormous waste of time and money that is involved in that unnecessary procedure; but what is perhaps even worse is that it gives the opportunity to the police to "doctor" the record, to put in inaccurate evidence as to

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what was said. It provides the opportunity, when there is no need for the opportunity. Furthermore, as the Thomson Committee themselves pointed out, it lays open the honest policeman, who is giving honest evidence as to what took place, to the humiliating business of being cross-examined as if he was a false witness intending to pervert the course of justice.
These are very great evils. There is only one way in which they can be avoided; that is, by adopting the unanimous recommendation of the Thomson Committee—and on that account I am sure it will appeal to the noble Lord, Lord Ross of Marnock—that this system of detention should be underpinned by the demand for an objective record.
I would only add one last word. If we are going to have this system of detention—and noble Lords will know that from these Benches we have expressed concern about whether it is not going too far, and I am not at all sure that it is not justified as long as one can have satisfactory safeguards—its workability and its acceptability to the public as a whole can only be ensured if one builds in the safeguard of the objective record of what takes place.
What is wrong with the process of secret interrogation behind closed walls, with nobody there to monitor, nobody there to arbitrate, nobody there to make a record except the police themselves who are the interrogators, is that it offends against the old legal maxim, that not only should justice be done but it should be manifestly seen to be done. Justice in the secrecy of the police station will, as I submit, never be manifestly seen to be done unless we can produce some method of making an objective record of it.
I cannot hope—and I do not hope—that the noble Earl or the noble and learned Lord the Lord Advocate will be able to give me any satisfactory answer at this stage, but I dearly hope that they may be able to suggest a word to make us believe that, in the further stages of the Bill through this House and in the other place, that matter may be looked at once again. I beg to move.
4.59 p.m.
Lord WILSON of LANGSIDE: My
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Lords, I should like to support this amendment. I do not think I can—and I shall not try—commend the amendment more effectively than did the noble Lord, Lord Foot, who moved it. The essential importance of this safeguard of the tape recording of what goes on in the police station was emphasised by the Thomson Committee in its report. But its essential importance has nowhere more graphically been shown than in the words of the Lord Justice-General in the case of Chalmers from which the noble Lord, Lord Foot, quoted. There is everything to be said for this amendment and I hope that it will receive widespread support.
Lord MISHCON: My Lords, I hope very much that the pessimistic note upon which the noble Lord, Lord Foot, ended his very effective words to the House will not prove to be justified. There is every reason, I would submit, why the amendment which my noble friends and I support should be accepted by this House. It is not just a question of the Thomson Report, though that is effective enough. If I may add to the quotations from that report, perhaps I may give this passage which appears on page 36 of the second report:
"The presence of a tape recorder may upset some persons, but on balance we consider that the vast majority of persons will be reassured by knowing that anything which is said will be accurately recorded. The fact that the police know that the interview is being recorded on tape will tend to reduce the chances of interrogation being conducted with any impropriety".
It is not only the Thomson Report but the practitioners in Scotland, represented by the Council of the Law Society of Scotland who, in their own memorandum in connection with this Bill, say very firmly, if I may quote very shortly from their recommendation:
"If questions are to be put and answered and the answers are to be admissible in evidence, all possible safeguards to the detainee should be provided to ensure fairness. There should be a readily available record of all questions and answers. As to the means of recording, the Council's recommendation is for video taping, failing which, tape recording".
It cannot be on the general grounds of economy that the Government could resist a recommendation of this kind, because these days tape recorders are by no means expensive machines. I should like to ask

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the Government Front Bench, as I believe would the noble Lord, Lord Foot, and the noble Lord who has just spoken: what can possibly be the reason for refusing to accept this statement? It means there will be a limitation of necessity upon the cross-examination of behalf of an accused, which usually takes a great deal of time, differing from the police report of what is recorded in a notebook or from recollection. It will mean that the court will have reliable evidence before it of what was said. It is a safeguard for the police against suggestions that bullying tactics were used or that trickery was employed in questions that were put to the accused. Therefore, in every way it can only add to the merits of a just trial. I hope very much that this amendment can be supported.
The Earl of MANSFIELD: My Lords, as the noble Lord, Lord Foot, said in his opening remarks, we did discuss this amendment fairly exhaustively in Committee and I certainly do not want to go over all the ground I went over on that occasion, when I dealt with, for instance, such matters as the noble Lord, Lord Mishcon, raised as to the cost of the apparatus in question, which has to be designed in such a way that in fact it becomes an extremely expensive piece of electronic apparatus. I really do not want to go over that ground again, not only for that reason but also because I really do not think that we need to do so.
Clause 2, may I remind your Lordships, is not the beginnings of the police state that some critics of this part of the Bill would like your Lordships, and indeed the population at large outside Westminster, to believe. This clause has been introduced in order to regularise the situation which already exists in Scotland, although not in England, by which the police have to rely on a mixture of, as I once said, "bluff and blarney" to enable them to invite persons to accompany them to a police station and there to investigate possible offences. That is the basis of my arguments. This matter has been coloured by what I might call "the Lubianka complex", but it really is not so. This clause is designed to put in something which does not exist and to correct a situation which is by no means satisfactory as it stands at the moment.
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I also told your Lordships in Committee that the Government, of course, subscribe to the objective of providing safeguards not only for persons interrogated at police stations, but also for the police. The noble Lord, Lord Foot, said that police officers need safeguards just as much as suspects.
I also said that we were engaged on an experiment—and I told your Lordships how it was going—and I mentioned that the difficulties in the use of tape recorders have proved to be much more formidable than the Thomson Committee had realised when they considered this matter. I said that the experiment is proceeding at Dundee and Falkirk, and once the results of the experiment are known we can then proceed from there. if I may say so in parenthesis, some of your Lordships may by chance have seen the television programme—last week I think it was—showing the premises where these experiments are being carried out and the sort of equipment which is necessary to ensure accuracy and fairness. If he had seen it, I am sure there would be no more talk on the part of the noble Lord, Lord Mishcon, that one could use some sort of little portable cassette recorder for this purpose. It is not at all like that, I can assure him.
Lord MISHCON: My Lords, the noble Earl is kind to give way; but really it was not my own report that I was giving about the type of machine that could be used. The Thomson Committee went into this matter very deeply, and this is what they said on page 36:
"The cost of tape recording is not prohibitive, the models of tape recorders which we used being marketed at £25 to £75".
I am sure the noble Earl is not saying that the noble Lord, Lord Thomson, and the members of his committee were so careless in their judgment of a suitable type of tape recorder that they chose a totally unsuitable one for this purpose.
The EARL of MANSFIELD: No, my Lords, I am not saying anything of the sort. What I am saying to your Lordships is that what the Committee said is not holy writ and what has been discovered is that if this experiment is to provide the safeguards we all require and an exact rendering and reproduction of a conversation in a way which I described in Committee as

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one which cannot afterwards be falsified by everybody, the machines are much, much more expensive than the illustration provided by the noble Lord, Lord Mishcon. I am sorry, but that happens to be the fact.
If I may go on, so far as the admissibility of evidence is concerned—and this was one of the main planks of the argument put by the noble Lord, Lord Foot, as I understood it—he regaled us with what I might perhaps call "the Old Bailey argument"; and if I do call it that I do so not in any pejorative sense but because that is a good way of describing it. The law on admissibility has been developed over the years by the courts and that will apply to any questioning under Clause 2(5)(a). It does not mean that anything said by a detained person will be admissible in evidence. As I have said on a number of occasions during the passage of this Bill through your Lordships' House, the admissibility of evidence depends on the test of fairness; and that no doubt will be applied. Again in Committee, your Lordships heard the noble and learned Lord, Lord Wheatley, explain that the police in Scotland have developed procedures which have reduced quite considerably the number of complaints about the manner in which statements are obtained; and it is a fact that we do not have in Scotland—at any rate, at all frequently—the kind of scenes which the noble Lord, Lord Foot, illustrated in his remarks.
So I suggest to your Lordships that we should allow the law and police practices to develop in a flexible way meantime, until there are firm results from these tape recording experiments. I have said that the experiments are proceeding. I have also said that they are being conducted with despatch. I have no doubt that, if they are successful, general use will be made of them in interrogation in police stations; although I did, in Committee, remind your Lordships that a great many interrogations of suspects in Scotland will not be in police stations at all, for reaasons which I went into on that occasion.
The noble Lord, Lord Foot, said that he did not intend to press this matter to a Division and, if I may say so, I am glad to hear it. I welcome this further opportunity to debate the matter. I am
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sure that my noble and learned friend, and indeed my honourable and right honourable colleagues in another place, will pay attention to the undoubted anxieties of your Lordships; and that, if anything, will, I hope, make the experiment in tape recording proceed even more resolutely and more quickly, perhaps, than it is at the moment. But I must say to your Lordships that, as things stand at the moment, the Government are convinced that we have got it about right and that Clause 2 should be left as it is.
5.12 p.m.
Lord HARRIS of GREENWICH: My Lords, I propose to speak very briefly and I wish to say only this. During the period when I was Minister of State at the Home Office in the last Administration, I had something to do with this problem of tape recording, because of the pressure to which the Home Office was then subjected to have tape recorders introduced into police stations in England and Wales; and this is one of the matters which, I know, is being looked at by the Royal Commission on Criminal Procedure.
I approach this matter with a mood of deep scepticism as to whether the existence of tape recorders will achieve the objectives of the noble Lord, Lord Foot, and those who favour them. In England, it is argued that they will end trials within trials. I am very doubtful whether that is true, because, as we know from the evidence of Watergate, tape recorders can be tampered with. If one assumes that there are all kinds of people involved in some form of conspiracy against an accused person, then it is certainly not beyond an accused person to suggest that there has been some tampering with the tape recorder.
Quite apart from that, we also know, though it is often denied by those who favour these experiments, that a defendant, suspect, or whoever it may be, during the course of the tape recording, may make some statement such as "Take that lighted cigarette away from my face", when, in fact, it is total fiction. I therefore do not believe, so far as England and Wales are concerned, that tape recorders would necessarily end trials within trials.
But the noble Lord's amendment would go far further, and indeed he suggested

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that his purpose today was to say that if one did not have tape recorders one should not have these new powers. As I made clear on Second Reading, I think that the case for these powers has been clearly made out in most cases. But, certainly, it would be going far too far to suggest that without tape recordings—and, as I have indicated, it is a matter of some speculation as to whether they will achieve the objectives of those who favour their introduction—one could not have these new powers. This would certainly be to go far further than I should be prepared to do.
If I may say so to my noble friend Lord Mishcon, I am bound to say that every time I hear the question of cost raised in your Lordships' House and elsewhere, it is always, I fear, the fact that those who favour change will tend to minimise the cost of the introduction of any new procedure. That was true when the party opposite was in Opposition and I fear that things have not totally changed. It is always suggested that some bold and revolutionary change shall, in some remarkable way, be achieved with only the most minimal cost. I do not believe for a moment that that is true.
If it is suggested that there are to be tape recorders in every police station, then I must point out that there are a very large number of police stations, some of them extremely small in the case of Scotland, as the noble Earl, Lord Mansfield, pointed out on a previous occasion. But if it is also to be suggested that without a tape recorder that works the evidence will not be admissible, there will then have to be back-up facilities. At some stage, there will also be the question of the cost of transcription which is very considerable indeed.
So, by all means, let us look seriously at the question of tape recorders. The noble Earl has pointed out that two experiments are being conducted in Scotland at the moment, and some work is going on among English police forces as well. But, certainly, I do not think we have enough information before us at the moment to decide to support an amendment which would have such sweeping effects as those of the amendment of the noble Lord, Lord Foot.
5.16 p.m.
Lord FOOT: My Lords, I do not propose to prolong this debate, certainly not by going into these technical questions that have been raised about the viability of a cheap system of tape recording. I would only say that it strikes me as absolutely extraordinary that, in the last quarter of the 20th century, in the days of the computer, the micro-chip and so on, it is past the wit of man to invent a simple little machine which can record what has been said in a room, and then to put a seal upon it in order that nobody can interfere with it. If that is not possible to us then surely our technological revolution is not quite so admirable as it is claimed to be.
I noticed that, in the course of his reply, the noble Earl did not enter into this question of tampering, which was raised by the noble Lord, Lord Harris of Greenwich. I can well understand reluctance to enter into that kind of argument, because this was all dealt with in the last debate when, I suspect, that the noble Lord, Lord Harris, was not here, at any rate in the later stages. It was pointed out then by me, and by my noble friend Lord Wigoder, that the only people who would have the opportunity to tamper with the machines were the police. If the noble Lord, Lord Harris, is saying that the police might be inclined to do that, what is to stop—
Lord HARRIS of GREENWICH: My Lords, may I intervene? The noble Lord, Lord Harris, said nothing of the kind. If the noble Lord, Lord Foot, will look at my remarks in Hansard tomorrow, he will see that I said nothing approaching that. What I said was that the allegation would be made that the police had done that. It may not have escaped the noble Lord's attention that criminal defendants sometimes make statements which are untrue.
Lord FOOT: My Lords, presumably, one could go on with that argument for ever. But the first point about it is this. In the ordinary way, the only people who will have the opportunity of tampering are the police, and, if the police are inclined to tamper with a machine, how much more would they be inclined to tamper with the evidence under the present arrangements, by which all they have to do

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is to record it in a notebook. It is much easier to tell lies in a notebook, than it is by tampering with a machine.
The Thomson Committee dealt with all this, as they dealt with everything else. They considered whether there might be tampering. They came to the conclusion that it could be easily avoided. They also came to the conclusion that they had seen a cheap machine which could be used and then sealed and handed over to the procurator fiscal. All these arguments about tampering are, in fact, tampering with the argument.
As I said, I do not propose to prolong this debate. What I am hoping—I do not want in any way to antagonise the noble Earl, because he has been so accommodating up to now—is that this may be considered in the further stages of the Bill, if necessary upon an administrative level. That would not satisfy me. I should like to see it written into the statute. But if it is right, as Mr. Rifkind was indicating the other day in answer to a question, that these experiments are being actively pursued, and if it is thought practicable for these machines to be introduced, then that will be so much gained. I am not concerned that there should be a recording machine in every police station in the land, but I do want to see a recording machine in as many police stations as possible. I should have thought that on the basis of the Thomson Committee recommendations one could supply a recording machine in a police station more cheaply than one could supply a typewriter. I doubt very much whether there are many police stations, even in the outer stretches of Scotland, where they cannot afford to have a typewriter. The noble Earl shakes his head, but I shall not pursue that matter further.
I said that I was not intending carrying this amendment to a Division. Certainly I do not intend to do so. I am afraid that one of the reasons why I came to that conclusion before this little debate opened was because, I am sorry to say, the assistance that my noble friends and I got from the official Opposition on the last occasion was derisory. I think that there were three of them who accompanied us into the Lobby when we took the matter to a Division. I can only rejoice that they have now repented and are thinking better
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about that. Therefore, it would not be right for me to carry the amendment to a Division. Indeed, I have allowed my own troops to go. Therefore I do not want to prolong the matter, certainly not by incurring another defeat in the Division Lobby. I hope that the matter will be able to proceed on the lines that the noble Earl has indicated; namely, that further consideration will be given to the matter at a later stage. Therefore, I beg to withdraw the amendment.
Amendment, by leave, withdrawn.
The EARL of MANSFIELD The EARL of MANSFIELD moved Amendment No. 16:
Page 3, line 30, leave out from ("force") to end of line 32 and insert ("in exercising any power conferred by subsection (1), or by paragraph (b) or (c) of subsection (5), above.").
The noble Earl said: My Lords, this is a drafting amendment. Its purpose is to remove the obsolete reference in Clause 2(4) to a requirement under subsection (1) to make clear that the use of reasonable force is authorised to secure compliance with fingerprint as well as search procedures. I beg to move.
On Question, Amendment agreed to.
Lord MISHCON Lord MISHCON moved Amendment No. 17:
Page 3, line 35, at end insert ("and there shall be recorded the time when he was so informed, the identity of the constable informing him, the terms in which he is informed and his response, if any, thereto, and he shall be invited to sign the record.").
The noble Lord said: My Lords, in regard to Amendment No. 17, my observations, I promise, will be very brief. When dealing with the points that I made before as to the safeguards over recording matters when a suspect is detained, the noble Earl dealt, with his usual effectiveness, with my point about a suspect's signature. I am not going to return to that argument, for it would not produce any good result. What I said then—the noble Earl did not answer on that occasion, although I am sure it was only an oversight—was that this important matter of the right of silence, and the fact that a suspect can be told that all that he can legally be required to do is to answer a question as to his name and address and nothing else, is a legal requirement by

1205
way of a response. The safeguard is that the terms in which he is told this by the police officer and his reply, if any, should be recorded. With regard to this amendment, I have merely risen to point this out in the hope that the noble Earl might find it within him to accept that small addition. I beg to move.
The Earl of MANSFIELD: My Lords, I think I have already explained why we do not wish to accede to the suggestion that the police should be required by statute to invite the suspect to sign the record. I am afraid that I do not see any value in requiring them to record the terms in which the suspect is informed—or, indeed, the suspect's reply. I cannot see any reason to suppose that the police would fail to give the information in the proper terms. They are experienced and well versed in these procedures. The suspect's response in such circumstances is unlikely to be either significant or helpful. If it were, I am sure that the police would record it, anyway.
On Question, amendment negatived.
Clause 3 [Right to have someone informed when arrested or detained]:
5.26 p.m.
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 18:
Page 3, line 37, leave out from ("who") to first ("delay") in line 43 and insert ("—

(a) has been arrested and is in custody in a police station or other premises, shall be entitled to have intimation of his custody and of the place where he is being held sent, to a person reasonably named by him;

(b) is being detained under section 2 of this Act in a police station or other premises, shall be entitled to have intimation of his detention and of the place where he is being detained sent, to a solicitor and to one other person reasonably named by him, without")

The noble Earl said: My Lords, this is basically a drafting amendment of a technical nature. It was pointed out in Committee by several noble Lords that, as originally drafted, Clause 3 might appear to conflict with Sections 19 and 305 of the Criminal Procedure (Scotland) Act 1975 which give an arrested person the right to have information sent to his solicitor immediately on his arrest. The purpose of this amendment is to make it clear that the only effect of this clause,
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so far as an arrested person is concerned, is to provide him with the additional right to have a friend or relative informed of his arrest, as the Thomson Committee recommended. However, the police may delay sending this information for so long as is necessary in the interests of the investigation, or the prevention of crime, or the apprehension of offenders. I beg to move.
On Question, amendment agreed to.
The DEPUTY SPEAKER (Baroness Wootton of Abinger): My Lords, after Amendment No. 18 we pass to supplementary Amendment No. 18A on the separate sheet.
Lord MONSON Lord MONSON moved Amendment No. 18A:
Page 4, line 3, at end insert (",and a Constable shall so inform him.").
The noble Lord said: My Lords, I beg to move Amendment No. 18A. Your Lordships will have noticed that subsection (7) of Clause 2 stipulates that a constable shall be required to inform a person detained under subsection (1) of the clause that he is under no obligation to answer any question other than to give his name and address. Indeed, Amendment No. 17, to which the noble Lord, Lord Mishcon, spoke, relates to this subsection.
If we agree that it is proper, indeed essential, that the police should be required to inform a person detained of his rights under Clause 2—and I think we do all so agree—then in logic and in equity it is surely only proper and desirable that they should be required to inform a detained person of his or her rights under Clause 3 as well. It is possible, of course, to argue that the amendment is superfluous on the grounds that the first instinct of any person taken to a police station is to thump the desk and to demand immediate access to a telephone so that he or she may inform his husband, wife, parent, solicitor and so on. But in real life things do not always work out like this.
By the law of averages, a fairly high proportion of those detained under this Bill will be innocent. Others may well be guilty, but first offenders. Even innocent people often find, within the confines of a police station, that they

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become apprehensive and confused and do not always behave in a calm and logical way. I believe it imperative, therefore, that the police should be required to inform detainees of their rights under Clause 3 as well as of their rights under Clause 2. Incidentally, there is no significance in the upper case "C" that prefaces the word "Constable" in the amendment as printed as compared with the lower case "c" that appears elsewhere in the Bill. That is not of my doing. I cannot see that acceptance of this amendment would in any way weaken the Bill and it could only help to protect the rights of the individual. I beg to move.
The Earl of MANSFIELD: My Lords, I am bound to say that I am rather attracted by the noble Lord's proposals, both in this amendment and in Amendment No. 18B. I am attracted by the idea that a person being detained should be entitled to know whether the police delay in notifying his solicitor or his friend, and if there has to be delay one would expect to see the time of that delay recorded. What I propose to do is to undertake to consider the matter and, if I may, consult with colleagues with a view to considering the possibility of bringing forward an appropriate amendment in another place. I will not go further than that, but on that undertaking perhaps the noble Lord will consider withdrawing this amendment and possibly not moving the next.
Lord MONSON: My Lords, I am grateful to the noble Earl for what he has just said, and, in view of that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 18B not moved.]
Clause 4 [Search for offensive weapons]:
5.32 p.m.
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 19:
Page 4, line 5, after ("person") insert ("is carrying an offensive weapon and").
The noble Earl said: My Lords, for the convenience of your Lordships perhaps I may speak to Amendments Nos. 20 and 21 at the same time because these three
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amendments address themselves to the same point, which is essentially a drafting point. The noble and learned Lord, Lord Wheatley, pointed out in Committee that, as originally drafted, this clause might be construed as permitting a police constable to stop and search a person simply because he knew that on some previous occasion the person had been guilty of the statutory offence of carrying an offensive weapon. This was certainly not the Government's intention and these amendments have been tabled in order to prevent any possible misunderstanding. The insertion into line 5 of the words,
"is carrying an offensive weapon and"
make it clear that the constable must have reasonable grounds for suspecting that the person actually has an offensive weapon with him at the time when he decides to search him. The amendment to line 22 provides that in Clause 4 the definition of "offensive weapon" shall be the same as is contained in the Prevention of Crime Act 1953. The amendment to line 16 deletes a phrase which has become redundant in consequence of the amendment to line 22. I beg to move.
Lord ROSS of MARNOCK: My Lords, am I to understand that this is purely drafting, or is there more substance to it than that? This is a strange clause, it says:
"Where a constable has reasonable grounds for suspecting that any person has committed or is committing an offence under section 1 of the Prevention of Crime Act 1953"—
under that Act, so far as we have read it, the constable should arrest him. That is the power that is given to the police under the present law. Indeed, no doubt he is still going to arrest him—or still could. I am very much concerned about the drafting and the strange conflicts within this provision. The policeman suspects that somebody is committing an offence: the present law, which applies both to Scotland and to England and Wales, is that the constable has power to arrest without a warrant, take that person to the police station and search him; but now this is something else. Has this drafting been looked at from the point of view of a constable with a duty under one law who now has to apply a new duty under this Bill?
The EARL of MANSFIELD: My Lords, I take the noble Lord's point and I particularly do not want at this moment to address myself as to whether Clause 4 should be in the Bill at all, because I dare say noble Lords will have something to say about that when we come to Amendment No. 22. All I was saying was that these amendments, which are of a drafting nature, are also explanatory in that they make plain the intention of the section, as it will become. As I have tried to point out to your Lordships, they make plain what the noble and learned Lord, Lord Wheatley, in Committee said was not plain, at any rate to him. The Government have considered what the noble and learned Lord said, respectfully agreed with him, and tabled these amendments in order to clear up the position. They really do not go any further than that, and I do not think I can, either.
Lord ROSS of MARNOCK: My Lords, by making it plain I think the nonsense is made equally plain. The Prevention of Crime Act 1953 is a very short statute and if we were to read it here it would be fairly easy to see just exactly what I am getting at:
"A constable may arrest without warrant any person whom he has reasonable cause to believe to be committing an offence"—
that is carrying an offensive weapon in a public place. We start with that.
The EARL of MANSFIELD: My Lords, with the greatest respect to the noble Lord—if he will give way—one is expected to speak only once on Report in your Lordships' House. Far be it from me to point out his duty to the noble Lord, but this is the Report stage and possibly the noble Lord may wish to reflect on his position.
Lord ROSS of MARNOCK: All right.
On Question, amendment agreed to.
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 20:
Page 4, line 16, leave out ("within the meaning of the said Act of 1953").
On Question, amendment agreed to.
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 21:
Page 4, line 22, at end insert—
("(4) In this section, "offensive weapon" has the same meaning as in the said section 1.").
Lord ROSS of MARNOCK: My Lords, would it not be much easier if here we actually put words as to what an offensive weapon is and then give the actual definition—
"Any article made or adapted for use for causing injury to the person or intended by the person having it with him for such use by him".
Would it not be far simpler, far more explicit and certainly easier for us all to understand when we are discussing this particular clause as to the definition of an offensive weapon? Surely we could actually do it directly and say what an offensive weapon is. I do not think there would be any great difficulty in that and I hope the Government will think about it between now and any other stage of the Bill.
The Earl of MANSFIELD: My Lords, I will certainly think about it, but, if I may say so, I think the clause is perfectly plain in its meaning and to put words in unnecessarily would be surplusage.
On Question, amendment agreed to.
5.39 p.m.
Lord ROSS of MARNOCK Lord ROSS of MARNOCK moved Amendment No. 22:
Leave out Clause 4.
The noble Lord said: My Lords, I beg to move that we delete Clause 4. The noble Earl said that the clause was perfectly clear as to what it meant in respect of every single word. Where it says "offensive weapon", with all due respect it is not defined and we must remember that we are here giving a new power to the police and within that power anyone resisting can be—on summary conviction—fined £200, and, indeed, of course, the outcome of the search that is conducted on a particular spot may lead to the penalties under the Prevention of Crime Act 1953, which prohibits the carrying of an offensive weapon.
There was for quite a time—it has not been so heated lately—a demand from the police in the West of Scotland for this particular power. I was Secretary of State for quite a long time while they tried to persuade me that this was absolutely essential for safeguarding the public and the prevention of crime. But, of

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course, all those who have considered it have always appreciated that there is a question of balance here. It would certainly be a small price to pay for reducing the number of crimes of stabbing or shooting, and if that and that alone were at stake I do not think anyone would object to it. But there are many members of the public, and I am one of them, who would very much object to being stopped for searching. The arguments about the eggs of particular birds is not relevant here, nor indeed is the question of being searched at an airport, because everyone is searched; there is no question of discrimination.
But suddenly to be lighted on for no particular reason by a constable and searched on the spot is a very different matter. When I spoke last on this subject I quoted the Council of the Law Society's Criminal Procedure Committee, which was entirely opposed to this. It is only fair to say now that the actual council have considered this, and they have come down on the other side by a majority of 15 to 13; the vote itself shows the difficulty they had in making up their minds as to what was the balance in respect of this particular clause.
There is a fear that there will be discrimination against a certain section of the public, that there will be judgment by appearance, by locality, certain parts of the town in which you are never sure this will not happen, and random checks, particularly of young people, would be initiated. This point is made time and time again. What always weighed with me was the fact that there is sufficient antagonism in certain parts of our cities against the police without introducing this, which I think is quite unnecessary. If anyone is committing an offence against the Prevention of Crime Act 1953 the power is there; they can arrest them and search them and let the law proceed from there. But if you get this kind of thing, you are going to have harassment of individuals in an area; it may cause further conflict within that area and certainly will not help to achieve what we all want, which is a measure of cooperation between young people and the police, particularly in our cities.
I am also very troubled indeed about the offensive weapon. The definition is
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as I have stated; I copied it down in the Library today:
"Any article made or adapted for use for causing injury to the person or intended by the person having it with him for such use by him".
It could be a normally inoffensive weapon, and most very inoffensive weapons can be used as offensive weapons. A constable with a particular person can construe it as such and proceed to search him. I heard someone speaking quite recently about the ignominy of being taken to a police station and searched. I do not think there is anything more ignominious than being searched in public or to be asked to go round the corner in a rather populous street to be searched. That is the implication of this. The power is already there, within the Act which is quoted, to be taken to the police station and searched. At the present time in England and Wales and in Scotland that is the law; the police can do that. But this is a different kind of thing—just stop and search. I think it is going to lead very considerably to trouble. This is why I have been very much opposed to it in the past. I still remain unsatisfied that there are any protections within this against unfairness to certain sections of the populace, young people in particular, in certain parts of our towns and cities, and I believe that it will cause very considerable difficulties between police and public. And, remember, once you stop a young person and harass them in this particular way it is not just they who are dissatisfied; the parents become dissatisfied with the treatment of their sons or indeed of their daughters. So you get a build-up of antagonism at a time when we want police and public cooperation. This is the wrong way to go about it.
I have always been satisfied that what is to be gained here is very little compared to what could be lost. As someone said—someone with the same name as myself; Father Anthony Ross, who has spent a lifetime on the question of crime and punishment—when it comes down to it, what is the most usual weapon that is used? The boot. That is fairly inoffensive, but it then becomes an offensive weapon. But that does not apply here; you are not going to prevent crime by telling people to take their boots off and walk in their bare feet. We are going of achieve so little but we are going

1213
to lose so much. At this particular stage, the Government should think again. Everyone who has considered it has not been overwhelmingly in favour of it. Even the Scottish Council on Crime, which the noble Lord, Lord Campbell, set up when he was Secretary of State for Scotland, said, when they decided to do it, let it be for a period and see how it works. That is something we will come to in the next amendment. I sincerely hope the Government will think about this again. I beg to move.
Lord CAMPBELL of CROY: My Lords, the noble Lord, Lord Ross of Marnock, in moving this amendment at the end made reference to me as having set up the Scottish Council on Crime and having drawn attention to the fact that they did recommend that a power of this kind should be given to the police in Scotland. I agree that in their recommendation they said that it should be tried for a period, I think of five years, if I remember rightly, but they did make this positive recommendation. The noble Lord started by referring again to the question of the weapons in this clause, and on the last amendment my noble friend Lord Mansfield was not attracted to that idea. My mind is certainly open on it, and I would ask the Government to have a look at this again if it is going to improve the clause from the point of view of those who are worried about it.
I differ very much from the noble Lord, Lord Ross, in his general attitude to this clause, because I believe it is necessary to give a power of this kind to the police in Scotland. I know that there are doubts about the power to search discriminately in public, but I believe the balance is on the side of law and order. I differ from the noble Lord, Lord Ross, when he says he would not like to be stopped and searched in public in the street. Well, I am the opposite. I would not mind in the least being stopped and searched by the police in Glasgow, or Dundee or my own nearest town, Inverness, if it is going to help to stop people, particularly those who might be tempted to use the weapon, carrying knives or other dangerous weapons about with them. When this came up earlier in the proceedings on this Bill, noble Lords, including noble and learned Lords with judicial experience,
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mentioned some of the crimes which have occurred on the spur of the moment, by people pulling out a knife and acting in a matter of a second or two. Those crimes might not have happened at all if those people had not been carrying weapons. Of course, I agree with the noble Lord, Lord Ross of Marnock, when he speaks about the boot and kicking. It is unfortunate that that kind of thing can happen, but at least let us try to reduce crimes which are committed with other forms of weapon, other bludgeoning or sharp weapons.
I agree with the noble Lord, Lord Ross, about preserving the relations between the police and the public. That is very important. However, Clause 4 says that a search can be carried out only:
"where a constable has reasonable grounds for suspecting that any person has committed or is committing an offence".
I think that the words "reasonable grounds" mean that it cannot be just discrimination—picking on persons in the street or in a public place. I agree that the police must operate this clause in a sensible manner if, as I hope, it passes into law when the Bill becomes an Act. However, I must make it clear at the beginning that I disagree with the noble Lord, Lord Ross. It is not simply because of the recommendation of the Scottish Council on Crime, although that is a factor. However, anything that can be done which will mean that fewer people carry weapons who might, in a moment of anger, in a gang fight or in drunken episodes emerging from pubs, commit such an offence, will help. Such people may for the rest of their lives regret that they ever used that weapon. If we can do anything in a clause of this kind to reduce that number, then I support it.
Viscount MASSEREENE and FERRARD: My Lords, briefly, I should like to support this clause. I know a young policeman—in fact, he is not all that young now—who is the son of an employee of mine in Scotland, who works at Cumbernauld. He has been there for quite a few years and he reckons that one in every three young men carries an offensive weapon. I do not know how the law defines an offensive weapon. Presumably an offensive weapon includes knives over a certain length and obviously firearms. If the law does not accurately define an

1215
offensive weapon, perhaps such a definition of an offensive weapon should be included in the clause. Like my noble friend Lord Campbell of Croy, I cannot understand how anyone who is innocent of carrying an offensive weapon should be embarrassed if a constable demands to search him. I would not be in the least embarrassed. There is an old saying:
"A stitch in time saves nine".
If a young man is carrying an offensive weapon and has a lot to drink, it is possible that he might use the weapon on the spur of the moment. With the tremendous rise in the crime rate, especially in certain areas of the country, particularly Scotland, I believe that the police should now have this essential power. I support the amendment.
Lord KINROSS: My Lords, we all know that crimes of violence in Scotland are on the upgrade. Mugging, attacks and acts of violence are prevalent to the extent that innocent citizens are afraid to walk abroad in certain areas by day or by night for fear of being assaulted and robbed. These attacks are often made by youths carrying and using offensive weapons, such as knives, which can wound, disfigure or even kill. We look to the police to give us protection against such assaults, but the police cannot give protection unless we give them adequate powers to carry out their duties.
The police already have powers to stop and search for firearms, but they have no power to stop and search suspected citizens for knives or other offensive weapons. Therefore, I welcome Clause 4 of the Bill, which will give them this power. It is true that in terms of the Prevention of Crime Act 1953 the carrying of offensive weapons is illegal, but in my view the increase in violence in this country more than justifies the extension of the powers to stop and search. Such an extension would enable the police quickly to expose those who are in breach of the 1953 Act and so reduce the prevailing violence.
It has been suggested—in particular by the noble and learned Lord, Lord McCluskey, when this clause was considered in Committee—that the clause is not necessary because a constable could avail himself of the provisions of Clause 2
1216
of the Bill by detaining a suspect and then having him searched at a police station. I can envisage circumstances in which this procedure would be too slow, perhaps because the nearest police station was some distance from the suspect, and it would be quicker and more efficacious to achieve success by making an immediate search and so prevent the use of a knife.
I beg to differ from the noble Lord, Lord Ross of Marnock, on this matter, but it is true to say that the Law Society was equally divided on it. Voting in the council resulted in 15 members in favour of the clause and 13 against it. The majority of the council accepted that the police be given power to search persons whom they had reasonable grounds to suspect of carrying offensive weapons in public, which is exactly what this clause does. They considered that this would be necessary and useful in crime prevention. Therefore, I hope that noble Lords will leave this clause as part of the Bill.
Viscount MASSEREENE and FERRARD: My Lords, through a slip of the tongue, which was very foolish of me, I said that I supported the amendment. Of course, I spoke against the amendment.
Lord PONSONBY of SHULBREDE: My Lords, nobody misunderstood the noble Viscount.
Lord ROSS of MARNOCK: My Lords, I certainly did not misunderstand the noble Viscount.
The Earl of SELKIRK: My Lords, if I have one regret it is that it is very difficult to obtain a copy of the report of the Scottish Council on Crime. It is an extremely good analysis, of many of the problems, and it is sad that it has not had a wider circulation. It makes a number of interesting points, in particular the very high level of crime among 18 to 21 year olds. This is a terrifying picture; compared with other ages it may be 20 times as high. The point which my noble friend Lord Campbell of Croy made is that if many of these people can be caught before they get deeply involved in this business, it may make a whole difference to their lives. It makes the point that quite a substantial percentage of those who are charged never come back. Once they have been caught, their way may be clear.

1217
The report says that in 1972 900 crimes were committed in Glasgow, with various weapons including knives. That is a terrifying picture at a time when I knew a little about Glasgow, and it shows that the city has not improved. I believe that we would be taking a chance if we did not take fairly strong measures to try to stop this violence.
The Earl of MANSFIELD: My Lords, there was a good deal of discussion on this clause in Committee, and I do not propose to repeat all the arguments in favour of it which I deployed on that occasion. However, I take comfort from what was said then by the noble and learned Lord, Lord Wheatley, who has vast experience in these matters. Equally, I take comfort from the remarks of my noble friends who support the inclusion of this clause in the Bill.
First, I should like to deal with the definitions point. To put the matter in what I might call "baby language", Clause 4 says that a constable can do certain things if he:
"has reasonable grounds for suspecting that any person has committed"
and so on; and it talks about offensive weapons as are defined in the Prevention of Crime Act 1953. In that Act there is a perfectly good definition clause. I will not say that it has not caused the courts to inquire into what it means at various moments, but I think that everybody is now pretty well agreed what an offensive weapon is or may be. They come in two kinds: an offensive weapon per se, such as a flick knife, and something which may become an offensive weapon, particularly if the suspect has the will, or the motive, or the desire to use it as such. There is no need to write into this Bill the definition of an offensive weapon because it is unnecessary and would be surplusage.
The next matter raised by the noble Lord, Lord Ross, was that he says there will be "random checks", which, he went on to say, will cause ill feeling and disaffection among the citizenry. There will not be random checks, because it is made plain,
"… where a constable has reasonable grounds for suspecting that any person has committed",
and so it goes on. One of the most basic
1218
fallacies which at the moment obtains throughout Scotland about the meaning and the purpose of this clause is that in some way it entitles the police to conduct random searches on the citizenry in public places to see whether they are carrying offensive weapons. It does nothing of the sort. If that is something that I can drive home tonight, then indeed my presence at this Dispatch Box will have been worth while.
The next point concerns the offence itself. As some of my noble friends have said, the inclusion of this clause or something like it, in a Bill was recommended both by the Scottish Council on Crime and by the Thomson Committee. I do not need to dilate at length on the habit among young people in the conurbations, particularly in our larger towns and cities, of going about carrying offensive weapons; usually knives carried hidden and ready for use, although probably in the first instance they are carried for purposes of self-defence. Be that as it may, the carrying of these weapons is responsible for a large proportion of the serious crimes of assault committed in Scotland.
The power to stop and search for offensive weapons is required because there are many circumstances where it is impracticable or undesirable to arrest the suspect, or to detain him under Clause 2. The noble Lord, Lord Ross, seems to think that it is some loss of liberty or dignity to be stopped and searched if a constable has reasonable cause for so doing in the street. But I put it to him that it is much less of an invasion of one's privacy, or liberty, merely to be stopped and searched, and if one is not carrying a weapon then to be sent on one's way by the police than, in the course of reasonable suspicion, to be dragged off to a police station which may be miles away and there searched. It is surely a better, quicker, and more efficient method in such circumstances that such searches should be quick, clean, and sharp and take place where the person happens to be. Otherwise there is a great deal more work on the part of the police who, for instance, have to transport the suspect down to the police station, and, as I have said, it represents a much greater intrusion into a person's liberty to be taken into a police station and there possibly to be searched and then booted out through the back or the front door.

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The point was made that this is going to lead to a breakdown in relations between the police and the public, or at least contribute to it. I am not going into all the absurd examples of birds' eggs which we had in Committee, but the police have already such powers in the case of dangerous drugs. The community as a whole accept that the police should have such powers. So far as I know the police in Scotland do not abuse their powers in relation to dangerous drugs, nor has there been a loss of public sympathy as a result. As society grows more complex we all have to suffer these invasions of privacy and liberty to an extent. One regrets it, but unfortunately it happens to be true. I am certain that these powers are necessary for the reasons that I have given. I am quite sure that they will not be abused by the Scottish police.
Nobody is better placed than the police to know how to secure and maintain their links with the public, and nobody is more sure and certain of how to do it and what the results will be if they abuse their position. The police's standing with the public at large is more likely to be enhanced if they are seen to be more effective at protecting the public from violent armed gangs; protecting the public as they make their lawful way in public places. This is a matter which was pressed to a Division in Committee. I very much hope that that course will not be adopted tonight.
6.7 p.m.
Lord ROSS of MARNOCK: My Lords, I was appalled to hear the Minister talk about police trying to stop armed gangs. Surely that is not the purpose of this. Are we to understand that the police at the moment are quite powerless to deal with armed gangs? This is the point. There is a lot of emotive stuff being poured out that if only we pass this then somehow, suddenly everything will be lovely in the cities and the streets. It is not true. The noble Lord, Lord Kinross, would be the first to appreciate that the police are not powerless.
We start with the first words of this clause:
"Where a constable has reasonable grounds for suspecting that any person is carrying an offensive weapon and has committed or is committing an offence under Section 1 of the Prevention of Crime Act…".
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If he suspects that, it is at present his duty to arrest the person. That is what he would do with armed gangs. It would not be one policeman, either: there would be a few on the spot. That is what they do at the present time. They have the power, and they use it. Here it is suggested that despite the fact that they know—they have got all the suspicions and all that is required under the law to arrest a person—instead of arresting him they search him.
What it means is that it may well be that he is going to search a lot more people, but he has still got to have reasonable grounds for instituting this search. But nobody has defined these reasonable grounds. The Minister says, "You don't need to worry about it. The police have got to be reasonable". What are the reasonable grounds? He just does not like his face? How he is dressed? Where he is at a particular time? It is a subject of assessment.
I can tell the Minister that, if he thought it was easy so to do, then the Law Society of Scotland did not. He spoke rather scoffingly about my suggestion of random checks. They were not my words. It is the Law Society of Scotland which uses this in their document in respect of the minority—and it was a minority of 13 against 15. They said this:
"The minority of the Council felt a citizen has the right to be protected against unreasonable search, but were concerned as to what could constitute reasonable grounds".
It was pointed out that when the constable used these powers he would have to make an immediate, pragmatic but subjective assessment. Elsewhere, it has been suggested that it will be in particular places, particular circumstances, particular people.
Somebody mentioned 18 to 20 year-olds. I hardly need to tell your Lordships just what the reaction will be in the section of people from whom you will want cooperation with the police. You will not get it if there is harassment, and yet there cannot but be harassment when this subjective assessment is made. Once again the minority of the Law Society felt that, if the clause were enacted,
"there would be an increasing tendency for the police to discriminate against a section of the population by appearance and by locality".

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It is not me saying this; this is being said by lawyers, practitioners in Scotland. They added:
"Random checks, particularly on young persons, would be initiated".
Of course they would be, and it is because of this that I have been convinced for a long time that we shall run into more trouble and create more difficulties by enacting this provision. The police have the powers, they can use them and they have been using them.
For anybody to suggest that by the exercise of this power we will suddenly get rid of all muggings is ridiculous. Muggings do not necessarily require offensive weapons; fists are enough to attack older people, and when they are in the

CONTENTS

Ardwick, L.

Gardiner, L.

Pitt of Hampstead, L.

Bacon, B.

George-Brown, L.

Ponsonby of Shulbrede, L. [Teller.]

Balogh, L.

Greenwood of Rossendale, L.

Blease, L.

Hale, L.

Rhodes, L.

Blyton, L.

Houghton of Sowerby, L.

Ritchie-Calder, L.

Bowden, L.

Jacques, L.

Ross of Marnock, L.

Brockway, L.

Janner, L.

Sefton of Garston, L.

Brooks of Tremorfa, L.

Kilmarnock, L.

Segal, L.

Bruce of Donington, L.

Lee of Newton, L,

Shinwell, L.

Cledwyn of Penrhos, L.

Listowel, E.

Stewart of Alvechurch, B.

Cooper of Stockton Heath, L.

Llewelyn-Davies of Hastoe, B.

Stone, L.

David, B.

Lloyd of Hampstead, L.

Strabolgi, L.

Davies of Leek, L.

Lovell-Davis, L.

Taylor of Blackburn, L.

Denington, B.

Mishcon, L.

Taylor of Gryfe, L.

Donaldson of Kingsbridge, L.

Monson, L.

Wells-Pestell, L. [Teller.]

Elwyn-Jones, L.

Northfield, L.

White, B.

Gaitskell, B.

Peart, L.

Wilson of Langside, L.

Galpern, L.

Phillips, B.

Wynne-Jones, L.

NOT-CONTENTS

Allen of Abbeydale, L.

Denham, L.

Hanworth, V.

Allerton, L.

Dormer, L.

Henley, L.

Alport, L.

Drumalbyn, L.

Hives, L.

Amory, V.

Dulverton, L.

Holderness, L.

Ampthill, L.

Ebbisham, L.

Hooson, L.

Atholl, D.

Ellenborough, L.

Hornsby-Smith, B.

Auckland, L.

Elliot of Harwood, B.

Hylton, L.

Avon, E.

Exeter, M.

Killearn, L.

Baker, L.

Faithfull, B.

Kilmany, L.

Balerno, L.

Falkland, V.

Kimberley, E.

Balfour of Inchrye, L.

Ferrers, E.

Kinloss, Ly.

Barrington, V.

Ferrier, L.

Kinnaird, L.

Bellwin, L.

Foot, L.

Kinnoull, E.

Belstead, L.

Fraser of Kilmorack, L.

Kinross, L.

Boyd of Merton, V.

Fraser of Tullybelton, L.

Lauderdale, E.

Byers, L.

Galloway, E.

Long, V.

Campbell of Croy, L.

Gladwyn, L.

Loudoun, C.

Chelmer, L.

Glasgow, E.

Lucas of Chilworth, L.

Clifford of Chudleigh, L.

Godber of Willington, L.

Lyell, L. [Teller.]

Cottesloe, L.

Greenway, L.

Mackay of Clashfern, L.

Craigmyle, L.

Gridley, L.

Macleod of Borve, B.

Crathorne, L.

Grimston of Westbury, L.

Mansfield, E.

Cullen of Ashbourne, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Margadale, L.

de Clifford, L.

Massereene and Ferrard, V.

De Freyne, L.

Hampton, L.

Milverton, L.

dark these cowards can resort to that and to the boot as well. So let us not have the impression that we shall suddenly get a dramatic reduction here. That is why I feel that this is deceiving the public by letting them think we are giving them some kind of new protection to prevent crime when I am convinced we are not. It will cause trouble between the public and the police.
6.12 p.m.
On Question, Whether the said amendment (No. 22) shall be agreed to?
Their Lordships divided: Contents, 53; Non-Contents, 115.

Monckton of Brenchley, V.

Reigate, L.

Strathclyde, L.

Montgomery of Alamein, V.

Rochdale, V.

Strathspey, L.

Morris, L.

Rochester, L.

Swansea, L.

Mottistone, L.

Romney, E.

Teynham, L.

Mowbray and Stourton, L.

St. Aldwyn, E.

Tranmire, L.

Murton of Lindisfarne, L.

St. Davids, V.

Trefgarne, L.

Newall, L.

St. Just, L.

Trenchard, V.

Northchurch, B.

Saint Oswald, L.

Vaux of Harrowden, L.

Nugent of Guildford, L.

Sanford, L.

Vernon, L.

Ogmore, L.

Sandys, L. [Teller.]

Vickers, B.

O'Hagan, L.

Savile, L.

Vivian, L.

Orkney, E.

Selkirk, E.

Wakefield of Kendal, L.

Pender, L.

Sempill, Ly.

Young, B.

Piercy, L.

Simon, V.

6.21 p.m.
Lord ROSS of MARNOCK Lord ROSS of MARNOCK moved Amendment No. 23:
After Clause 4, insert the following new clause:
Expiry of sections 1–4
".Sections 1, 2, 3 and 4 of this Act shall continue in force for the period of five years beginning with the date of the passing of this Act and shall then expire unless Parliament by affirmative resolution of both Houses otherwise determines."
The noble Lord said: My Lords, this is a new clause that I seek to have inserted into the Bill. It is a simple one, and it covers the point that I made in my speech relating to the last amendment, suggesting that:
"Sections 1, 2, 3 and 4 of this Act shall continue in force for the period of five years beginning with the date of the passing of this Act and shall then expire unless Parliament by affirmative resolution of both Houses otherwise determines.".
The point was made in relation to Clause 4 that the Council on Crime when recommending this proposal suggested that it should be introduced for a trial period of five years. Here is our chance to do exactly what the Council on Crime suggested—have a trial period of five years. By use of the Affirmative Resolution the Government could continue to keep in force Clauses 1 and 2 in force and leave out Clause 4, or keep the lot in force. The amendment would give them full power.
The reason why I extend this proposal to Clauses 1 and 2 in particular is that we are concerned here with a completely new power. We do not know how it will work out, or whether it will be of any benefit, and it would be reasonably wise to look at it after three of four years and decide whether to drop it or continue it. We can
1224
see how both the public and the police react to it, and we can see whether it has the desired effect on crime that many people think it will have. This is a very simple and reasonable amendment, and is in keeping with the views of those who suggest that we must follow the Council on Crime. Let us follow them, and let us have a trial period for only five years. I beg to move.
Lord FOOT: My Lords, I hesitate to intervene in a debate which is not on my own amendment, but I cannot see the logic of the argument that is being advanced in support of this amendment. I remember only too well that about 10 years ago we had a major debate in the House on whether we should confirm the abolition of the death penalty. If I remember rightly, the noble and learned Lord, Lord Wilson of Langside, took part in that debate. The same thing was done on that occasion. On the recommendation of the noble Lord, Lord Brooke of Cumnor (who was then Mr. Henry Brooke), if I remember rightly, when the death penalty was abolished, it was provided that the abolition should cease to have effect unless within five years by Affirmative Resolution it was decided to continue it.
I can remember very well all the difficulties to which that gave rise. When we were coming up to the end of the five-year period the question was, had the statistics of the previous five years demonstrated whether the decision was right of wrong? On that matter we at least had some statistics to go by. We were able to look and see what had been the effect on the murder rate in England and Wales during the period of the suspension of the death penalty as compared with the period beforehand. We had some sort of basis on which to judge the matter. But in this case what statistics will be available

1225
at the end of the five-year period to enable us to judge whether these four clauses have been successful and effective? I cannot conceive of the sort of statistics which could be available.
I suppose that the argument in five years' time will be that we should try to decide whether the system of temporary detention in the street and, subsequently, detention for six hours, as well as the provisions about search, have or have not proved effective. I do not know how this House or any other House will be able to arrive at a judgment on that matter because I cannot see how any statistics or factual evidence will be available.
My other point is that if what we are trying to do now is right, surely we ought to have the courage of our convictions. We have had long, elaborate reports, and most of these clauses with the exception of Clause 4, are based upon the recommendations of the Thomson Committee. The Thomson Committee were quite clear in their recommendations. The Government have substantially adopted the recommendations of that committee. They are now putting them into force, and putting them on the statute book. If every time we pass legislation amending the criminal law we insert a clause of this kind, it will merely indicate that we have lost faith in our own convictions and in the recommendations of these very high-powered committees which have been called into being from time to time. I trust that the amendment will not be accepted, and I hope that the noble Lord who moved it will not press it to a Division.
Lord MONSON: My Lords, I rise to support the amendment. This is not of course a party political matter. Indeed, the noble Earl, Lord Perth, rose from these Benches to support a similar amendment in Committee; I am only sorry that he is not here today. At this stage we cannot possibly know whether the optimists or the pessimists are right in regard to Clauses 1 to 4. I tend to number myself among the pessimists. I very much share the misgivings voiced by the noble Lord, Lord Ross of Marnock, concerning Clause 4, for reasons which I advanced fairly fully in Committee and in regard to which I do not wish to take up the time of the House by repeating
1226
today. I was worried and am still worried that the counter-productive effects of Clause 4 may outweigh the undeniably beneficial ones, and that is why I voted against it in Committee and again today. However, my assessment can be only a subjective one, and we cannot for several years know for certain who is right.
I am also uneasy about Clause 3, despite the kind indication of the noble Earl, Lord Mansfield, that he would look favourably upon my two modest amendments. Notwithstanding the words,
"Without prejudice to section 19 or 305 of the 1975 Act…"
with which Clause 3 opens, it still appears to weaken very considerably the right of unfettered and unconditional access to a solicitor which had been conferred by the 1975 Act. Again, perhaps things may work out in practice rather better than expected, but the point is that we cannot possibly know at this stage.
The arguments for a five-year trial period seem to me to be overwhelming. As the noble Lord, Lord Foot, has pointed out, there is a respectable precedent in the Act which abolished capital punishment, in which at a Conservative instigation, a five-year trial period was inserted. For that reason I am very happy to support the amendment.
6.30 p.m.
Lord MISHCON: My Lords, if I may say so, I was rather surprised when the noble Lord, Lord Foot, took as an example of the use of a five-year period and an Affirmative Resolution the question of the abolition of capital punishment. This was a step which was taken by our Legislature in order to do away with something which we had known for a very long time and to see whether in fact we were doing something which was morally right and might have the same sort of deterrent effect as capital punishment might or might not have had. By Clauses 1 to 4 of this Bill we are doing no such thing. We are not abolishing that which we have known: we are initiating that which we have not yet known, and we are doing it on the basis of recommendations, soundly reached in so many respects after a lot of consideration, by a committee whose words the noble Earl opposite (if I may say so

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without in the slightest degree being offensive) said, when it suited him, did not constitute holy writ. I am indeed quoting his very words. If holy writ is immutable, that which is not holy writ at the hands of human beings is mutable if they find they have made a mistake.
The powers which are sought under Clauses 1 to 4 deal with the question of detention in circumstances we have not yet experienced; with forcing a witness to give name and address, and with the setting up of an offence if that witness is not co-operative in proper circumstances. It is not a question of the test of statistics as to whether or not these are good clauses. Over a period of a few years we shall have judges who will tell us whether or not these clauses have worked out successfully, and we shall have the views of the police as to whether in fact Clause 4 has harmed them instead of benefiting them in the pursuit of crime, and has in fact antagonised young people or has not antagonised young people. I feel that when innovating something people have confidence in a view if they say, "In case we are wrong (and we are humble enough to say that we may be) let us try an experiment. It looks as though we are right, but we can correct things if we find we are wrong".
All that this amendment does is to say that, in regard to the clauses where there has been an honest cleavage of opinion, with views cast on both sides of the House irrespective of party—and, indeed, on the Benches that I am at this moment looking at I know there is a diversity of opinion on some of the things we have been discussing on Clauses 1 to 4—there should be an opportunity to think again after five years without having to legislate further or to bring in amending legislation. All of us know how, in crowded Government programmes, it is so difficult to do that even though there is merit in the amending legislation. By this amendment we are giving ourselves the power to think again after five years and to consult again with those who know and who have had experience of the working of these clauses. Then, if we find that in respect of any of them we have gone wrong, by a mere resolution of a House of Parliament we shall be able to say, humbly, "We were wrong", or, "The times have changed", and we can put things right.
Lord WILSON of LANGSIDE: My Lords, I, too, would support this amendment. I must confess that I did not find the arguments in favour of the amendment quite so overwhelming as did the noble Lord, Lord Monson, and I thought that perhaps there was something in the statistical point which was made by the noble Lord, Lord Foot. But it can surely do no harm to have this five-year trial period. It will give us the opportunity to reassess the situation in the kind of context to which the noble Lord, Lord Mishcon, has referred. For myself, I must say that I think it is a great pity that during the period since, in particular, 1945—no doubt this applied before, too, but in our efforts in the reform of the criminal law of Scotland since, in particular, 1945—we have never properly stopped to reassess the situation and see whether all these things that we have been doing have made any impact on the problem at all, or whether perhaps we have been on the wrong lines altogether.
This proposal I think would have the great advantage that it would compel us in Parliament to look again at the situation; because, of course, sweeping claims have been made. Sometimes at the hustings they were made for unworthy motives, to allay the anxieties of people fearful of the rise of crime and violence, and so on; but sweeping claims have been made about what will happen if these additional powers are given to the police. Some of us are very sceptical about what the effect of these additional powers will be, but sweeping claims have been made. What harm can there be? What reason have the Government to resist the suggestion, "Let us look at it again in five years"? What on earth is wrong with that? Capital punishment was a different situation, as the noble Lord, Lord Mishcon, has said. But what possible reason can the Government advise for our not looking at this question again? It may be that it suggests, as the noble Lord, Lord Foot, implied, that we have not the confidence that we should have in our capacity to deal with this problem of the rising tide of crime and violence in society.
I have been involved in various aspects of this business throughout my professional life, and I must say that what I have seen does not fill me with confidence that we have been on the right lines and that we are being effective. So I say to your

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Lordships: Why should we not take advantage of this amendment moved by the Opposition? There is everything to gain and nothing to lose.
Lord GALPERN: My Lords, last Thursday I had the good fortune to watch a television programme called Current Account in Scotland. It consisted of two lawyers, both Members of another place, Mr. Michael Ancram and Mr. Donald Dewar, who has already been mentioned this afternoon, cross-examining witnesses for and against this Bill. The jury were composed of final-year law students. I see the noble Earl, Lord Mansfield, smiling; perhaps he saw it, too. I hope he did. However, the jury which had to give their verdict were composed of final-year law students—the young people who, probably more than anyone else, are concerned about the state of crime in Scotland at the present time. What struck me about it was that even those who were supporting the Bill—for example, Mr. Michael Dewar—said, "All right; on balance it is a good Bill."Surely we in this country do not legislate on the basis of laws that are good on balance; that is to say, with an admission that there are bad parts in them but those bad parts are compensated by the other side wherein there are some good parts. If there are bad parts in a Bill and it is admitted by even its protagonists that they are bad, surely we ought to drop them. This amendment gives us the opportunity to do that.
I have heard the noble Earl, Lord Selkirk, constantly referring to Glasgow. May I say that Glasgow is as well behaved a city as anywhere else, and that we have no greater incidence of crime than anywhere else, but if we had an adequate police force it could make a substantial difference to the incidence of crime, not only in Glasgow but everywhere else. That is probably the way we ought to be going about trying to solve the rise—the steep rise—in crime throughout the country. I therefore think that this amendment, which says, in effect, "Let us limit it to five years" is a very sensible and reasonable one in view of what even the supporters of the Bill have said. But the remarkable thing to me was that at the end of this programme, when the jury of these final-year law students were asked to give their verdict, it was a unanimous vote
1230
against the Bill, good and bad as it may be. If that is the thought of people who are studying law and who I dare say have given some reasonable thought to the problems which confront us, then we are not asking anything beyond reason by saying, "Let us limit it to five years."
I am afraid that I have not had the opportunity or the good fortune to get a copy of the Law Society's Report but it is true, in my opinion, having been Lord Provost of the city about 20 years ago, that the scrutiny of the police will be directed to certain areas where these fights are likely to take place more so than in the centre of the city. Noble Lords, may disagree, but I do not see them going about in the centre of the city thinking of somebody for whom they have "reasonable belief". This "reasonable belief" is something that worries me and, I am sure, every Member of this House. Have we to see a six-foot spear sticking out of his jacket in order to say, "Right, we are going to do it"—because he is going to be arrested, not having committed a crime for which there is already a law in existence but simply because of the "reasonable belief" that he is carrying an offensive weapon. It has been repeated over and over again that probably the boot is a more offensive weapon than some of the offensive weapons that they could be using. Talking about the general layout of the city of Glasgow, I am afraid and worried that this could lead to very bad relations between the general body of citizens of Glasgow, particularly in the housing schemes, and the police force. To ask that this amendment should be supported is to give us the opportunity to assess the value or otherwise of the Bill we are considering at the present time.
6.42 p.m.
The EARL of MANSFIELD: My Lords, we discussed at Committee stage a very similar new clause to this one. The only difference is that noble Lords have now lengthened the proposed trial period from three years to five years. Neither the noble Lord, Lord Ross of Marnock, nor the noble Lord, Lord Mishcon, sought to explain why the period should be lengthened from three years to five years. I do not take any point on that, mostly because I do not agree (and the Government do not agree) with the concept of a review in these circumstances. May

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I say, first, that we do not regard the provisions contained in Clauses 1 to 4 as dramatic innovations so much as measures to regulate existing practices in many cases. I know that others do not take that view. Until I am blue in the face, I can explain that Clause 4 does not give the police the right to stop and make random searches for offensive weapons. Whatever I say, people will still believe, perhaps in this House and certainly in Scotland, that that is precisely what Clause 4 does. May I say to the noble Lord, Lord Galpern, because I, too, watched that programme, that that is what they said on the "telly". If he and I have both suffered perverse verdicts in the hands of juries, which certainly I have in my past, we know how to endure them with fortitude.
What we want is for these provisions (which, as I have tried to say, we do not regard as being dramatic innovations) to cease being in the realms of controversy. We want the controversy, hopefully, to fall away once these measures become law. I believe that if there was a trial period such as is now proposed the controversy would never fall away and it would be because people would continue to try to find debating points with which, during the period of five years, they would either attack or defend these measures. They would be likely to attack or defend them on the same premises, which may be true or false, as they seek to do at this moment.
In any event, as the noble Lord, Lord Foot, has told us the assessment of the effect of these clauses is still likely to be largely a matter of subjective judgment. I do not believe, and we do not believe in Government, that the police will misuse the powers set out in Clauses 1 to 4. As I said in Committee, if they were to do so, there are a number of checks that we have in a social democracy. There is the sanction of public opinion, and the police in a democratic society cannot be immune to public opinion. There are the courts through which aggrieved individuals will have a remedy and, finally, Parliament, in spite of having overcrowded Sessions, is always in a position to amend or repeal measures at any time if it should consider that it is proper to do so.
Finally, there is no precedent for a provision such as this—reform with a
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trial period except for the Murder (Abolition of Death Penalty) Act 1965. The noble Lord, Lord Mishcon, quite fairly, did not attach much weight to that as a precedent for this, and I agree with him. It is our considered opinion that for such a course as is proposed in this amendment there would have to be very exceptional circumstances indeed; and we do not believe that the circumstances in this particular case are exceptional—certainly not such as would justify the inclusion of a clause such as this. It is somewhat a debating point, but when the last Bill was proposed by the last Government, no such provision was included; and I think it fair to say that they probably preferred to follow the Thomson Committee in this case rather than the Scottish Council on Crime who, I know, made their recommendation—although it is fair to say that they gave no reason as to why they proposed what they did. In the circumstances, this is not an amendment which I can commend to the House.
Lord ROSS of MARNOCK: My Lords, the noble Earl suggested there was no precedent for this kind of thing. I wonder what we did in all those years when we had what was called the Expiring Laws Continuance Act. I do not know whether the noble Earl appreciates it, but I think that the 30 mph speed limit was introduced in 1935 or 1936 and was not made permanent legislation until long after the war. Long after the 50s, it was continued year after year. There used to be the aliens' law which was continued year after year. Perhaps, as a Scottish laird, he will more appreciate the one called, I think, the Public Holidays for Children for Potato Lifting, which was supposed to last for five years and then was continued year after year. The schedule to the Expiring Laws Continuance Act was a list of Acts of Parliament which, unless Parliament continued them, would die. So that there is plenty of precedent.
I did not like the one precedent which Lord Foot suggested. I think it was a very different matter, indeed, and one of such dramatic controversy, and consequence, that I do not think it should be rated along with what we are doing here. When he says that we have no crime statistics, we do publish crime statistics in Scotland. I used to get them every year.

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Certainly by the time I got them, they were usually a bit out-of-date; but that is one of the arguments by which I persuaded my noble friend that we should extend it from three years to five years. Then we would have more reasonable statistics on which to base our judgment. So I do not think that he is right on the precedent argument. When he says that it was not in the Labour Bill, may I point out that neither was Clause 4.
So far as Clause 4 is concerned, he appreciates—because he said so—that the Scottish Council on Crime (which is no longer in existence) suggested in its recommendation for Clause 4 powers that provide for a trial period of five years. There again is a second reason to why it should be five years. We are coming down to what they suggested. In all the arguments it seemed that so much reliance was placed upon the virtues and authority of the Council on Crime that, having accepted what it suggested, I thought the Government might be more amenable to the idea that we should accept its second point, that the power should last for five years.
I think the statistics will be there, and we will get the ideas from the police and the public. Of course public opinion will finally determine what may well be done. I get strange ideas from your Lordships' House about the attitudes of public opinion. I sense the attitude that everyone is delighted to be stopped and
subjected to a search. This was the implication given by noble Lords. It is just not true. I was interested in what the noble Lord, Lord Galpern, said about the radio programme. I think it was the programme on which Father Anthony Ross appeared—a man for whose judgment I have the highest regard. In his lifetime he has probably had far more than anyone else to do with the people who may well be involved in this. I would trust his judgment before any Council on Crime; he is a council of one, and a wonderful councillor at that. He is no relation by the way. He is not even of the same kirk.
The public opinion and the specialist opinion: it was interesting that these were young lawyers who made this particular decision. It has certainly been divided. It is because it has been divided, it is because it is a question of balance, that we should not tie ourselves to this for ever. That is why I insist, and ask the House to support me in that insistence that we limit the period to five years, and that it shall then expire unless Parliament by Affirmative Resolution of both Houses determines otherwise.
6.53 p.m.
On Question, Whether the said amendment (No. 23) shall be agreed to?
Their Lordships divided: Contents, 53; Not-Contents, 106.

NOT-CONTENTS

Allerton, L.

Fraser of Kilmorack, L.

Mowbray and Stourton, L.

Alport, L.

Fraser of Tullybelton, L.

Murton of Lindisfarne, L.

Amory, V.

Glasgow, E.

Newall, L.

Ampthill, L.

Godber of Wellington, L.

Northchurch, B.

Atholl, D.

Greenway, L.

Nugent of Guildford, L.

Avon, E.

Gridley, L.

Ogmore, L.

Baker, L.

Grimston of Westbury, L.

Pender, L.

Balerno, L.

Hampton, L.

Reigate, L.

Balfour of Inchrye, L.

Henley, L.

Rochdale, V.

Barrington, V.

Hives, L.

Rochester, L.

Bellwin, L.

Holderness, L.

Romney, E.

Belstead, L.

Hooson, L.

St. Davids, V.

Boyd of Merton, V.

Hornsby-Smith, B.

St. Just, L.

Brougham and Vaux, L.

Keith of Kinkel, L.

Saint Oswald, L.

Campbell of Croy, L.

Killearn, L.

Sandford, L.

Chelmer, L.

Kilmany, L.

Sandys, L. [Teller.]

Clifford of Chudleigh, L.

Kimberley, E.

Savile, L.

Cockfield, L.

Kinnaird, L.

Selkirk, E.

Cottesloe, L.

Kinnoull, E.

Sempill, Ly.

Craigavon, V.

Kinross, L.

Simon, V.

Craigmyle, L.

Lauderdale, E.

Southwell, Bp.

Crathorne, L.

Lloyd of Kilgerran, L.

Strathclyde, L.

Cullen of Ashbourne, L.

Long, V.

Strathspey, L.

de Clifford, L.

Lucas of Chilworth, L.

Swansea, L.

De Freyne, L.

Lyell, L. [Teller.]

Tranmire, L.

Denham, L.

Mackay of Clashfern, L.

Trefgarne, L.

Drumalbyn, L.

Macleod of Borve, B.

Trenchard, V.

Dulverton, L.

McNair, L.

Tweedsmuir, L.

Ebbisham, L.

Mancroft, L.

Vaux of Harrowden, L.

Ellenborough, L.

Mansfield, E.

Vernon, L.

Elliot of Harwood, B.

Margadale, L.

Vickers, B.

Faithfull, B.

Merrivale, L.

Vivian, L.

Falkland, V.

Monckton of Brenchley, V.

Wade, L.

Ferrers, E.

Montgomery of Alamein, V.

Wakefield of Kendal, L.

Ferrier, L.

Morris, L.

Foot, L.

Mottistone, L.

Resolved in the negative and amendment disagreed to accordingly.
Clause 6 [Judicial examination]:
7.2 p.m.
The LORD ADVOCATE (Lord Mackay of Clashfern)The LORD ADVOCATE (Lord Mackay of Clashfern) moved Amendment No. 24:
Page 5, line 7, after ("him") insert (", to or in the hearing of an officer of police,").
The noble and learned Lord said: My Lords, we now come to a series of amendments to Clause 6 and perhaps before speaking to this particular amendment I might expand on the reasons we have for tabling a considerable number of Government amendments to this clause. As I have explained at earlier stages, the Government are concerned to adopt the Thomson recommendations in this clause and to devise the best machinery to do so. We have thought that to ensure flexibility and improve on procedures as experience was gained, it would be best to provide for power to amend the procedures of the judicial examination by act of adjournal,
1236
which is the method by which the judges can make rules of procedure.
In view of the representations made by noble Lords, we have reconsidered the matter and have brought forward a number of amendments designed to improve the clause and to bring into the Bill the major restrictions on judicial examination which the Thomson Committee recommended. We hope this will reassure your Lordships about the nature and scope of judicial examination and, more especially, ensure that Parliament's intention in this regard is clearly expressed on the face of the Bill. I should perhaps reiterate that the Government are in no doubt, in the light of the Thomson Committee's examination of the matter, as to the value of judicial examination. This was a matter on which the Committee were unanimous.
We shall now discuss individual amendments, but I thought it might be useful if I stated the general intention to your Lordships at the beginning of our consideration. With your Lordships' permission, I should like to speak to the

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present amendment and to Amendment No. 34 together. These amendments seek to provide that only confessions allegedly made by the accused to, or in the hearing of, a police officer may be the subject of judicial examination. We do not consider it would be desirable or practicable to examine an accused on all the statements he may be alleged to have made to any witness. This may well amount to a sort of cross-examination in which the accused's account of events is compared with that of witnesses who may not even, in the event, be called at the trial. Alleged confessions made to a police officer and of which a written copy is given to the accused before the examination are in quite a different category. Indeed, one of the great values of judicial examination is that it will give the accused person a chance to deal with alleged confessions made to the police at a very early stage of the proceedings. I beg to move.
Lord MISHCON: My Lords, this may give me a speedy opportunity of thanking the noble and learned Lord for what he has said in regard to Clause 6 and the revised thinking of the Government in regard to it. This obviously meets a great number of the points of principle we tried to raise from these Benches at the Committee stage and indeed on Second Reading. We are obliged to him, and now it will merely be a question, from our point of view, of dealing with the fundamental matters of Clause 6, as we hope to do in our various amendments.
The Earl of SELKIRK: My Lords, I should like to raise one point. I am not quite clear why all confessions are not being brought to judicial examination, and particularly confessions made to a prison officer. I should have thought it was absolutely essential that such a confession should be brought before the judicial examination rather than used without it. I remember a case of my own in which a confession was made to a prison officer. He never took the trouble to make a declaration before a magistrate and the accused got off without a scratch on his character. I should have thought the phrase should be "officer of law", of which Section 25 gives a rather wider definition. I suggest that this would be better than the narrower one of "police
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officer", which the noble and learned Lord is now suggesting.
Lord MACKAY of CLASHFERN: My Lords, I am grateful to the noble Lord, Lord Mishcon, for what he said about this matter and I am glad that we may be able to concentrate on the essentials.
On the question of widening this matter to cover other than police officers, which was raised by my noble friend Lord Selkirk, the thinking that has brought us to suggest a restriction to a police officer is that if one were going to make it wider there would be a grave risk of every matter that had been discovered in the course of an investigation having to be brought back for judicial examination, and the people who normally hear these matters and in respect of whom there is a question of the kind which was mentioned by the noble Lord, Lord Foot, earlier, are police officers. Therefore, the examination is of particular value in relation to these. Those are the reasons which prompted us to restrict the matter in this way.
On Question, amendment agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 25:
Page 5, line 8, after ("charge") insert ("and as regards which he has not previously been examined").
On Question, amendment agreed to.
The Earl of SELKIRK The Earl of SELKIRK moved Amendment No. 26:
Page 5, line 8, after ("sheriff") insert ("in chambers").
The noble Earl said: My Lords, when coming to examine this Clause 6, referring to judicial examination, I think it is important to get a fairly clear idea of how it is going to be conducted. The Thomson Report makes it clear that they think it should be in private. I should have thought that there are only two ways: one in public and the other in private. Also I should have thought it was wrong to hold it in open court and I believe we should make it clear we expect that it will be held in private.
If I may give three short reasons, the first is that if you hold it in an open court it would amount very nearly to a trial or at least a pre-trial, and certain discussions which might take place on confessions of

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this sort would be made public and reported in the Press. This would undermine, as I understand it, the purpose of the judicial examination. Also, it is rather interesting that the Thomson Report brings out the fact that it would give an opportunity for the accused to complain about the police. He could explain how he has been treated, and that would be very much better done in private than in public. The third point which Thomson made is that there may be some circumstances when it could be a matter of personal embarrassment—nothing to do with crime, but for personal reasons—to have to admit that you were somewhere or other, where someone else did not think you were. For those reasons, we ought to make it clear that these examinations are taking place in chambers or in circumstances which are not public. My Lords, I beg to move.
Lord MACKAY of CLASHFERN: My Lords, the present position is that judicial examination is in private. The intention is that this further judicial examination should he in private rather than in open court. I should like to have an opportunity to consider whether the best way to make that plain, if it is not plain already, is by giving effect to my noble friend's amendment, because this might tend to cast doubt on other provisions where it is intended that the sheriff should operate in chambers. If we express it in one place, it might raise difficulties about another. But so far as the principle of the matter is concerned, we entirely accept what my noble friend has said and go along with it.
The Earl of SELKIRK: My Lords, I thank my noble and learned friend very much. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 2:
Page 5, line 17, leave out ("subsection (2) below") and insert ("the following provisions of this section").
The noble and learned Lord said: My Lords, this is a drafting amendment to introduce the details of the amended provision. I beg to move.
On Question, amendment agreed to.
7.11 p.m.
Lord MISHCON Lord MISHCON moved Amendment No. 28:
Page 5, line 21, leave out ("prosecutor") and insert ("sheriff but only").
The noble Lord said: My Lords, there is no doubt that the whole of the examination that is considered in Clause 6 is a matter of great importance in regard to the accused person, or the person who may be accused. Under the wording of the clause as we now have it, it is the prosecutor who asks all these questions. I ask your Lordships not to think—as lawyers too often think—in terms of being acquainted with courts and thinking it perfectly reasonable that questions should be asked and answered. I ask your Lordships to think of the accused person, and, by inference of our law—Scots law, too—that person will not be considered guilty until found guilty, when at this examination it is not his own lawyer who is asking him questions; it is not even the sheriff who is asking him questions; it is the prosecutor who is asking him questions.
Your Lordships will be dealing in a moment (and I shall not go off at a tangent at this point) with the type of questions that will be asked. But they will be questions that deal with alibi, where the accused was, what he has to say by way of explanation and so on. If your Lordships try to put yourselves into the position of the accused, you will wonder in what fashion it is that justice appears to be done when it is not his own friend and lawyer and professional guide, and not the judge, but the person who is prosecuting who is asking the questions. Therefore, the amendment seeks to put the questioner as the sheriff and not the prosecutor. I very much hope that, on further reflection, the noble and learned Lord the Lord Advocate will feel that justice will be seen to be done if the questioner is made the judge. My Lords, I beg to move.
Lord FOOT: My Lords, I remember on Second Reading, when we raised this matter of who should conduct an examination and ask the questions, that it was said then that this procedure of reviving the judicial examination was being done primarily for the benefit of the accused, so that he would have an early opportunity, if possible, to clear himself altogether of the

1241
charge by being able to explain matters at that early stage. I asked the question at that time, the same question as is, in effect, asked by this amendment: If that was the case, and the whole thing was designed primarily for the benefit of the accused, why could the questions not be put by the accused's solicitor?
Since that time—and I do not like disagreeing with the noble Lord, Lord Mishcon, about this—I have had occasion to look at the Thomson Committee's report, and I should like to quote to the House what it says about this, because the Committee considered whether it was better for the sheriff or the procurator fiscal to ask the questions. What they said in paragraph 8.12 on page 42 was:
"We considered whether the sheriff or the procurator fiscal should ask the questions at the judicial examination. We think that the advantage lies in the procurator fiscal doing so since, unlike the sheriff, he will have knowledge of the case and the relevant facts. The sheriff, however, will be in control of, and responsible for, the conduct of the proceedings. This step in procedure is so important that we consider that judicial examination must always be conducted before a sheriff and not before a magistrate. We so recommend".
I think there is virtue in that.
I am entirely unfamiliar with the Scottish system of judicial examination. I gather that it has almost fallen into desuetude over recent years and is now being revived under the Thomson recommendations. But, as I understand it, under these new recommendations the sheriff will not know what questions to ask, unless he is previously given the papers in that case by the procurator fiscal, and, presumably, invited by the procurator fiscal to ask certain relevant questions. To some extent, instead of being in an impartial position in presiding over this inquiry, the sheriff will be putting the questions at the instance of the procurator fiscal and may therefore appear to be acting on behalf of the prosecution, rather than maintaining an independent poise.
I am reinforced in my belief that the Thomson Committee got it right by reason of the fact that in all the amendments which we shall be considering in a minute, and the amendments which the Government have put forward to their previous clauses, if I understand them correctly, they are importing into the Bill the safeguards that were recommended by the Thomson Committee. They have gone a
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very long way towards doing that, and therefore they have, in particular, done precisely what the Thomson Committee recommended, which is that the sheriff will be in control of and responsible for the conduct of the proceedings. For all these reasons, I have come to the conclusion that, on balance, it would be best to follow the recommendations of the Thomson Committee in this and in other matters which we shall be discussing under the other amendments.
7.19 p.m.
Lord MACKAY of CLASH FERN: My Lords, I am grateful to noble Lords for raising this matter and to the noble Lord, Lord Foot, for reminding us of the Thomson recommendations. The reason why we have thought it wise to put this matter first on to the procurator fiscal is exactly the reason which has been quoted from the Thomson Committee's report. We think it vitally important that the accused should feel that there is someone independent, who is there as the arbiter of whether the questions are fair. Human nature being what it is, even in the exalted position of a sheriff, if he is responsible for constructing the questions and putting them, he cannot be quite such a good judge of whether they are fair. It is much easier that he should be, as it were, the arbiter of that matter. Accordingly, in the light of the Thomson recommendations and for these reasons I would invite your Lordships to agree that the sheriff should have the role of being in charge of the proceedings and seeing that they are fairly conducted, but it should be left to the procurator fiscal to put the questions, as the Bill at present proposes.
Lord FRASER of TULLYBELTON: My Lords, may I say briefly that in my view the clause is right as it stands. I agree very much with what the noble Lord, Lord Foot, said about this. Whoever is going to ask the questions will have to prepare himself, read up the case and know what questions to ask. That is not the business of the sheriff in the ordinary case. If he had to do that we should be going a long way down the road towards an inquisitorial system. It is much better that these questions should be asked by the procurator fiscal, who will know what the appropriate questions are,

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and then there will be an impartial sheriff presiding over the whole procedure. I think there is no doubt that that is the proper procedure. Therefore I think it would be a great mistake if this amendment were to be adopted.
Lord MISHCON: My Lords, it is with some diffidence that again I rise to try to persuade your Lordships and to move the noble and learned Lord the Lord Advocate from what he has just said, especially in view of the fact that a very learned law Lord has just spoken against this amendment. I still feel, with the greatest possible respect to the Thomson Committee and to what has been said by the noble Lord, Lord Foot, that the attitude of the accused has been ignored.
I do not follow, if I may say so most respectfully, the argument that it is impossible for the sheriff properly to conduct this questioning since it would mean that he would have to learn about the facts of the case. I repeat with great respect that I feel that is a bad argument for two reasons. First, your Lordships will subsequently be dealing with what will, I imagine, except possibly for the wording, be an unopposed amendment. I am looking at Amendment No. 33, which is to be moved on behalf of the Government, and which limits the line of questioning to two matters—whether any account which the accused can give ostensibly discloses a category of defence, and the nature and particulars of that defence. It does not need a very detailed knowledge of a case for an experienced sheriff to be able to conduct a line of questioning on those grounds. Indeed, the lawyer for the defence is very probably there, and certainly the prosecutor is there in order to submit questions to the sheriff to ask, if that should be necessary.
The second reason why, quite frankly, I do not follow the argument of the noble and learned Lord the Lord Advocate—I believe that this was also the argument of the noble Lord, Lord Foot—is that he said the sheriff would be there in order to see that justice is done in regard to the questions asked. How can the sheriff tell whether justice is being done in regard to the questions asked unless he knows something about the facts of the case?
So I am intent only upon this: that it is
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for every accused person in our courts, whether north or south of the Border, to feel that the atmosphere is one of objectivity until the final verdict is passed. I do not think that that atmosphere is created where the line of questioning at a preliminary hearing of this kind is by the prosecutor. So again I ask for further thought by the Government about the matter. I hope that the noble and learned Lord will at least say that further consideration will possibly be given to this matter in the light of what has been said today, so that there could be second thoughts before the Bill finally becomes an Act.
On Question, Amendment negatived.
7.24 p.m.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 29:
Page 5, line 22, after ("any") insert ("denial,").
The noble and learned Lord said: My Lords, if I may, I will speak to Amendments Nos. 29 and 30 together. We are not doing anything of substance here. However, it is felt that "denial" is the important matter in this situation and that therefore "denial" should come first in the presentation of the various matters that are to be the subject of questioning. I beg to move.
On Question, amendment agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 30:
Page 5, line 23, leave out ("denial").
On Question, amendment agreed to.
Lord MISHCON Lord MISHCON moved Amendment No. 31:
Page 5, line 23, leave out ("denial, justification or comment").
The noble Lord said: My Lords, the noble and learned Lord was correct when he said that very little was done by the previous two amendments except to put emphasis upon the word "denial", bring it to the fore and make it the first of those matters about which some explanation or other is elicited at the preliminary judicial hearing.
The purpose of Amendment No. 31 is to limit this questioning to matters which I hope your Lordships will agree represent the one thing that a preliminary hearing of this kind ought to try to achieve—namely, an explanation. If it were

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limited to that, then all of us would know that this will not become the inquisitorial procedure that the noble and learned Lord referred to when he was dealing with another amendment. It is only, surely, a question of explanation. It is not, surely, a question of the prosecutor being allowed to question on matters which relate to denial, or on matters which relate to justification, or on matters which relate to comment, which are the three words which follow the word "explanation" in the Bill but which will now follow the word "denial" because of the transposition of "denial". Is it necessary to go beyond "explanation"? Is not that sufficient at a preliminary hearing? I hope that your Lordships will agree to this amendment. I beg to move.
Lord FOOT: My Lords, I should have thought that the appropriate amendment in view of what the noble Lord has just said, would be not to leave in the word "explanation" but rather to leave in the word "comment" and eliminate the others. I say that for this reason. If a person is brought up at this judicial examination and then asked to give an explanation of the matters referred to in the charge, or anything of that kind, that is automatically—is it not?—an infringement of the principle that everybody is to be regarded as innocent until he has been proved to be guilty, because the very words—that the accused should be given an opportunity to put forward any explanation that he has to give—presume that he has something to explain. Surely that is a presumption which is contrary to the general presumption of law that not only is he entitled to remain silent but also that it is no business of his to offer explanations about his conduct, at any rate, until he comes to be tried?
I should have thought, therefore, that the noble Lord's purpose in moving this amendment would be better met by leaving out all the words except "comment", because that word is neutral, if I may say so. It does not imply that the accused has something to explain; it merely affords him the neutral opportunity of making any comment that he wants to make about the various matters which are referred to later in the clause. I simply think that as a matter of legal language the noble Lord may have got it wrong.
Lord MACKAY of CLASHFERN: My Lords, the general structure of judicial examination is fairly closely confined by the amendments which we shall be considering later, but I would respectfully suggest to your Lordships that judicial examination, to be a proper one, would have to allow questions which invited the accused, or gave the accused an opportunity, to deny matters alleged in the charge. Indeed, that seems to be the first thing that he might want to do. Or, in some circumstances, to justify the actions alleged because he accepts that it happened, but he has some justification for it, such as, for example, that he struck a blow in self-defence. Or he may want to offer comment, such as, for example, that he knows what happened and he knows who did it. He is able to incriminate somebody else, as we usually say.
So in my submission to your Lordships it is perfectly reasonable to have a fairly broad set of headings under which questions could be put on the lines proposed. I suggest that to restrict the questioning to explanation only gives a flavour, on lines which the noble Lord, Lord Foot, described, but also is too restrictive, it does not give a full opportunity to the accused to say what he might have to say that would be relevant in dealing with the charge from his point of view. I therefore invite your Lordships not to accept this amendment.
Lord FRASER of TULLYBELTON: My Lords, I should like to add one comment to what the noble and learned Lord the Lord Advocate has just said. One of the matters on which denial or explanation is relevant is in paragraph (b)
"The alleged making by the accused of an extrajudicial confession".
One of the objects of this whole procedure, I should have thought, was to give the person the opportunity of denying that he did make it. Surely if we delete "denial", it will deprive this procedure of a large part of its purpose.
On Question, amendment negatived.
Lord MISHCON Lord MISHCON moved Amendment No. 32:
Page 5, line 25, leave out paragraph (a) and insert—
("(a) his whereabouts on any occasion to which the charge relates; ").
The noble Lord said: My Lords, having now to realise, in view of the failure of the last amendment, that there is to be a series of headings under which questions may be put at these proceedings, it becomes necessary to be sure that the area in which questions under all those four headings may be put, is very clearly limited. The Bill, as it stands, in paragraph (a) allows questioning in regard to such a general area as "matters averred in the charge". What we seek to do by this amendment is to limit that area very definitely, because I believe I am right in saying that the arguments which have been advanced in respect of paragraph (a) are that this will give the opportunity for any question of alibi defence to be inferred, if not openly stated, by the accused, with the result that the prosecution will be able, quite properly, to investigate the genuineness of that alibi. Indeed, in defence of the accused if the alibi is found to be a genuine one, presumably it would lead to the dropping of a charge.
Therefore, what we seek to do in this amendment is to limit paragraph (a) to the whereabouts of any occasion to which the charge relates without allowing the questioning to go deeper and, indeed, in a very wide way over a field which is a large and substantial field if the words are "matters averred in the charge". I beg to move.
Lord MACKAY of CLASHFERN: My Lords, I accept that this is an improvement on the Bill as it stands at the moment and that it is necessary to limit paragraph (a). However, I also consider that it limits paragraph (a) in a slightly unbalanced way. It limits it to alibi. Alibi is certainly an important area for this paragraph to apply to, but it is not the only area and, if your Lordships will bear with me, in due course I shall move an amendment which has a limiting effect, although it will not limit the matter to alibi only. I think it would be a mistake to limit the clause to alibi only, because there are other situations in which it could be useful and we shall endeavour to persuade your Lordships later that we have succeeded. This is a difficult thing to define, and that is one of the reasons why, on the whole, I felt originally that it was wise to have some flexibility, but we have attempted it now and our efforts will be put before your Lordships in a moment.
Lord MISHCON: My Lords, having at least scored a single if not a boundary, I find myself so full of rejoicing that immediately, upon the terms mentioned by the noble and learned Lord, I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.37 p.m.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 33:
Page 5, line 25, at end insert—
("Provided that the particular aims of a line of questions under this paragraph shall be to determine—

(i) whether any account which the accused can give ostensibly discloses a category of defence (as for example alibi, incrimination, or the consent of an alleged victim); and

(ii) the nature and particulars of that defence.").

The noble and learned Lord said: My Lords, this is the amendment which has the effect, from our point of view, of limiting heading (a) and the idea is to get at matters within the knowledge of the accused which would disclose a category of defence—an alibi, the one referred to by the noble Lord, Lord Mishcon, a moment ago is the first example. We have put in "incrimination", which is the allegation that someone else committed the offence. The consent of an alleged victim is taken as one of the most important examples of the sort of defence which would arise to make what otherwise would be an offence, not an offence at all (for example, in the case of rape), and of course it is a matter particularly in the knowledge of the accused. So paragraph (i) is intended to elicit whether there is any category of defence available to the accused in the light of his knowledge of the facts.
Paragraph (ii) is intended to give opportunity for that defence to be made more particular in some circumstances. I have had some discussion with noble Lords about this matter and it is not easy to get it exactly right, but, having regard to the provisions which we hope to incorporate about the questions being fair and so on, it may be that your Lordships will feel that this is correct. The words, "the nature and particulars of that defence", are intended, for example in the case of alibi, to enable the prosecutor to ask where the person was, and possibly

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also whom he was with, and something to indicate whether the alibi can be checked. That would obviously be of great assistance. On the other hand, where it is a matter of the consent of an alleged victim, there may not be room for much further particularisation. So the way in which this clause would apply would be subject to the rulings of the sheriff as to what is fair in the circumstances, and I invite your Lordships to approve this amendment. I beg to move.
Lord FOOT: My Lords, I wonder whether I might comment upon two aspects of this amendment. The noble and learned Lord the Lord Advocate said, quite rightly, that it is, of course, difficult to find satisfactory words particularly when you come to paragraph (ii) "the nature and particulars of that defence". In the case of the alibi he said that as he saw it the way in which those words would apply was this. If the accused person says, "Yes, I was elsewhere at the time", then the procurator fiscal should be allowed to go on and say Where were you?", and possibly "Who were you with?", and so on. I do not see very much objection to that. I do not know exactly what the procedure is in England at the present moment, but, as the noble and learned Lord will probably know, there is a provision in this country whereby if a person is intending when he gets up to the Crown Court to plead an alibi he is required to give notice of that alibi some seven days before the hearing in order that the police may have the opportunity of checking on it. So far as I know, under that procedure he has not got to give particulars of who he was with. So far as I know, he only has to say where he was and when, in order that the police can make their inquiries. I would have thought that would have been sufficient in this case.
I am a little more disturbed about the affect of the words "the nature and particulars of that defence". When one turns to the question of consent, if one is faced with a case of rape why should it not be sufficient for the accused to say" My defence is that the woman consented", and leave it at that? Under these words it seems to me that the procurator fiscal might very well be able to go on and say, "I am entitled to ask you
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questions about the nature and particulars of that defence of consent. So I want you to tell me in detail exactly where you went with this woman on this occasion, what led up to the act of intercourse to which you say she consented?", and without asking leading questions to ask for full particulars of all the circumstances which go to make up the defence of consent. I would have thought that that was very objectionable, and I cannot see in what way the prosecution would be at any unreasonable disadvantage if the accused could confine himself to saying, "My defence to this charge of rape is consent and leave it at that. Why should he go further? Why should he be pressed further at this stage?
If you allow him to be pressed further, either on the defence of alibi or the defence of consent, or even on the defence of incrimination, surely the trial has begun and you have got past the stage of allowing the accused to give a reasonable explanation of something or comment upon something or deny something; you have got past that stage and entered into the field of investigation and the accusatorial system under which the case will later he conducted. Naturally, I have not put down an amendment to the amendment, but I would invite the noble and learned Lord to consider between now and the next stage whether the words included in paragraph (ii) are indeed necessary at all.
Lord MISHCON: My Lords, let me at once say that we welcome the proviso in Amendment No. 33, which is directed to this purpose, and it is a very proper purpose; it is directed to limiting the sphere of the questions that can be put. I hope I will not be thought ungracious if, having said that, I suggest that the wording now in this proviso is somewhat woolly. If we managed to be a little more precise in the wording—and I ask the noble and learned Lord the Lord Advocate to think about this—I think we should make the job of the sheriff, who is sitting there now as the umpire, as it were, a little easier, and the job of the prosecutor, who is putting the questions, a little more sure and certain.
Your Lordships will see that the wording is,
"Provided that the particular aims of a line of questions… ".

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I appreciate that the learned sheriff can at any stage stop the prosecutor and say, "Will you kindly tell me why you are asking that question and what your aim is in regard to it?" But if we are trying to use precise language in limiting the area of the questions, would it not be very much better English, and much clearer direction, if the words were,
"Provided that the line of questions under this paragraph shall be restricted to"
or "confined to" or words to that effect. I do ask the noble and learned Lord the Lord Advocate—and I hope he will not think my appreciation of this proviso is any the less because of this suggestion—to look at this clause again with possibly that sort of wording in mind, only to make it abundantly clear as to where the line of questions is supposed to be directed to and make the job of the sheriff rather easier.
Lord MACKAY of CLASHFERN: My Lords, certainly we are obliged for all assistance in this rather difficult matter. So far as Lord Foot's concern with consent goes, I would point out that I am proposing a little later to move that the questions should not be designed to challenge the truth of anything said by the accused, so that that will considerably limit the sort of difficulty I think he has in mind. Naturally, the process of trying to improve this Bill will continue both here and in another place, and if we can come up with something better than we have got, by all means we shall do so. I hope your Lordships will feel able to approve this amendment now.
On Question, amendment agreed to.
Lord MACKAY of CLASH FERN Lord MACKAY of CLASH FERN moved Amendment No. 34:
Page 5, line 26, after ("accused") insert (", to or in the hearing of an officer of police,").
On Question, amendment agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 35:
Page 5, line 28, at end insert—
("Provided that questions under this paragraph may only be put if the accused has, before the examination, received from the prosecutor or from an officer of police a written record of the confession allegedly made; or").
The noble and learned Lord said: My
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Lords, this is a purely drafting amendment. Instead of following the clause as a whole, as the proviso stands at present, we thought it better to follow immediately paragraph (b) to which it really relates. I think this is an improvement. I hope your Lordships will approve this amendment. I beg to move.
On Question, amendment agreed to.
[Amendment No. 36 not moved.]
The DEPUTY SPEAKER (Lord Alport): My Lords, I have to inform your Lordships that if Amendment No. 37 is approved I cannot call Amendments Nos. 38, 39, 40 and 41.
7.48 p.m.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 37:
Page 5, line 31, leave out from ("examination") to end of line 7 on page 6 and insert—
("( ) The prosecutor shall, in framing questions in exercise of his power under subsection (1) above, have regard to the following principles—

(a) the questions should not be designed to challenge the truth of anything said by the accused;

(b) there should be no reiteration of a question which the accused has refused to answer at the examination; and

(c) there should be no leading questions; and the sheriff shall ensure that all questions are fairly put to, and understood by, the accused.

( ) The accused, where he is represented by a solicitor at the judicial examination, shall be told by the sheriff that he may consult that solicitor before answering any question.
( ) With the permission of the sheriff, the solicitor for the accused may ask the accused any question the purpose of which is to clarify any ambiguity in an answer given by the accused to the prosecutor at the examination or to give the accused an opportunity to answer any question which he has previously refused to answer.
( ) An accused may decline to answer a question under subsection (1) above; and, where he is subsequently tried on the charge mentioned in that sub-section or on any other charge arising out of the circumstances which gave rise to the charge so mentioned, any such declination may be commented upon by the prosecutor, the judge presiding at the trial, or any co-accused, only where and in so far as the accused (or any witness called on his behalf) in evidence avers something which could have been stated appropriately in answer to that question.") ".
The noble and learned Lord said: My Lords, this is the major amendment which

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seeks to incorporate into the Bill the various matters designed to safeguard the accused's position in the procedure. I do not know that I need to refer to these in detail; I hope they are reasonably plain. I have referred to paragraph (a) already; paragraph (b), no reiteration of a question, is also, I think, a useful safeguard; and (c) is that there should be no leading questions; then there is reference to the sheriff having a duty in charge of the whole procedure to ensure that all questions are fairly put to and understood by the accused. The provision states:
"The accused, where he is represented by a solicitor at the judicial examination"—
and there are arrangements for him to be able to get that assistance, generally speaking—
"shall be told by the sheriff that he may consult that solicitor before answering any question";
so that he has a full opportunity of considering what he is going to say in answer to any question. Then with the permission of the sheriff the solicitor for the accused may ask any question to clarify any ambiguity in an answer given, or to give him another opportunity of answering questions which he has declined to answer previously. Some of these proposals owe their origin to suggestions made to me by the noble and learned Lord, Lord McCluskey, when we discussed these amendments in draft, as I sought to do both with him and with others.
The following subsection, which is on page 7 of the Marshalled List, is one to which I desire to draw your Lordships' attention in particular. The question has been raised with regard to this judicial examination of the right of silence, and it has been suggested that judicial examination erodes that right, affects it adversely. This provision makes it clear that comment by the judge, the prosecutor or any co-accused is to be allowed only where and in so far as the defence in evidence avers something which could appropriately have been stated in answer to a question at judicial examination. In other words, if an accused person refuses to answer any question at judicial examination, and also does not go into the witness box, as he is entitled to, the fact that he has not spoken at judicial examination shall not be commented on. Therefore, as I have understood it, the right of silence is in no way affected. But if, being silent at judicial examination, the accused or
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witnesses on his behalf come forward with an explanation at the trial, then it will be open to those mentioned to say, "Well, you were asked a question to which this would have been a very satisfactory answer at the judicial examination long ago. Why did you not do so?" He might have a good explanation or he might not. That is the restriction put upon the comment. I suggest to your Lordships that it is suitable.
While I am on this point, perhaps I could mention that there is no need to make any provision for the defence commenting, because the defence have no restriction in commenting on anything they wish on this line. It is the people who are likely to be restricted who are mentioned in this provision, and that is the reason for it. I beg to move.
Lord MISHCON: My Lords, there is not the slightest doubt that this represents a great improvement on the Bill as drafted and as we considered it last time in Committee. We are all very grateful to the noble and learned Lord, Lord Mackay of Clashfern, for having listened so carefully to the arguments that we and others in your Lordships' House have presented on the last occasion, with the result that we have this amendment.
There is one tragedy that results from it. If, of course, one substitutes an entirely new provision for what was formerly in the Bill, an amendment—as has been so properly said—falls if the new substitution, which is an omnibus one, succeeds. Therefore, I hope I shall be in order if—without, of course, being at liberty to move the amendment or to talk to the amendment which will now fall if Amendment No. 37 is approved by your Lordships—I mention the question of the right of the accused at proceedings, which are of considerable importance to him, to say to the sheriff that although the duty solicitor, who he may have had accorded to him, was most likely a very charming and helpful gentleman, he would prefer to have his own solicitor present at the proceedings, in which event the sheriff would give him the opportunity of so doing. As I said, I merely ask for that to be considered because I shall be silenced now with regard to that amendment which deals with that point.
Lord FOOT: My Lords, I should like to raise two matters. One is purely a matter of information. Under this new subsection at the top of page 7 of the Marshalled List, I understood the noble and learned Lord to say that if the accused at the judicial examination says, "I do not want to answer a question", no one will have the opportunity later of commenting upon his refusal unless something is averred at the trial which conflicts or about which he might have been expected to give an explanation if the question had been put to him and he had replied to it. What is the situation if this happens: At the beginning of a judicial examination when the procurator fiscal gets up and begins to ask his first question, what happens if the accused then says,"I do not want to answer any questions", and the matter therefore comes to a conclusion? Does the prosecutor then go on and say, "I shall put my questions to you in order that you can say to each one that you will or will not answer it." If that happens, I can understand that the system will work.
However, let us suppose that the accused can enter an omnibus plea at the beginning and say, "I do not want to answer any questions at all". In that case, I do not see how this clause can come into effect, because no specific question has been put to the accused which he failed to answer and upon which comment could therefore be made at the trial. I do not know whether the noble and learned Lord can help me on that.
My other point is a minor point. Throughout my life I have never come across the word "declination". It appears in the fifth line of the amendment on page 7 of the Marshalled List. I understand what the word is intended to mean, but I was so surprised at seeing it that I looked it up in the dictionary. The only dictionary I had available was an English dictionary. It may he that the word has a meaning in Scotland which it does not have in England. However, I can inform the noble and learned Lord, the Lord Advocate that according to the Oxford English Dictionary, used in this sense and meaning the substantive of the verb "decline", in England the word is obsolete and the last time it was used was in 1612. I do not know whether that situation obtains in Scotland, but if
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we start to use the verb "decline", there is then a difficulty if we want to go on and invent a suitable substantive. I suggest that the only way of doing it would be to use the verb "refuse", and then the noun "refusal", but that might he carrying the matter a little far because the definition of the obsolete word "declination" in the dictionary is a "polite refusal".
7.57 p.m.
Lord FRASER of TULLYBELTON: My Lords, like the noble Lord, Lord Mishcon, I should like to welcome this clause which meets one of the points which I raised at the last stage. I want to ask one question about the use of the Ards. "should", or, "should not". The new subsection says that:
"The prosecutor shall, in framing questions…have regard to the following principles—

(a) the questions should not be designed to challenge the truth…

(b) there should be no reiteration…"

and so on. I do not know exactly what the word "should" in an Act of Parliament means. It is not a word which we commonly find there. I cannot say that it is never found in any Act, but it is certainly not very common. Let us suppose that the prosecutor wants to ask a question about which the sheriff is doubtful. The prosecutor may have a good answer saying, "I have referred to the following principles, that they should not be designed to challenge; but having had regard to them, I still want to ask the question. There is a good reason for it." I doubt that that is what is intended, but it is what may happen. There may be some explanation for this, but I feel rather unhappy about the way in which the subsection is worded.
The EARL of SELKIRK: My Lords, I should like to draw attention to one point. In the Thomson Report on the objects of judicial examination, paragraph c on page 43 is designed particularly to protect the accused. I am not very sure whether this is quite the place to raise this, but I should like to draw attention to it. It reads:
"…to protect the interest of the accused who has been interrogated by police officers and who has given answers or made statements to the police, so as to ensure as far as possible that any such answers or statements which are to be used as evidence at the accused's trial have been fairly obtained and are not distorted or out of context".

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I am not sure where this comes in, or whether it does come in. But it seems to me an integral and important part of the judicial examination. If the police have behaved badly, this is the obvious place where it should be brought up. It is a check of very great value for this purpose.
I am not sure whether in the redrafting—and I wholly agree with the noble Lord, Lord Mishcon, and the noble and learned Lord, Lord Fraser, that it is a great improvement—this particular point does come in. I throw doubt to the noble and learned Lord. I have not put an amendment down because I do not see where it should fit in, but consideration should be given to this point of protection for the accused which has been recommended by the Thomson Committee.
Lord MACKAY of CLASHFERN: My Lords, may I try to answer these questions in the order in which they came. First, I think it would be necessary, if the prosecutor was going to have available a comment in respect of any particular question, that that question would have to have been put. Therefore, it would not be sufficient for the prosecutor to stop if the accused shows a general—I was almost going to say declination—to answer any more questions. This is part of the reason why we have given the solicitor a right to suggest that a question he put again, because the accused might refuse to answer some of the earlier questions and then adopt a slightly different frame of mind and answer later ones, then decide, having answered the later ones, that he would have been wiser to answer the earlier ones. This gives this opportunity.
So far as declination is concerned, we took the view that we should be as polite about this as possible, and that is why we used "decline" rather than "refusal". Perhaps I may be allowed an opportunity to take advice on how common the word "declination" is in Scottish literature.
Lord FOOT: My Lords, may I interrupt the noble and learned Lord? Since I spoke I have been advised that the proper word is "declinature".
Lord MACKAY of CLASHFERN: My Lords, there certainly is a word "declinature". Perhaps I may get an opportunity to consider further whether "declina-
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tion" is appropriate or whether something else should be substituted.
So far as Lord Fraser's questions are concerned, we thought that these were the principles of fairness to which the sheriff should have particular regard. Fairness generally, but in particular these principles of fairness. I think that is the reason why the clause has been framed in this way.
I shall be glad to reconsider whether the word "should" might be appropriately changed for something else. I shall certainly consider that. This was thought to be the best phraseology when we put these amendments together. This is a matter we shall be happy to consider at some later stage, either here or in another place.
Lord MISHCON: My Lords, with the leave of the House, would the noble and learned Lord care to deal with the question of the duty solicitor?
Lord MACKAY of CLASHFERN: My Lords, I am happy to do that now. The situation is that we agree in principle that provisions should be made for the sheriff to allow an accused person to get a solicitor of his choice. I explained that to the noble Lord's noble friend when I spoke to him earlier. We are not able however to agree that that could be done independently for reasons which will be apparent. We hope to bring forward the necessary amendment to incorporate what I have already said, probably in another place because there are amendments required to the legal aid legislation as well as the criminal justice legislation. On that footing, perhaps the noble Lord will be able not to press the matter further at this stage.
Lord MISHCON: My Lords, I am much obliged.
On Question, amendment agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 42:
Page 6, line 16, leave out ("subsection (2)") and insert ("subsections (2) and (3)").
The noble and learned Lord said: My Lords, if I may, I will speak to Amendments Nos. 42, 43, and 117 together. They seek to provide that either the

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defence or the prosecutor may apply to the court for a preliminary diet in order that any matters connected with the record of the judicial examination should be disposed of before the trial. There may be questions, for example, about whether a particular answer should be admitted in evidence at the trial, or whether a particular question would be admissible, to be founded on, in the way I explained earlier, at the trial. It seems suitable that that should take place at the preliminary diet. These amendments are intended to make it clear that that is possible, and I commend them to your Lordships.
On Question, amendment agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 43:
Page 6, line 29, leave out ("; and") and insert (".(3) Subject to section 76(1)(b) of this Act,").
On Question, amendment agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 44:
Page 6, line 35, leave out ("subsection (2)") and insert ("sub-sections (2) and (3)").
The noble and learned Lord said: My Lords, if I may I would speak to Amendments Nos. 44, 45, and 46 together. These provide that either the defence or the prosecutor may apply to the court to refuse to admit the record of judicial examination (or part of the record) as evidence in a summary trial, but only if at least 10 clear days' notice of the application has been given to the accused and the other parties except on cause shown.
This, like the previous group of amendments to which I have just spoken, is intended to ensure that the record of judicial examination is entered at the trial with the agreement of all parties, and that time at the trial is not wasted with disputes over the record which could properly have been settled before. This aim would not be achieved if it were possible to delay notification of objection to the record until shortly before the trial itself. The amendments therefore provide for a period of 10 clear days before the trial, within which it is not possible to notify the court and the other parties of an application for the record, or part of it, not to be admitted in evidence. There is of course
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an exception made for cases where the court accepts a late application on cause shown. I beg to move.
On Question, Amendment agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 45:
Page 6, line 45, leave out (";and") and insert (".(3) Subject to subsection (4) below").
On Question, amendment agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 46:
Page 7, line 3, at end insert—
("(4) Except on cause shown, an application under subsection (3) above shall not be heard unless notice of at least 10 clear days has been given to the court and to the other parties.").
On Question, amendment agreed to.
[Amendment No. 47 not moved.]
8.7 p.m.
Clause 9 [Citation of defence witness for precognition]:
The Earl of SELKIRK The Earl of SELKIRK moved Amendment No. 48:
Page 7, line 43, after ("sheriff") insert ("in chambers").
The noble Earl said: My Lords, we are now dealing with a process of which I must confess I am entirely ignorant. I did not know it existed. I presume, as I have said on the other occasions I mentioned this, that these matters will be taken by the sheriff in chambers; that is to say, they will not be public. That is what I presume. Perhaps I might just move accordingly.
Lord MACKAY of CLASHFERN: My Lords, the situation here is similar to that which I dealt with earlier. The intention is that it should be in chambers. We think that is implicit. To make it explicit in this case might cause difficulty, but we would be glad to look at that matter and make sure that it is in proper form from that point of view.
The Earl of SELKIRK: My Lords, I am grateful to the noble and learned Lord. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 49:
Page 7, line 45, after ("precognition") insert ("on oath").
The noble and learned Lord said: My Lords, this amendment is intended to deal with a matter which was raised by the noble and learned Lord, Lord Wheatley, and others at the Committee stage. The procedure which is proposed here is to make available to the defence facilities which are in line with those available to the prosecution. The prosecution have the right, in circumstances which are fairly general, to precognosce witnesses on oath. That would not be done except in somewhat special circumstances, and it is thought right to give the same facilities to the defence. The result of that will be that the matter will be a fairly solemn one, and the various provisions in the Bill are appropriate to that.
Your Lordships may remember that questions were raised about whether or not it was appropriate to have an offence in relation to prevarication in his evidence if the person was not on oath. It seems right that there should be available the right to put him on oath. Of course, the existence of this power does not mean that it would have to be often used. It would be a last resort of the defence to put a particular witness on oath, but it might be very necessary in some circumstances to do that. The sheriff has a discretion whether or not to grant the application. In moving this amendment, I am speaking at the same time to Amendments Nos. 50 and 52.
On Question, amendment agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 50:
Page 8, line 2, after ("precognition") insert ("on oath").
On Question, amendment agreed to.
The Earl of SELKIRK The Earl of SELKIRK moved Amendment No. 51:
Page 8, line 7, leave out from ("£50") to (";and") in line 8.
The noble Earl said: My Lords, I must admit that I am not very enamoured of Clause 9. I think it is an improvement that it should be taken on oath and the noble and learned Lord said it would not be often used, but there is no reason why
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it should not be. It is clearly intended, as I think is plain from the Thomson Report, that this is to be used only in cases of very reluctant witnesses. However, it does not say that in the Bill and it looks as if it could be used at any time.
On the face of the clause as drafted, somebody could receive a letter saying that within 48 hours he will appear before the sheriff, and of course I do not know what the letter will contain. He will then come before the sheriff and be asked what he knows about the big bank robbery or whatever the case may be. Many people might be very worried at being asked that sort of question—they might indeed lose their head—and if they annoy the sheriff too much they will find themselves in Barlinnie Jail by lunchtime for prevarication.
I do not want to cast any reflection either on the procurator fiscal or the sheriff in relation to what they will do, but I should like there to be in the Bill something to show that this is not to be handed to somebody who has not already been precognosced or approached for evidence, who is perfectly aware that he is needed to give evidence, who has flatly refused to so do and has perhaps been offensive in the course of doing so, and, as a last resort, is being brought before the sheriff to be examined and under very severe circumstances; the sheriff can fine him, send him that afternoon to prison and tell him to stay there for 14 days or whatever the period may be. Let us be frank about it: afterwards, when he applies for an appointment, what is the question? "Has he a prison record?" and the answer is, "Yes, 14 days in Barlinnie for prevarication".
This is a strong and Draconian clause. I think the noble and learned Lord said at an earlier stage that the prosecution could do this as well. I do not know where that comes in and it does not come into the 1975 Act; perhaps it is contained in some other Act. I really would like something either to modify the clause or show that it is in fact a clause of last resort. The noble and learned Lord said it will not be often used but I must ask, with respect, how he knows that. The accused could apply to the sheriff and tell a story and I imagine the sheriff would be very reluctant to turn

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down an application well supported with facts, even if they did not happen to be true.
I should like to feel that this is something which will be used only rarely. How often has it been used by the prosecution? Is there much evidence of it having been used, or is it simply held in terrorem as something that could be used in an emergency? I should have liked a rather fuller explanation of a clause drafted in such extremely strong terms by which a witness—after all, no crime has been committed—could be sent to prison straight away by the fiat of the sheriff without any indictment or charge against him. Can the noble and learned Lord tell us a little more about this? It is a rather strong clause. I beg to move.
Lord ROSS of MARNOCK: I think the noble Earl, Lord Selkirk, has a point here, my Lords. I have always set myself up as the protector of witnesses. I entirely agree with the noble Earl on this point and I should have had my name beside his to this amendment. This is a difficult matter. I do not know whether we are entirely helped by the fact that the words "on oath" have been inserted, and certainly that has been done as a result of pressure from both sides of the House. Like the noble Earl, I am a bit confused as to what happens in prosecution cases. I had not realised that precognition was taken by the procurator on oath. I thought it was a much more informal matter, but clearly the whole thing has been formalised, and to that extent I do not know whether it will achieve the desired result. Certainly the desired result will not be achieved with this business of penalties of £50.
Lord MACKAY of CLASHFERN: My Lords, the prosecutor has this power in relation to the situation we are considering and it is true, as the noble Lord, Lord Ross of Marnock, points out, that precognitions are usually taken by the procurator fiscal informally. That is really the basis on which I said that this is a power of the last resort. It is used by the prosecutor only where there is some vital witness whose position must be clarified in a way which is necessary to be able to establish what was his evidence
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at the time. The existence of the power normally makes it possible for much more informal arrangements to be made.
As I said earlier, the clause gives power to the sheriff, on the application of an accused person, to grant a warrant to cite the witness. That is a matter of discretion and sheriffs are as conscious of the situation of witnesses generally as it is possible to be; they are in the business of conducting courts from day to day and they are very well aware of the need not to bother witnesses unnecessarily. Therefore I think I can safely claim that this is a power which the sheriff would exercise in the light of the circumstances as known to him, and he would not put this obligation on a witness unless he was satisfied that in the circumstances it was necessary to do so.
The important thrust of the clause is to give to the prosecution and the defence the same sort of apparatus, the same kind of power, for dealing with witnesses, and that is a strong recommendation of the Thomson Committee. It is for the benefit of accused persons, and that is the underlying matter to which one must have regard—that it is thought that the accused should have the same kind of basic opportunities as the prosecution in this matter. I hope that in the light of this explanation noble Lords will not feel it necessary to press the amendment.
The Earl of SELKIRK: My Lords, it is perfectly fair that the accused should have the same opportunities as the prosecutor, and the noble and learned Lord emphasised that this is a last resort when all else has failed, but there is absolutely nothing in the clause to suggest that. We leave this entirely to the discretion of the sheriff. I should like to think that they are guided in some way to the effect that this is to be used only when necessary. I do not know whether the noble and learned Lord can think of slightly redrafting the provision to make it clear that the sheriff must have a really strong case before allowing a petition of this sort to be given. There is nothing to that effect in the clause and, as I said, anybody could make out a good story without necessarily having to prove it to the sheriff. I do not say the sheriff would not have discretion, but I hope the noble and learned Lord will examine the matter with a view to making it clear that in the terms he used, there will be

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clear guidance to the sheriff in respect of the execution of these powers. If the noble and learned Lord will do that, I will beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.20 p.m.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 52:
Page 8, line 10, at end insert ("on oath").
On Question, amendment agreed to.
Lord ROSS of MARNOCK Lord ROSS of MARNOCK moved Amendment No. 53:
Page 8, line 14, leave out from ("possession") to end of line 15.
The noble Lord said: My Lords, this amendment deals with the point about prevarication. I am still very unhappy about this. Until the Lord Advocate mentioned that this was the very word used in respect of precognition in relation to the prosecution I did not realise that it would be used. If one really means that the person is not telling the truth, why not bluntly say that?—then people would know what it meant. But the word "prevarication" in the fairly ordinary sense is generally understood to mean a hesitation, rather than a refusal to tell the truth. Hesitation may arise with someone who stutters and stumbles over words, and such a person could be accused of prevarication. I think that "prevarication" is even a parliamentary expression. We cannot use the word "lie", but there is nothing to prevent one putting into a statute what one means. If one means that the person is not telling the truth, then that is that.
I think that the formalising of the proceedings will make the situation very difficult. The whole meaning of the clause has changed. It was all based on a question of fairness: the police do it, the procurator fiscal does it, so why not let the defence do it as well? Now we are told that this power is to be used only very rarely. I have my doubts about that one.
I am not very happy about the phrase "prevaricates in his evidence". I think that the only person who will have the right to remain silent now will be a prisoner. Here we have a witness who has to wait beside the policeman. He has to wait
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until he gives his name and address. The Lord Advocate has got things wrong. The person must wait until he gives his name and address.
There is also the question of the penalty. Here we have a penalty not only of £50, but also of imprisonment
"for a period not exceeding 21 days",
which is nonsense. In a case in which the maximum fine is £50 an alternative of 21 days is too many days. There used to be a relationship between the number of days and the monetary fine. I do not think that this whole thing makes entire sense. In fact, I want to see the provision for imprisonment for a period not exceeding 21 days removed from the Bill in both cases. This is a point which the noble Earl, Lord Selkirk, also had in mind, and we shall come to it later.
I should be very happy to be enlightened about the question of prevarication, and to know whether this is the right word to use. Does it mean simply not telling the truth? What is the objection to inserting this into the Bill in a much more direct fashion, instead of using this word which I have not previously seen in a Scottish statute? I beg to move.
Lord MACKAY of CLASHFERN: My Lords, the word "prevaricate" appears in section 344(1) of the Criminal Procedure (Scotland) Act 1975. I am not sure whether I know who was the Secretary of State for Scotland when that Act was passed. But that is where the word is used in relation to evidence, and the noble and learned Lord, Lord Wheatley, gave an explanation in Committee of what he understood it to mean. I think that telling lies on oath amounts to the crime of perjury if the matter in question is substantial and is relevant to the case. Prevarication is intended to be something less than that, and of the kind that the noble and learned Lord, Lord Wheatley, mentioned. So I think that the word has at least some honourable antecedent.
Lord ROSS of MARNOCK: My Lord, the Secretary of State at that time, in 1975, was myself, but perhaps I was badly guided by a Lord Advocate—he is not here. I am still not very happy about this. Putting the witness on oath introduces all sorts of other possibilities regarding penalties or disciplines that

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could be used, without having this kind of thing. One thinks of the whole business of contempt of court. The questions are being put not by a sheriff or a judge, but by the accused or his solicitor. I think I am right in saying that. I think that it is awful that a witness on oath should be put in this position and should be subject to a fine of £50 or 21 days' imprisonment. I hope that the Government will look at this matter again. I am not entirely happy about it, but at the moment I am not prepared to press the amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 54 not moved.]
Clause 14 [Prevention of delay in trials]:
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN: moved Amendment No. 55:
Page 11, line 27, leave out ("no proceedings shall be competent against him in respect of that offence") and insert ("he shall be for ever free from all question or process for that offence").
The noble and learned Lord said: My Lords, if I may, I should like to speak to Amendments No. 55, 56 and 57 together. Your Lordships may remember that in Committee the noble and learned Lord, Lord Fraser of Tullybelton, made a strong plea that we should use the words from 1701 in this Statute, instead of changing them, and we have been persuaded to do that. The words that the noble and learned Lord mentioned in particular—
"he shall be for ever free from all question or process"
are being substituted in place of what we proposed. I beg to move.
On Question, amendment agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 56:
Page 12, line 9, leave out ("no proceedings shall be competent against him in respect of that offence") and insert ("he shall be for ever free from all question or process for that offence").
On Question, amendment agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 57:
Page 13, line 2, leave out ("no proceedingssh all be competent against him in respect of that
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offence") and insert ("he shall be for ever free from all question or process for that offence").
On Question, amendment agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 58:
Page 13, line 4, leave out ("A single judge of the High Court") and insert ("The sheriff").
The noble and learned Lord said: My Lords, this amendment is to give effect to a proposal by the noble and learned Lord, Lord Wilson of Langside, at Committee stage, in which he was supported by the noble and learned Lord, Lord Keith of Kinkel. While the matters in issue are extremely important, these noble and learned Lords took the view that the provision for appeal to the Sheriff was an adequate safeguard for the very important rights which were in issue. We had originally thought that because of the importance of the rights the matter should be referred to a High Court judge in the first instance, but in view of these representations, and bearing in mind the quarter from which they came, we have on reflection accepted the view. I beg to move.
Lord ROSS of MARNOCK: My Lords, I think that this shows the character of the Lord Advocate; that he was prepared to be persuaded by what was said earlier. This reflects great credit on him, and is one of the reasons why both the Committee and Report stages have proceeded so smoothly. I am certainly grateful for what the noble and learned Lord has done, and I am sure that the noble and learned Lords whom he has mentioned will be duly gratified.
On Question, amendment agreed to.
Clause 17 [Failure of accused to attend diet in summary procedure]:
The Earl of SELKIRK The Earl of SELKIRK moved Amendment No. 59:
Page 14, line 36, leave out from beginning to ("an") in line 37.
The noble Earl said: My Lords, this amendment concerns a point which I raised at the Committee stage. I am afraid that I am still not happy with the reply that I received from the noble and

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learned Lord the Lord Advocate. The words in Clause 17(2)
"Without prejudice to any power which the court may have to deal with the accused for contempt…"
raise the possibility of a double jeopardy; that is to say, an offence to which two separate groups of penalties can be applied. The Lord Advocate said that this is in line with the Bail Act, but I do not think that this is true. If your Lordships look at Section 3(5) of the Bail etc. (Scotland) Act 1980, you will see that the
"penalties provided…may be imposed in addition to any other penalty…"
in respect of the original offence. That is quite different. There is one offence for skipping the diet; there is another offence, which is the original offence. Obviously they have different penalties—that I accept—but I think that the words in subsection (2) of Clause 17 raise the possibility of the punishment for the statutory offence which stands in that subsection and the punishment for contempt both being imposed for the same thing.
I realise, of course, that if someone skips a diet he is not liable for contempt, but suppose you have the case of, for instance, a newspaper editor who publishes something about evidence, or something of that sort, which might be brought into the realm of contempt, who is summoned to appear before the court but who skips that appearance. He certainly would be liable on that, as I see it, to the statutory penalty, which is under Clause 17; but he would also be liable on that account to punishment for contempt of court. So that would be a dual jeopardy to which he would be exposed. I think this is undesirable, and if this is true I am certain that the Government would not wish that to be the case. But I do not see why those words are in there at all. What do they mean?
If in fact someone is brought before the court and, if you like, skips his court, he can be brought in and given the statutory penalty, which is shown in Clause 17, and he can then be hit at by subsection (3), which quite clearly allows any other penalty to be imposed, which would be for contempt of court. Perhaps I may say that I have an amendment down to move that subsection out, but that was a mistake
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on my part and I have no intention to move that amendment.
I think that the position would be very much more clear if, as I have suggested, those words in subsection (2) are taken out. They can only apply, I may say, to someone who skips his diet, who does not turn up. They can have no other application that I can see. If you want to use the contempt of court procedure it is perfectly simple to use it. Indeed, it is provided, (shall I say?) when it says here
"…in addition to any other penalty which it is competent for the court to impose…".
That would certainly cover any penalty arising under contempt of court proceedings. I think that those words could be safely left out, so avoiding any suggestion of dual jeopardy. This matter, as I think the noble and learned Lord knows, has been brought up by the Law Society of Scotland. They think that there is a danger of dual jeopardy. I can see no advantage in those words, and I believe it would be very much better if they were left out. I beg to move.
Lord MACKAY of CLASHFERN: My Lords, if I may first of all explain the situation so far as the Bail Act is concerned, the situation is that the offences which are there provided for are also possibly offences at common law, and what I was saying was that the position is the same as that which we have here. Also, of course, the position in relation to this particular clause is in line with matters which are provided for in the Bail Act.
The Earl of SELKIRK: My Lords, may I interrupt my noble friend for one moment? My noble friend says that, and it may be that they are liable at common law, but it does not refer to that. Subsection (3) says specifically
"in respect of the original offence".
That is the offence, whether he is guilty or not, for which the person is summoned to appear in court.
Lord MACKAY of CLASHFERN: My Lords, I am not founding on that clause in the answer I am giving. But, in any case, the situation is that the words to which the noble Earl objects are words which are intended to indicate that the powers of the court to deal with the matter

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as contempt are not being taken away. It does not mean that the court would, in respect of the same matter, deal with him both under this clause and as a contempt, but that, if the circumstances were such that it was appropriate to deal with the matter as contempt, that would still be possible. However, in view of what the noble Earl has said I think I can assure him that we shall again consider it very carefully, but that is our attitude for the present.
Lord ROSS of MARNOCK: My Lords, I hope that the noble and learned Lord the Lord Advocate will do so. I do not think he has entirely convinced me about this particular one, but I am not going to go on that. If he is going to look at this again, will he look at the first three lines of the clause? I never saw anything more difficult to construe than this, and so unnecessarily so. I think that could be enacted very much more simply. It says:
…the existing words shall be",
so-and-so. The existing words are so-and-so. Then,
…after that subsection there shall be inserted the following subsections…".
Why not just,
"there shall be inserted the following sub-sections",
and go ahead with it, without all this rather otiose and not very sensible prelude? I am not entirely convinced, from what the noble and learned Lord said. It says:
"Without prejudice to any power which the court may have to deal with the accused for contempt";
then they can go on and deal with him in this particular way. He gave the impression that he could be dealt with in both ways. Is it that there is an option to treat it as contempt?
Lord MACKAY of CLASHFERN: No, my Lords.
Lord ROSS of MARNOCK: My Lords, it could be made much more clear than it is here. I think the noble and learned Lord had better have a session with his draftsman.
The Earl of SELKIRK: My Lords, I am grateful to the noble and learned Lord for what he has said. The point I am really making is the one which the noble
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Lord, Lord Ross of Marnock, has made. If there is an alternative—that is to say, they can either proceed with contempt or they can proceed with the statutory offence—then I would be wholly content; but I think that this is capable (perhaps by an ill-disposed sheriff, if you like, because there are such things in this world) of enabling them to proceed in both ways. I think it would be a pity to enable that possibility to happen. I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 60 not moved.]
Clause 18 [Desertion of trial diet]:
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 61:
Page 15, line 14, at end insert ("(and its decision in that regard has not been reversed on appeal)").
The noble and learned Lord said: This, again, is a rather technical matter to which the noble and learned Lord, Lord Wheatley, referred when the Bill was in Committee before your Lordships. The present situation is that where the court, against the will of the prosecutor, deserts a diet simpliciter, the court may allow the prosecutor to raise a new case on the same matter provided the court is satisfied that the original reason for the matter not being proceeded with was excusable and was not a fault of the prosecutor which was inexcusable. The clause proposes to change that, so that once it is decided that a case has been stopped without any reservation—simpliciter, as they say—that will be the end of the matter.
The noble and learned Lord, Lord Wheatley, was concerned that that was reducing the power of the Lord Advocate as the public prosecutor, and of course it does that; but this is a recommendation of the Thomson Committee, and we felt that it was not right not to affect the Lord Advocate's powers in this way where that was proposed.
On the other hand, it is always possible to appeal the decision in the first case, and we think it preferable that if the matter is to be raised it should be raised in the first case while the circumstances are fresh and when people know the reasons for the prosecutor not proceeding.

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But in order to emphasise that the decision of the court at that stage is subject to appeal, we are proposing these two amendments, Nos. 61 and 62, and I hope your Lordships will feel able to agree with them. I beg to move Amendment No. 61.
On Question, amendment agreed to.
Lord MACKAY of CLASH FERN Lord MACKAY of CLASH FERN moved Amendment No. 62:
Page 15, line 27, after ("above") insert ("(and the court's decision in that regard has not been reversed on appeal)").
On Question, amendment agreed to.
Clause 19 [No case to answer.]:
8.39 p.m.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendments Nos. 63 to 70:
Page 15, line 34, after ("answer") insert ("both—(a)")
Page 15, line 35, at end insert ("; and
(b) on any other offence of which he could be convicted under the indictment were the offence charged the only offence so charged.")
Page 15, line 41, after ("offence") insert ("charged in respect of which the submission has been made or of such other offence as is mentioned, in relation to that offence, in paragraph (b) of subsection (1) above")
Page 15,line 42, after ("offence") insert ("charged in respect of which the submission has been made")
Page 16, line 12, after ("answer") insert ("both—
(a)")
Page 16, line 13, at end insert ("; and
(b) on any other offence of which he could be convicted under the complaint were the offence charged the only offence so charged.")
Page 16, line 17, after ("offence") insert (" charged in respect of which the submission has been made or of such other offence as is mentioned, in relation to that offence, in paragraph (b) of subsection (1) above")
Page 16, line 18, after ("offence") insert ("charged in respect of which the submission has been made").
The noble and learned Lord said: My Lords, I will speak to Amendments Nos. 63 to 70, if I may. This clause provides a new procedure in both solemn and summary procedures for the accused to submit, after the close of the evidence for the prosecution, that he has no case to answer on an offence charged in the
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indictment or complaint. The effect of such a submission being sustained by the judge will be that the accused will be acquitted of that offence, and the trial will proceed only in respect of any other offences charged in the indictment or complaint.
However, various provisions exist in terms of which if a jury or judge is not satisfied that an accused committed the actual offence charged, they or he may convict of an alternative or lesser offence. I can perhaps best illustrate my point by using an example. If an accused is charged with the crime of theft, he may be convicted of the crime of reset if the jury or judge consider that there was insufficient evidence to show that the accused actually stole the property but consider that there was sufficient evidence to show that the accused received some or all of the stolen property in the knowledge that the property had been stolen. The Government take the view that it may not be entirely clear from the present wording of this clause that the submission by the accused that he has no case to answer must relate not only to the offence actually charged in the indictment or complaint but also to any other offence on which he could be convicted under the indictment or complaint. Similarly before a judge upheld such a submission, he would require to be satisfield not only that there was insufficient evidence in law to justify the accused being convicted of the offence charged in respect of which the submission has been made but also that there was insufficient evidence in law to justify the accused being convicted of any of these other offences such as I have mentioned earlier. These amendments, therefore, for both solemn and summary proceedings make the matter clear beyond doubt and I would therefore commend them to the House. I beg to move.
On Question, Amendments agreed to.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 71:
Page 17, line 35, after ("removed") insert ("for so long as his conduct may make necessary").
The noble and learned Lord said: My Lords, this is an amendment to Clause 21 dealing with misconduct. Perhaps I could speak to Amendments Nos. 71, 72 and 74 together. These amendments give effect to an undertaking I made in Committee to

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consider somewhat similar amendments tabled by my noble friend Lord Selkirk. The noble Earl was concerned that the clause should explicitly state Parliament's intention that the power to exclude an accused who so misconducts himself that the trial cannot continue should be narrowly guarded. In particular, he wished it made clear that the power of exclusion should only continue for so long as it was necessary and that an accused who repented of his conduct should not remain excluded. I consider that the existing clause would be so construed. However, this is a difficult and important area and I feel that it is right that we should restrict the clause in the way my noble friend has proposed and to do it expressly, not leaving a matter of this importance to implication. I beg to move.
The Earl of SELKIRK: My Lords, I thank the noble and learned Lord very much for this amendment.
On Question, amendment agreed to.
[Amendment No. 72 not moved.]
The DEPUTY SPEAKER (Lord Aberdare): My Lords, I have to point out that if Amendment No. 73 is agreed to, I cannot call Amendment No. 74.
8.44 p.m.
The Earl of SELKIRK The Earl of SELKIRK moved Amendment No. 73:
Page 17, line 39, leave out subsection (2).
The noble Earl said: My Lords, this is part of Clause 21 which deals with summary procedure. We have already dealt with subsection (1) which deals with solemn procedure. This deals with summary procedure. I wonder very much whether it is desirable to remove the accused in summary procedure. As I have said before, it is a fundamental principle of Scots law that a criminal trial should not proceed outwith the presence of the accused. There may be cases in solemn procedure where this is necessary but there are two fundamental differences in dealing with summary procedure. In the first place, it is nothing like so serious to have to adjourn a case in summary procedure; because there is no jury there and fewer people are involved in it; while to adjourn because the accused
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misbehaves in solemn procedure is an expensive and serious matter. In summary procedure it is not so serious. Secondly, in solemn procedure, there is a record kept of the whole proceedings which is not normally so in summary procedure; so that although the accused is out of the court, he can read the whole of the procedure which takes place in his absence. There is some difficulty there—and the noble and learned Lord Justice-Clerk referred to it—but I do not think it would be a serious or fundamental one. He will have counsel appointed to look after him and at the end of the day could read every word of evidence submitted. Therefore, I do not think that as far as subsection (1) is concerned, it is so serious.
In regard to subsection (2) neither of these things will apply. If the accused leaves the dock, he will never know exactly what was said while he was away. He may get a summary account from his counsel but he will never know verbatim what happened. It is, I think, for those reasons rash to insert this at this time as far as the summary courts are concerned. I particularly regard this as so with the district courts. I think it is a serious decision to require the accused to leave the dock; and I wonder whether untrained magistrates (as is the case in district courts) are competent to form a judgment in this court. I should like subsection (2) left out altogether. I think we could try. It is a complete innovation in Scots law to remove the accused on account of his conduct from the dock. I accept that—and Scottish Law Society accepted subsection (1) but they do not like subsection (2). I agree with them. I think that this is taking a big risk at this time and I think it would be wrong. I beg to move.
Lord MACKAY of CLASHFERN: My Lords, I have a good deal of sympathy with the views expressed by my noble friend Lord Selkirk but, although I accept a good deal of what he has said about the differences between summary and solemn procedure, I consider it may be the best safeguard against such a thing happening in a summary court that there should be such power as this in the court. I think this is a matter which will be the subject of a good deal of consideration, and certainly we shall continue to consider the matter in the light of what my noble friend has said. But perhaps at this juncture he may be willing to withdraw his amendment.
The EARL of SELKIRK: My Lords, I think that the point which my noble and learned friend might consider is this. When this Bill is passed, any district court can, on its own intitiative, remove the accused from the dock. The noble and learned Lord the Lord Advocate and the Secretary of State have no power to stop it and it might be widely misused. If my noble and learned friend insists on this, can we not have it subject to a regulation of parliamentary approval that he is able to withdraw the power from the district court on summary procedure if it should prove necessary. I throw that out as a suggestion. It is possible that this power might be grossly misused at this particular level. In these circumstances, I do not want to press this: but I hope that he will consider it. Does the noble Lord, Lord Mishcon wish to say something? If not, I would propose to withdraw the amendment.
Lord MISHCON: My Lords, I hope that the noble Earl will not yet withdraw the amendment. It may be helpful to the House if I were to speak now on this amendment having first apologised to the noble and learned Lord that I did not hear his earlier remarks because I was out of the Chamber. Possibly it would help the House if, instead of making two speeches on the further amendment we have to leave out this clause, I say what I have to say now. First of all, I wish to adopt (as do my noble friends) the arguments of the noble Earl in relation to what we would call in England the summary court, the magistrates' court, which is what corresponds to the district court that the noble Earl talked about.
To give this power to the court I should have thought was not a very sensible thing by any means because it can be abused. Having said that, I must confess that there is a power afforded to the magistrates' courts in England to construct a hearing in the absence of the accused but not upon the basis of the words used in this clause. The material word here—and I took the liberty of speaking on this matter in Committee—is the word "misconducts". This is a very penal clause so far as the accused is concerned. He can literally be tried in his absence. The question of what amounts to misconduct can vary from one judge to another and, if I may say so,
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from one justice to another. What constitutes misconduct? Is it the question of the accused refusing to answer a question or answering back counsel if not the magistrate or the judge in a way which is considered by the court to be unseemly? Misconduct is undefined.
I believe (if I may try to quote from a piece of possibly slightly superior wisdom in those who drafted an English statute) when that power was given to the magistrates' court in English law it was given by the Criminal Justice Act 1972, and the language there used is "disorderly conduct" which defines, I believe, precisely what the noble and learned Lord, the Lord Advocate had in mind—I think it was he and not the noble Earl—when he addressed us on this clause at the Committee stage. If one admits the validity of this clause at least let us have clear language. It is a question of disorderly conduct and not misconduct.
So far as the Crown Court is concerned in England—if I may venture to say what happens South of the Border—I do not believe that there is a statutory power; but Archbold, when referring to the inherent power in the courts, talks about disruptive behaviour. He also cites certain cases showing that the court has this inherent jurisdiction—a jurisdiction which is not inherent in our magistrates' court and therefore had to be given by a statutory enactment. Later, as i said, without repeating so far as I am concerned a speech, I am trying to move an amendment together with my noble friend which excludes this clause.
If I may be permitted to make the speech now and not again, it is to submit to the House that on any view it is not a jurisdiction which should be given to the district court, and on any view the term "misconduct" is much too loose a word without any definition to appear in a statute which, as I said, deals with something which is quite penal to the accused. I therefore would respectfully suggest that if this clause is allowed to stand then one of these two terms is borrowed: namely, the term of disorderly conduct or disruptive behaviour.
The Earl of SELKIRK: My Lords, I would possibly accept the words the noble Lord uses. Of course one could say

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"so conducts himself that in the view of the court a proper trial cannot take place ", I do not know. I am very happy to leave this to noble Lords. I will not press this amendment and I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 74:
Page 17, line 44, after ("removed") insert ("for so long as his conduct may make necessary").
The noble and learned Lord said: I have given the explanation for this already. I beg to move.
On Question, amendment agreed to.
8.54 p.m.
Lord ROSS of MARNOCK Lord ROSS of MARNOCK moved Amendment No. 75:
Leave out Clause 21.
The noble Lord said: I am very sorry indeed that the noble and learned Lord, the Lord Advocate, could not see his way to leave out subsection (2). It is very very contentious indeed. He will be aware of course that it colours our attitude to the question whether the clause should stand part of the Bill. He must have received from the Law Society of Scotland their particular views. They were very strong indeed. They were divided about the whole clause; they were not very happy about it. There was no doubt at all about their opinion about subsection (2). They said:
"As framed, it appears to the council that this clause would apply to any charge, any trial, and any court, even the district court. The council was at first inclined to the view that, if, as has been suggested, the purpose of the clause was to deal with terrorists, legislation should be enacted in that sphere only".
However, after they had debated the issues and gone over all the issues they came to the unanimous conclusion that they were opposed to the provisions so far as relating to summary cases where it appears totally unnecessary and might indeed be used oppressively in minor courts.
Here we have a clause with a very serious blemish and I do not think that we could let it go. In fact, I will appeal to the kindly nature of the noble and learned Lord the Lord Advocate. Remember, after we finish it in this House it goes elsewhere. Would it not be far kinder—
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would it not be the act of humanity—to take the clause out now? Can he think of the dire trouble into which the present Solicitor-General is going to get himself in another place? After all, here is a proposal so foreign a breach of natural justice, a breach foreign to our law and to our system and horrific to both lawyers and laymen alike.
How is the poor Solicitor-General, no matter how he is garbed for the occasion—probably he is going to wear sackcloth and ashes that day—going to support these words or listen to these words being thrown at him, as he gets up to defend the clause that he attacks so rudely—and so sincerely no doubt with his customary passion—in another place?
Are there circumstances in which a person in the dock could so break up a trial in Scotland that he would effectively be stopping justice? "No", said the Solicitor-General, "It could not happen. It has never happened. It will not happen". I am glad that at least someone on the Front Bench appreciates exactly the kind of position that the poor Solicitor-General is in if we in thoughtlessness and unkindness send this back. I appeal to noble Lords out of kindness for a man for whom I have a very high regard and very kind thoughts—the present Solicitor-General for Scotland—that I do not want to see him suffer. But my goodness! I would dearly love to be on that Committee though.
There is no doubt about the facts. We have never had occasion to use this power or even want to use it. We think that it might be used for terrorists—certainly not necessarily in all the courts. The clause, as it stands, is very, very undesirable. I am perfectly sure that he thinks this himself. He has to use his power as Lord Advocate. Let them know in the Crown Office that he is the boss, and if he thinks that the clause is useless let him exercise that power. I am perfectly sure that if he looked at this once again he would say, "Let us save the face of the Solicitor-General and also be honest about the power of the courts and those in charge of the courts in Scotland. We can deal with this without this new power". I beg to move.
Lord WILSON of LANGSIDE: My Lords, I do not know whether it will be

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helpful to the House if I answer the question rhetorically put by the noble Lord, Lord Ross of Marnock, as coming from the Solicitor-General for Scotland who apparently asked: "Was there ever an occasion in which any court in Scotland has been so disrupted by the conduct of an accused person as to make the continuation of a trial proceed in accordance with justice?" There is at least one court in Scotland which shall be nameless where there is a notorious accused person from time to time summoned to attend for trial after the places of refreshment have opened and who is in such a condition as to be incapable of understanding the proceedings and totally disrupts them. All the efforts of the police, the sheriff and the other officials of the court cannot contain this situation, with the result that from time to time these trials have to be adjourned, the witnesses have to be sent away and brought back on another day when, I am told, it has happened that the same situation has been repeated. This might be the kind of situation in which, quite properly, a power of this sort could be used to assist the process of justice and to ensure that cases will be disposed of and not continued unnecessarily, as at present they have to be. I am not saying this is a commonplace, but it happens from time to time.
Lord MACKAY of CLASHFERN: My Lords, I am very interested in the explanation given by the noble Lord, Lord Ross of Marnock, for moving this amendment. So far as the Solicitor-General for Scotland is concerned, I feel that he will be able to look after himself in connection with whatever is said about him. The clause in its present form is not the same clause as that to which the noble Lord referred. Although the differences may not be very great, there is a very substantial safeguard in this clause which was not originally in the Bill. If it was intended to suggest that I was not in favour of this clause, I

CONTENTS

Ardwick, L.

Milner of Leeds, L.

Segal, L.

Balogh, L.

Mishcon, L.

Stewart of Alvechurch, B.

Blease, L.

Peart, L.

Stewart of Fulham, L.

Brooks of Tremorfa, L.

Pitt of Hampstead, L.

Stone, L.

David, B. [Teller.]

Ponsonby of Shulbrede, L.

Taylor of Blackburn, L.

Davies of Leek, L.

Ritchie-Calder, L.

Taylor of Gryfe, L.

Gaitskell, B.

Ross of Marnock, L.

White, B.

Houghton of Sowerby, L.

Sefton of Garston, L.

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

must say that I am in favour of it on the basis of the information which I have at the moment. I agree that it is a difficult situation, but it is still one which we have to try to deal with, and it may be that the best way of preventing this kind of thing happening is that this power should exist.
I should also like to point out, in answer to what the noble Lord, Lord Mishcon, said earlier, that it is not left on "misconduct". It is misconduct of a certain kind; namely, misconduct that makes it impossible to have a proper trial, in the view of the court. That is the standard and it is a very high standard indeed; so I invite your Lordships to allow this clause to stand part of the Bill and to reject this particular amendment.
Lord MISHCON: My Lords, before the noble and learned Lord sits down, would he give consideration to the words that have been thought out in another statute in order to deal with this situation he is talking about? In making this suggestion I am not in any way inferring that I am in favour of the clause—I support my noble friend Lord Ross in the views which he put forward—but is it not right that instead of having the term "misconduct" it would be so much more sensible to think in terms of "disorderly conduct" or the type of behaviour I have referred to previously as being defined by Archbold in that way, rather than the term "misconduct"?
Lord MACKAY of CLASHFERN: My Lords, I must say that as at present advised—but I am always learning—I prefer what we have got. However, I should certainly be glad to look at these suggestions at more leisure.
9.4 p.m.
On Question, Whether the said amendment (No. 75) shall be agreed to?
Their Lordships divided: Contents, 24; Not-Contents, 80.

NOT-CONTENTS

Amherst of Hackney, L.

Gainford, L.

Mowbray and Stourton, L. [Teller.]

Atholl, D.

Galloway, E.

Auckland, L.

Gisborough, L.

Mirton of Lindisfarne, L.

Balerno, L.

Glasgow, E.

Orr-Ewing, L.

Balfour of Inchrye, L.

Godber of Willington, L.

Reading, M.

Bellwin, L.

Gridley, L.

Reigate, L.

Belstead, L.

Grimston of Westbury, L.

Rochdale, V.

Boyd of Merton, V.

Hanworth, V.

Rochester, L.

Camoys, L.

Harvey of Tasburgh, L.

St. Just, L.

Campbell of Croy, L.

Henley, L.

Sandys, L. [Teller.]

Chelmer, L.

Hives, L.

Savile, L.

Clifford of Chudleigh, L.

Holderness, L.

Selkirk, E.

Cork and Orrery, E.

Hooson, L.

Sempill, Ly.

Craigavon, V.

Hylton, L.

Strathclyde, L.

Crathorne, L.

Kilmany, L.

Swansea, L.

Cullen of Ashbourne, L.

Kinnaird, L.

Swinfen, L.

De Freyne, L.

Kinross, L.

Tranmire, L.

Denham, L.

Long, V.

Trefgarne, L.

Drumalbyn, L.

Lyell, L.

Vaizey, L.

Dulverton, L.

Mackay of Clashfern, L.

Vaux of Harrowden, L.

Ebbisham, L.

Macleod of Borve, B.

Vernon, L.

Elliot of Harwood, B.

Mansfield, E.

Vickers, B.

Faithfull, B.

Margadale, L.

Vivian, L.

Falkland, V.

Massereene and Ferrard, V.

Wade, L.

Ferrers, E.

Merrivale, L.

Westbury, L.

Ferrier, L.

Morris, L.

Wigoder, L.

Foot, L.

Mottistone, L.

Wilson of Langside, L.

Resolved in the negative, and amendment disagreed to accordingly.
Clause 22 [Restrictions on report of proceedings involving person under 16]:
9.11 p.m.
The Earl of SELKIRK The Earl of SELKIRK moved Amendment No. 76:
Page 18, line 6, leave out ("newspaper report") and insert ("report in any newspaper available in the United Kingdom").
The noble Earl said: My Lords: I drew attention to Clause 22 during the Committee stage, and I have since had a letter from the noble and learned Lord, the Lord Advocate, for which I am grateful. The position is rather peculiar, as regards both solemn and summary procedure. Apparently, Clause 22 extends to England and Wales, but not to Northern Ireland. But subsection (4) contains the words:
"…references to a court shall not include a court in England, Wales or Northern Ireland".
Subsection (1) begins with the dictatorial words "No newspaper", the principle being that certain cases affecting young persons—that is, persons under the age of 16—will not be given publicity. I assume that newspapers could be prosecuted and fined up to £500 if they published reports which had been forbidden.
It seems to me that we should be
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perfectly clear as to which newspapers and in which circumstances this clause applies. The words "No newspaper" would clearly mean that the Patagonian press would be excluded. But which newspapers would be included? Does this restriction apply to papers which are published or available in the United Kingdom, or does it not? Clause 80 states, quite specifically, that Clause 22 extends to England and Wales. What happens if the Act is violated by some newspaper, such as the Cornwall Herald? Will the newspaper be prosecuted in the English courts or in the Scottish courts, because this clause clearly applies to England?
I think that this should be clear, and if the noble and learned Lord the Lord Advocate can explain it I shall be grateful. In the meantime, I should like to ask him about the meaning of the last line of this clause:
"and the same provision shall (with the appropriate section number) be substituted for section 374 of the 1975 Act".
May I ask about Section 365 which says very nearly the same thing but in different words. I cannot think that we want both sections, so may I ask the noble and learned Lord the Lord Advocate to look at that point. I think that this is a curious mixture which took place when

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the Act was consolidated. If we are to deal with it again, could we have a look at that to see whether both sections are required? Let us have a clear explanation as to what papers and in what courts a prosecution can take place if anybody violates the instructions given by the court in regard to protecting the persons and the names of persons under the age of 16. I beg to move.
9.15 p.m.
Lord MACKAY of CLASHFERN: My Lords, the noble Lord, Lord Ross of Marnock, suggested that there should be sackcloth and ashes for the Solicitor-General. This is a place where sackcloth and ashes are appropriate for me! Before I reply in some detail to the noble Earl, I should like to say that I am very sorry about a mistake that I made in answering the noble Earl when he raised this question in Committee. The reason was that I did not give proper effect in my answer to subsections (5) and (6) of Clause 80 which extend the provisions of Clause 22, in the first case to England and Wales and in the case of Clause 80(6) to Northern Ireland.
The situation is that this provision will be part of the law not only of Scotland but of England, Wales and Northern Ireland, if it passes. The result will be that the newspaper reports to which it refers will be any newspaper report circulated in any part of the United Kingdom. But the court to which the power to dispense with the provision is given is the Scottish court because it is Scottish court proceedings which are in issue. The offence, if it is committed by, for example, the Cornwall Herald, would be an offence against the law of England and Wales, if the paper is circulating only there. Of course, the court which could deal with the matter is the court of summary jurisdiction appropriate to that place. The provision is intended to secure protection for persons under the age of 16 from publicity subject, of course, to the court at any stage and the Secretary of State, after completion of the proceedings having a right to dispense with the requirements of the section.
The other matter which was raised by my noble friend related to Section 365. The situation is that Section 365 of the 1975 Act is being repealed by the Bill and therefore it is Section 374 only that needs to be referred to. I very much regret that
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I got this wrong on the last occasion and I hope that your Lordships will be kind enough to accept my humble apologies.
The EARL of SELKIRK: My Lords, if I understand correctly what the noble and learned Lord the Lord Advocate has said, my amendment fits the case exactly. Therefore, I ask him why he does not accept it because that is exactly what the position is. It relates to any paper available—not printed or published but available. That means that if Paris Match comes over with a very undesirable article about children in Edinburgh, it could be prosecuted. Is this correct? If it is, I suggest, with respect, that we should make this clear.
I am grateful to the noble and learned Lord the Lord Advocate for what he said about Section 365, which confused me completely. But would it not be better, instead of the stentorian "no newspaper", to say "newspapers available in the United Kingdom"? This should be made clear. I find myself at a loss to know why something of this kind cannot be properly attributed. I do not know whether the noble and learned Lord can undertake to have a look at this to see whether that is possible. If he will have a look at it, I shall beg leave at this stage to withdraw the amendment.
Lord ROSS of MARNOCK: My Lords, could the noble and learned Lord the Lord Advocate tell me whether or not this same restriction applies to reporting in the courts of England and Wales, or whether this is purely a Scottish matter? I ask for the simple reason that we have to try to be fair to newspapers in the benighted places that he has mentioned. They have already got into very considerable trouble, probably out of ignorance.
Even the publication of a photograph can get an editor into very considerable trouble. It would be of guidance to those who publish newspapers in England, Wales and Northern Ireland if the words "United Kingdom" were to be inserted here. Then they could have less of an excuse for saying, "We did not know—this does not apply in England." If we put it into this statute and give it the publicity which I trust this will get and as indeed it merits, from the Press of the United Kingdom, they will appreciate that in dealing with a court case in Scotland they have to be even more careful now as

1287
to particulars of persons under the age of 16, be they involved directly or as witnesses. I think this is an eminently sensible amendment and I do not know why there has been hesitation over it.
Lord MACKAY of CLASHFERN: My Lords, with permission, I will answer the question that there are somewhat similar provisions in England and Wales affecting courts in those countries. They are not exactly the same. These are modifications of provisions which have existed for some time. The two sections which I mentioned have had this ambit and we are only altering them somewhat to increase the protection, but the general principle has been operating for some time. Certainly I am happy to consider whether the matter can be made clearer, although I think the extent provisions under Clause 80 make the matter clear, as at present advised.
Amendment, by leave, withdrawn.
Clause 24 [Seclusion of jury after retrial]:
9.22 p.m.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 77:
Page 19, line 20, at end insert—
("Provided that the judge may, for the purposes of this subsection, authorise a person to act on his behalf").
The noble and learned Lord said: My Lords, this is an amendment which gives effect to the point which was raised by the noble and learned Lord, Lord Fraser of Tullybelton, in Committee, providing that the judge may appoint someone to act on his behalf in reference to the matters dealt with in this clause, and I commend the amendment to your Lordships. I beg to move.
On Question, amendment agreed to.
The DEPUTY SPEAKER: My Lords, I understand that Amendment No. 78 has been withdrawn.
Clause 31 [Offences in connection with lights, reflectors, obstruction, etc., to be provable by one witness]:
The Earl of SELKIRK The Earl of SELKIRK moved Amendment No. 78A:
Page 25, line 33, after ("laws)") insert ("as amended by section 131 of the Transport Act 1968, section 203 of the Road Traffic Act 1972 and section 24 of the Road Traffic Act 1974").
The noble Earl said: My Lords, Clause 31 is one of the clauses where the principle of Scots law, of having corroborative evidence, is put aside and one witness is enough to convict the seven types of offences. Accordingly, I looked this up because I thought it sufficiently important that I should have a clear idea of what types of offence could be convicted by one witness. The rubric deals with lights, reflectors, obstruction and minor matters dealing with motorcars, but in Section 80 of the Act I found that there were not the subsections referred to in the paragraph(9A) of Clause 31 of this Bill. Subsection (9A) refers to paragraphs (a) to (d) and (f), but I find in Section 80 there are only paragraphs (a), (b) and (c). I received an answer from the noble and learned Lord the Lord Advocate, but in fairness I must say that he did not tell me that (d) and (f)—and indeed (a) to some extent—came out of no fewer than four different Acts of Parliament. I think it is extremely important if people are to be convicted by one witness that they should know exactly what the offence is and there should be no possible dubiety as to the nature of the offence.
I have a further letter—and I am grateful to the noble and learned Lord the Lord Advocate. It is in the short report of the amendment and I have put down here the Acts of Parliament which have to be referred to in order to get a clear picture of those acts on which a person can be convicted on the evidence of one witness. I think it is right and proper that they should be clearly stated here, and to pass it off simply by referring to Section 80, which does not give the whole story, and so far as I know does not give it accurately, is quite wrong and is careless drafting. Therefore, I ask the Government if they will put in this amendment, saying where the nature of the offences can be precisely shown. For that reason, I beg to move.
Lord MACKAY of CLASHFERN: My Lords, the situation, unfortunately, is that Acts of Parliament are amended from time to time, and the Interpretation Act in its most recent form, the Act of 1978, provides in Section 20(2) that, where an Act refers to an enactment, the reference, unless a contrary intention appears, is a reference to that Act as amended and includes a reference thereto as extended

1289
or applied. So, when Section 80(1) of the 1967 Act is referred to, it is referred to as subsequently amended. Accordingly, the words that my noble friend Lord Selkirk proposes are already covered by the application of the 1978 Interpretation Act to the words of this clause.
I agree, of course, that when a person is looking up these matters he has to find these Acts, but, unfortunately, if all the amending acts are to be referred to expressly, Acts of Parliament are going to be even longer than they are at present. Therefore, I have to say that this Amendment would not be an improvement in the drafting but rather the other way. I would therefore invite the noble Earl to consider withdrawing his amendment. I feel that if this principle were to be given effect to it would have to be given effect to generally, and that would involve a tremendous amount of further references in Bills such as this.
Lord ROSS of MARNOCK: My Lords, surely the Lord Advocate appreciates that this is probably the one clause in this whole Bill that would apply to most ordinary individuals. We are not now talking about criminals, we are not talking about witnessing criminal acts, we are talking about people who drive motor-cars—and I think that would apply to the great majority of people in Scotland.
This change is a fundamental change; let nobody argue about that. I have heard so many arguments about this—that the law of corroboration in Scotland was supreme, that you could not prove an offence unless you had corroborative evidence; you required more than one witness. I can remember one change that was made; I think I have quoted it before. It was the Salmon and Freshwater Fisheries Act 1951. Then a few years ago in civil cases a judge was entitled to use his discretion—not absolute, but his discretion—in respect of accidents where there could not possibly be a corroborative witness. So if we are going to make a change like that, one that is going to affect so many people, it really ought to be clear as possible. I have already referred this evening to the question of legislation by reference.
This does not make sense to anybody who reads it, not even to a lawyer. The oble Earl has explained how much diffi-
1290
culty he had. He had to go to Section 80 of the 67 Act and then he had to go to three other Acts tracking right away back. This really is not good enough from the point of view of getting the law understood by people in any part of the country. We should be much more specific. Considering the length of this Bill, we surely could have been specific in this one clause, because it is really going to affect a great many people, many people who for good or ill think that it requires two policemen to say that their lights are not functioning properly.
May I say that I am not entirely happy in respect of this? I suppose we have all been pulled up by a policeman for something or other, perhaps thinking we had exceeded the speed limit by about one mile per hour. But they never stop there; they wander round the car. It is very easy for somebody to stumble and knock out a light and then come back and tell you that your light is out. It is not likely to happen if there are two witnesses. It is no use a Minister of State shaking his head. Why does he think this has been in the law of Scotland for centuries?
Certainly, if we are to make the change—and I do not say that the change is not desirable or justifiable—then let us make the change in language that people understand so they will know whether they are subject to new penalties and new conditions for an offence. I very much agree with the noble Earl, Lord Selkirk, and trust that the Government will look at this and spell it out. It should not take all that long. Then there will be one clause where we can say, "This clause we understand, this clause we can follow, and so can those who read about the Criminal Justice Bill".
However, I defy anyone in Scotland to read these six lines and understand, or indeed any of your Lordships who have been studying this Bill all day, and who have come here specially to hear me orate on this particular point! Let us be honest about it, not one of us knows what we are doing. Here we are legislating for the simple people of Scotland. They read statutes; the Criminal Justice Bill is the only thing they read at the weekend after they have read the football results. My goodness! this one does not make sense at all, and legislation which does not make sense should not be so readily passed. I

1291
tried very hard. I had not the endurance of the noble Earl, but I saw him sitting in the Library with his brow furrowed, writing something down, tearing it out again because it was wrong, getting another book and discovering that he had to get another three before he could get down to the heart of those six lines.
This is all very grand for the draftsmen; they have an art and an appreciation of these words and a way of doing things that is all their own. It is fine for them, but it does not make good sense for people trying to understand what the law says. I sincerely hope that the noble and learned Lord the Lord Advocate will exercise his powers and say, "We are going to have something different in Scotland in future", and that the law will not be a Chinese puzzle—something on which I am an expert. One of my privileges during the war was to make an assessment of the security in terms of time of Chinese codes and cyphers. I can assure noble Lords that it would take me much longer to break some of these clauses.
The noble and learned Lord the Lord Advocate should set his mind to making the law a little clearer. If we cannot please everyone with regard to what the law says, let us all be able to understand what it says.
Lord DRUMALBYN: My Lords, would it be of any assistance if the noble and learned Lord the Lord Advocate were to tell us how far in this case the rubric covers it? One notices that the clause covers paragraphs (a) to (d), which

CONTENTS

Ampthill, L.

Gardiner, L.

Sefton of Garston, L.

Ardwick, L.

George-Brown, L.

Segal, L.

Atholl, D.

Houghton of Sowerby, L.

Selkirk, E. [Teller.]

Auckland, L.

Kinnaird, L.

Southwell, Bp.

Blease, L.

Llewelyn-Davies of Hastoe, B.

Stewart of Alvechurch, B.

Brockway, L.

Massereene and Ferrard, V.

Stewart of Fulham, L.

Brooks of Tremorfa, L.

Milner of Leeds, L.

Stone, L.

David, B. [Teller.]

Mishcon, L.

Taylor of Blackburn, L.

Davies of Leek, L.

Morris, L.

Taylor of Gryfe, L.

Elliot of Harwood, B.

Peart, L.

Thomson of Monifieth, L.

Faithfull, B.

Pitt of Hampstead, L.

Vickers, B.

Ferrier, L.

Ponsonby of Shulbrede, L.

White, B.

Foot, L.

Ritchie-Calder, L.

Wigoder, L.

Gaitskell, B.

Ross of Marnock, L.

Wilson of Langside, L.

makes four, and (f), which makes five, and there are only three matters referred to, with an "et cetera". Would it make the matter clearer if the noble and learned Lord put into the rubric what each of these paragraphs refers to?
The Earl of SELKIRK: My Lords, I call this the worst type of legal quibble one can possibly imagine. It is outrageous that here we are passing Acts of Parliament which we all know are incomprehensible. I want to divide the House. I think that we should revolt against the draftsmen who put in front of us words which every one of us knows are quite incapable of comprehension. If we get into trouble let us get into trouble, but let us at least show that Acts are referred to in a Bill which no one can possibly understand. I could not have understood it if I had not received a letter from the noble and learned Lord the Lord Advocate, who has a staff behind him who can follow all this up. Other people do not have that staff. It is time that those who consider these matters put their house in order. If that is what the Interpretation Act leads to, let us change the Interpretation Act. It is quite outrageous that this should be the case. If anyone will support me—and I do not know whether anyone will—I shall be very willing to divide the House. I beg to move.
9.35 p.m.
On question, Whether the said amendment (No. 78A) shall be agreed to?
Their Lordships divided: Contents, 42; Not-Contents, 61.

NOT-CONTENTS

Amherst of Hackney, L.

Galloway, E.

Mowbray and Stourton, L.

Balerno, L.

Gisborough, L.

Murton of Lindisfarne, L.

Balfour of Inchrye, L.

Glasgow, E.

Orr-Ewing, L.

Bellwin, L.

Godber of Wellington, L.

Reigate, L.

Belstead, L.

Gridley, L.

Rochdale, V.

Boyd of Merton, V.

Grimston of Westbury, L.

St. Just, L.

Camoys, L.

Hanworth, V.

Saint Oswald, L.

Campbell of Croy, L.

Harvey of Tasburgh, L.

Sandford, L.

Chelmer, L.

Henley, L.

Sandys, L. [Teller.]

Cockfield, L.

Hives, L.

Savile, L.

Cork and Orrery, E.

Holderness, L.

Sempill, Ly.

Craigavon, V.

Kilmany, L.

Strathclyde, L.

Crathorne, L.

Kinnoull, E.

Swansea, L.

Cullen of Ashbourne, L.

Kinross, L.

Swinfen, L.

Denham, L. [Teller.]

Long, V.

Trefgarne, L.

Drumalbyn, L.

Lyell, L.

Vaizey, L.

Dulverton, L.

Mackay of Clashfern, L.

Vaux of Harrowden, L.

Ebbisham, L.

Mansfield, E.

Vernon, L.

Falkland, V.

Margadale, L.

Vivian, L.

Ferrers, E.

Mottistone, L.

Westbury, L.

Gainford, L.

Resolved in the negative, and amendment disagreed to accordingly.

Clause 34 [Prosecution appeal by bill of advocation]:
9.43 p.m.
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendment No. 79:
Page 26, line 16, leave out from ("with") to ("shall") in line 17 and insert ("an indictment containing the charge or charges which were affected by the decision (the wording of which charge or charges").
The noble and learned Lord said: My Lords, Clause 34 places a new Section 280A into the 1975 Act. Subsection (2), to which this amendment is directed, states that where the decision being challenged by bill of advocation is reversed by the High Court, the prosecutor may, whether or not there has already been a trial diet with evidence led, reindict, the new indictment to be in the same terms as it was immediately before the decision. However, it is necessary to provide for the situation where there are a number of charges on the original indictment but a bill of advocation is taken in respect of only one, and trial proceeded and was concluded on the other charges. As the clause stands, it would be necessary to include on the indictment all the charges which appeared on the original indictment, and it is not intended that this should be so. Another example would be where a number of accused appeared on a number of charges on an indictment—not by any means an unusual situation—and a bill of advocation was taken against only one charge involving one accused, and trial proceeded and was concluded on all the other charges.
As the clause stands it would mean reindicting against all the accused merely to effect indictment of that one charge and one accused, and I think that noble Lords will agree that fairness would not in these circumstances be served. Our amendment seeks to restore the balance by enabling the second indictment to contain only the charge or charges on which the bill of advocation was taken and the decision reversed, and enabling, at the same time, any other matters on the indictment, not including the charge or charges reindicted, to be altered without difficulty, should that be necessary. I beg to move.
On Question, amendment agreed to.
Clause 35 [Appeals from decisions on competency and relevancy in summary proceedings]:
The Earl of SELKIRK The Earl of SELKIRK moved Amendment No. 80:
Page 26, line 21, leave out ("42(b)") and insert ("43(b)").
The noble Earl said: My Lords, I am moving an entirely trivial drafting amendment, but I am doing so because I do not think that this drafting error would have occurred had the clause not been constructed with unbelievable complexity. This is one clause dealing with one subject, but it is spread over three different places, and is almost impossible to read. May I explain what the clause consists of. The rubric in the Bill is:
"Appeals from decisions on competency and relevancy in summary proceedings".
These probably do not take place often, but they can be important, and they are sometimes difficult. However, the clause is amending a section of the Criminal Procedure (Scotland) Act 1975, relating to procedure at first diet. I do not know which one is to be selected in the new Bill. There is a reference in the clause to Section 334 of the 1975 Act, but that is not the end of the matter because it is amended in a schedule to the Bill we are now looking at.
I ask your Lordships to look at Schedule 7 paragraph 43(a) where you will see that a subsection is amended. Subsection (2) of the earlier Act is referred to in Schedule 7 to the Bill we are considering. In order to consider subsection (3) one has to go back to Clause 35, where there is a reference to what is called subsection (2A). Subsection 2(b) is subsection (4), subsection 2(C) is subsection (5) and subsection 2(D) is subsection (6). Then we have to go back to the Act of 1975, the consolidated Act, where there is a series of references: six is three, seven is four and eight is nine—
Lord LYELL: Is it not the other way round, my Lords?
The Earl of SELKIRK: Why should that be the other way round? This is an extremely complicated matter and the general public will find it very hard to

1297
understand. Why not substitute in respect of the 1975 Act a complete clause dealing with these various aspects, some of them amended in the schedule, some of them amended elsewhere? That would make it quite easy for anyone to read. It would be a sensible thing to do and would make the matter much more understandable.
I have no doubt that the Government will say: "We shall consolidate these Acts in due course". Well, no doubt that is true, but I doubt very much whether a consolidated Act will be available to the general public in less than three years. It may be even longer than that; it will depend on how long it will take to consolidate it. Would it be fair to have during that period a clause which is incomprehensible and which the public cannot understand? I really do not think that many people will be able to put this thing together and understand what is means. This is totally unnecessary complexity, and I ask the Government to consider very carefully whether they can reconstruct the clause so that it is reasonably sensible. I beg to move.
Lord MACKAY of CLASHFERN: My Lords, I am grateful to the noble Earl for bringing this matter forward. Of course I accept that there is an error here, and we are happy to correct it. So far as the structure of the clause is concerned, the situation is that consequential amendments to the deletion of the first diet are dealt with in the schedule and we have tried to deal with substantive amendments in the main body of the Bill. I shall certainly consider whether there is any way in which we can simplify this matter. My experience so far has been that attempts to simplify sometimes lead to further complexity, but I am certainly very glad to consider the matter.
The Earl of SELKIRK: My Lords, I am very grateful to the noble and learned Lord for agreeing to have a look at it, but I think he will find it difficult to make it more complex than it is already. I am therefore certain that, whatever he does with it, it will almost certainly be on the side of simplicity; but if he would look at it I think it would be sensible to put forward a clause which hangs together and makes some sense. I press this
1298
amendment because it is a drafting amendment.
On Question, amendment agreed to.
Clause 42 [Punishment for murder.]:
The DEPUTY SPEAKER (Lord Amherst of Hackney): My Lords, I must tell the House that if Amendments Nos. 81 or 82 are agreed to I cannot call Amendments Nos. 83, 84 or 85.
9.51 p.m.
Lord MISHCON Lord MISHCON moved Amendment No. 81:
Page 30, leave out lines 11 to 32.
The noble Lord said: My Lords, I wonder whether I may be permitted to speak to Amendment No. 81 with Amendment No. 85, and may I inform the House immediately that Amendment No. 82 will not be moved. It will then make what I have to say rather more intelligible. My Lords, we are dealing here with a very serious clause and a very serious amendment. It is a clause which deals with murder trials and, as against the present position of Scottish law (which is, as I understand it, that the judge at the trial may, after conviction, if he sees fit, recommend a minimum term that the prisoner will serve even though a life sentence is given), this clause makes it mandatory upon the judge, unless there are special circumstances in the judge's mind—and if there are he has to say what they are—to state what that minimum sentence shall be.
At the Committee stage the noble Earl, Lord Mansfield, said that this was part indeed of the Conservative Party manifesto. I am hoping very much that party allegiances, and the question of it having appeared in a party political manifesto before an election, will not obtrude upon your Lordships' minds in a matter as serious as this. Very effective speeches were made—much more effective than I shall ever be able to make to your Lordships—at the Committee stage, and in particular, if I may say so, there was a very notable contribution from the noble and learned Lord, Lord Fraser of Tullybelton,

1299
who I personally am so glad to see in his place in the hope that he will also make a contribution tonight.
In the first instance, one would imagine that one had enough faith in Scottish judges for it to be apparent that, where they thought it was right to do so, they would exercise the discretion they at present have. Secondly, one would imagine that, if it is thought desirable on the grounds of public policy that a habit of making such a recommendation should be pursued, the judges of Scotland would have enough sense of public duty to follow any wish that might be expressed to them in that regard. However, to make it mandatory upon the judges to do this is surely highly undesirable. I could quote the reasons that were given by the noble and learned Lord, Lord Fraser, on the last occasion, but it seems wrong that I should paraphrase reasons which I hope he will be advancing himself tonight again; and if I can only learn from an indication from him that he will in fact be advancing those reasons tonight, I think it would be impertinent of me—and I have received that indication—to paraphrase what he said. I therefore want to add only reasons that he did not advance.
I have already said that I think there ought to be enough faith in the judges of Scotland. Furthermore, there was a point, I remember, that was advanced by the noble Lord, Lord Wigoder, at the Committee stage and it was this—and I hope it does not meet with too cold a reception when it comes from me. I did in my own remarks talk in terms of the law of England, and the noble Lord, Lord Wigoder, I remember so well at the Committee stage, said that, unless there was a very good reason (if he will permit me to quote him), surely upon a matter so serious as the crime of murder the laws North and South of the Border, and the customs and the traditions of dealing with murder trials, should be roughly the same. In other words, should it be a different treatment by a Scottish judge, who has to say what the minimum sentence should be, because the murder has been committed by an Englishman in Scotland, whereas the same situation does not apply if a Scot should happen to commit a
1300
murder in England and be subject to English law and sentencing by an English judge?
My Lords, I feel, as I have said, that this is a matter of great seriousness. I think I put it as high as this, that it is an impertinence to cast upon judges a mandatory duty of this kind instead of allowing it to be a matter for their discretion in proper places and in proper circumstances. As I have said, there were other reasons which were advanced, but I am leaving those who advanced them to do it with, as I have said, far more ability than I would be able to do it; but I do commend this amendment to your Lordships. May I explain before I sit down the way in which this amendment is put so that there is no misunderstanding? It is, first, to leave out lines 11 to 32 which would mean, as I understand it, that the present law would apply in Scotland—which is that the judge would have the discretion to make a recommendation in regard to a minimum sentence and then one must clear up the position later by dealing with the case on appeal where no recommendation has been made by the court below.
The appeal procedure is dealt with in paragraph (4) before one reaches Clause 43 of the Bill. There, by virtue of the fact that there is a reference to subsection (1) (which subsection I am hoping to remove by this amendment), the alternative words are set out that the Appeal Court, the High Court, if the appeal against conviction is unsuccessful, will be able if it sees fit—and again there is a discretion; and in the Bill itself the Appeal Court is given the discretion although the first court is not—to recommend the minimum period which should elapse before the Secretary of State releases that person on licence under Section 61 of the Criminal Justice Act 1967. It only remains for me to say what I think most of your Lordships know, that, in any event, the presiding judge makes a report to the chairman of the parole board and therefore all the relevant matters are before the parole board and there will be no question of the parole board not being in receipt of all the information possible.
The only thing one is omitting from this is the (in my view doubtful) effect of casting, as I have said, this mandatory duty upon the judge and, for reasons which

1301
we will advance, creating in many cases misapprehension and misunderstanding in the public mind. I beg to move.
10 p.m.
Lord KEITH of KINKEL: My Lords, I support the principle of this amendment; but I think that as drafted it does not fully give effect to the intentions stated by the noble Lord, Lord Mishcon. The reason for that is that Clause 42 opens with the provision:
"For section 205 of the 1975 Act there shall be substituted",
the provisions which follow.
Section 205 of the 1975 Act is the provision which at the present time confers upon judges in the High Court of Justiciary the discretionary power to make a recommendation when sentencing an individual to life imprisonment as to the minimum period to be served. If Section 205 goes and nothing is put in its place, as the amendment proposes, then the power to make the recommendation will go and that will be the end of that.
The amendments which stand in my name later in the Marshalled List are intended to deal with that particular situation: in other words, the amendments which I shall propose if I have an opportunity are so drafted that the power to make the recommendations will be preserved. The amendment now proposed would not have that effect. However, in principle, may I say that I support the proposition that the existing power to make recommendations should remain, but that the mandatory duty of making a recommendation should not be placed upon the judges of the High Court of Justiciary.
The considerations against the Government's proposal were stated quite fully at the Committee stage by my noble and learned friend Lord Fraser of Tullybelton and myself. I do not propose to go into them in quite such detail as was then done. But basically and in summary the considerations are as follows: for the most part, the murders which have to be dealt with in the higher courts of Scotland are run-of-the-mill murders, the sort of murders that happen every day. But there are a very few which strike the public
1302
conscience as being exceptionally wicked and atrocious. I believe that the right course is that the power to make recommendations about minimum terms of imprisonment should be reserved for that class of particularly atrocious murders that have particularly jarred upon the public conscience.
In a sense, this exercise is in the nature of a public relations exercise. I am not alluding there to the fact that the noble Earl, Lord Mansfield, stated in Committee stage that these proposals appeared in the party manifesto prior to the last election. The purpose I think is first of all to exercise —as far as this can happen—some better and greater deterrent effect upon those minded to commit murder; but, more importantly, it is to increase the sense of public confidence in the judicial system in so far as that system has to deal with the crime of murder.
It is suggested that public confidence will be increased if in every case, unless there are special circumstances, the judge is required to make a recommendation as to the minimum term of incarceration. I believe very sincerely that if these proposals are passed the effect will be the very reverse. I consider—and I have thought about this quite deeply—that it would help to undermine public confidence in the judicial system so far as it has to deal with murder.
We must face realities. The Parole Board has been set up to perform what I believe to be an exceedingly valuable and useful function which it carries out with great devotion and, as far as can be seen, great success. It is part of the Parole Board's function to recommend when a prisoner serving a life sentence should be released. I think it should be trusted to get on with that; but at all events it is known to the judiciary that in the ordinary run of murder cases, such as I have mentioned, the Parole Board normally recommends release after some eight, nine or perhaps 10 years. All judges know that. If this proposal is passed, what are they going to do? They know the Parole Board normally recommend release around that period. I would have thought that any judge—and I have some experience myself—would say: "I don't want to interfere unduly with the Parole Board in the ordinary murder case: I recommend eight or perhaps nine years."

1303
What is going to happen if these proposals are passed? Is there going to be a series of recommendations of round about the nine-year mark? That is not going to promote public confidence, in my opinion, and that is the principal reason why these proposals are really a bad idea.
However, there is another aspect to be considered, which is I believe that this proposal would place a serious and unsatisfactory type of burden upon the judges who have to administer it. I have no interest of a personal character in that matter because although for some five years I was a Lord Commissioner of Justiciary, I do not hold that office any longer. If I did, I should be very concerned about the burden that I had to bear. It is stated that reasons must be given. In the ordinary case, the judge has before him, following a verdict of "guilty", a report on the social background of the accused, always a psychiatrist's report and, of course, always the record of previous convictions. Is the judge carefully to examine and analyse these papers? Is he to try to reach a sort of assessment as to the kind of danger the man represents to the community and weigh that against the seriousness of the crime, his social background and all the rest of it and give a reasoned opinion about it? If so, is he to deliver this ad longum the painful circumstances in which murderers are sentenced? I think that would be very undesirable. If it is not to be done that way, then it would be a quick, off-the-cuff thing and perhaps not very valuable.
However, there is this question of appeal, and if there is to be an appeal and the reasons are given, the tendency of any judge would be to go into the matter in very considerable detail. I do not feel that this would really be a very satisfactory state of affairs in the ordinary atmosphere of a criminal trial in the High Court.
It is also proposed that in special circumstances the judge may refrain from making a recommendation, and say why. I find it very difficult to envisage the kind of circumstances which are here in contemplation. As I say, you get the ordinary murder case, and the especially atrocious murder case. I cannot quite see that if you are not going to treat the ordinary
1304
murder case as the kind of case where it is not appropriate to make a recommendation, you could never find a category where it was not appropriate. You may find that judges tend to put it away, saying, "There is nothing very special about this murder and therefore I do not propose to make a recommendation". But I foresee that this will cause very great difficulties for judges, and therefore it will not have a very satisfactory effect on the public view of the administration of justice.
Two reasons were advanced by the noble Earl at the Committee stage to those supporting the amendment: first, it was not in the party manifesto. I propose to say no more about that. Secondly, it was said that the proposal was recommended in the Emslie Committee Report of 1972. The Emslie Committee reported a long time ago. There has been considerable experience since of the working of the existing discretionary power to make a recommendation. It would be very interesting and of value if the noble Earl would say whether he consulted Lord Emslie, now the Lord Justice-General, as to whether his views about the matter remain as they were in 1972, or as to whether the general views of the Scottish judiciary have been obtained in an up-to-date context.
The fact is that this is a very serious and important issue which deserves the most serious consideration and full debate, which is not to be had at this time of night. These proposals are not to be passed on the basis that they were in the manifesto. They must be passed on their merits or not at all. Life imprisonment is a very serious penalty. It must be recalled that it is a penalty imposed by law after mature deliberation, here and in another place, as a penalty for murder. It means that the individual who is sentenced to that penalty is never free for the rest of his life from the prospect that, although he may be released for a time, he can be recalled if he misbehaves, because he is only out on licence. Properly understood, it is a very serious and significant penalty and I do not believe that these attempts to brush up its image are either necessary or desirable.
So, in the result, although I do not find myself able to support the amendment proposed by the noble Lord as drafted, I support the principle of it and would

1305
prefer in due course that my own amendment and not that of the noble Lord should be passed.
Lord MISHCON: My Lords, with the leave of the House, it may be convenient for me to say that I am most indebted to the noble and learned Lord, Lord Keith, for pointing out that defect in the amendment. It certainly was not the intention to remove the discretionary power and I am most grateful to him for bringing the matter to my attention. I should have thought that it would be for the convenience of the House, and would save a lot of time, if I therefore at this stage immediately withdrew my amendment and asked for the noble and learned Lord's following two amendments to be called. The debate can then continue without any interruption. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 82 not moved.]
10.13 p.m.
Lord KEITH of KINK EL Lord KEITH of KINK EL moved Amendment No. 83:
Page 30, line 12, leave out from ("judge") to ("make") in line 14 and insert ("may").
The noble and learned Lord said: My Lords, if I may, I will take with this Amendment No. 84, which is purely consequential. In effect, I have already spoken to the substance of this amendment. However, it might be helpful if I explained more precisely its effect. First, so far as Section 205A(1) is concerned, the effect of the amendment is to substitute for the mandatory provision there contained, a discretionary power to make a recommendation such as exists at present in Section 205 of the 1975 Act, which, it may be worth recalling, derives from Section 1 of the 1965 Act. So that power has been running for 15 years without, so far as I know, any serious complaints about its manner of exercise.
As regards subsection (2), my amendment retains the provision that reasons for the recommendation should be stated, but it deletes the second part of the subsection about "special circumstances", because that would no longer be apt if it were only a power and not a mandatory duty. Subsection (3) is unaltered and so is subsection (4). The result is that there will now be a right of appeal against the
1306
recommendation made under the power, which is something new and which, I think, is quite unexceptional. I should be quite prepared to accept that part of the proposal and likewise subsection (4) which deals with the power of the High Court—that is the court of criminal appeal, in effect—to make a recommendation when no recommendation has been made by the judge of first instance. That also would remain and is, I think, quite harmless. I should have no objection to it. The reasons for pressing this amendment upon your Lordships I have already stated as fully and as carefully as I can, and I beg to move.
10. 15 p.m.
Lord CAMPBELL of CROY: My Lords, I know that the noble and learned Lord, Lord Fraser of Tullybelton, has still to speak but as I propose to say a few words perhaps I ought, from this part of the House, to do so next because the noble and learned Lord, Lord Keith of Kinkel, explained the purpose of his amendment when speaking to the earlier one. It is a brave layman who intervenes where judges and learned advocates are speaking on a subject of this kind. I do so, as some noble Lords will know, because I was Secretary of State for Scotland in 1970 and at that time set up the Emslie Committee under the noble and learned Lord, Lord Emslie, who then reported to me in 1972.
I had no opportunity to take any legislative action. As a result of that, of course, consultations were started. Quite apart from anything else, as the noble Lord, Lord Ross of Marnock, will remember, I got landed with a complete year of legislation to change local government in Scotland, a task which I had no wish to do but which inevitably I had to carry out at that time because of the recommendations of the Royal Commission headed by the noble and learned Lord, Lord Wheatley—yet another of our Scottish Law Lords. I therefore feel some responsibility for what now appears in the Bill. I hope that the member of the Government who replies to this debate will confirm, in case I am not correct, that this clause arises directly from the recommendations of the Emslie Cornmittee and that there is not very much change from what was then recommended.

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The noble and learned Lord, Lord Keith of Kinkel, has said that a certain amount of water has flowed under the bridge since 1972. I do not think he was saying that in 1972 he would necessarily have objected to what was then proposed. If I understood the burden of his argument, he was saying that judicial opinion in Scotland had changed somewhat since 1972. I shall be very interested to hear what my noble friend Lord Mansfield, who it seems is going to reply to this debate, has to say on the effect of the passage of those eight years.
I would remind your Lordships that the noble and learned Lord, Lord Emslie, who was recently introduced into your Lordships' House, has been the head judge in Scotland for at least seven years. He has been the equivalent of the Lord Chief Justice in England. Certainly what he, with his committee, recommended in 1972, was something which I think everyone in Scotland would take very seriously.
If I may go back to the situation which caused me to establish that committee in 1970, may I say very briefly that there was great disquiet in Scotland among the general public—and perhaps it may be a good thing for a member of the public like myself who is not in the legal profession to speak about this—and general concern that murders and crimes of violence were increasing. There were feelings, which may have been right or wrong, first, that it was possible for people with homicidal tendencies to be let out of prison after seven or eight years inside, and fears that they could be dangerous and, secondly, that the penalty itself of perhaps only seven years inside was not enough for murder: that some people might deliberately decide upon murder, in certain circumstances, knowing that there was no capital punishment and that they would have to spend, on good behaviour, only about seven years inside. Those feelings may have been completely wrong but people certainly did need some reassurance. Therefore a committee, which was a very distinguished and able one, under the chairmanship of the noble and learned Lord, Lord Emslie, was set up. That was the background to his recommendations.
My other reason for speaking—and
1308
this is something on which I hope I shall find that a chord is struck with the noble Lord, Lord Ross of Marnock, because he and I have both occupied the positions of being the Secretary of State who had to consider personally the cases—is that everything in this clause is leading up to those words, "The Secretary of State releasing a person on licence". Of course, those decisions are taken with all the information and advice from the psychiatrist and the Parole Board—and perhaps I may just mention to the noble Lord, Lord Mishcon, that it is the Scottish Parole Board.
Of course, there is more than one; the Parole Board does not operate North of the Border. The Scottish Parole Board makes its recommendations and the Secretary of State has to take them into account, but it is a personal decision. Junior Ministers do not take any part in this. It is a personal decision like the one that the Home Secretary in England has to take, as to whether somebody should be let out. I am glad to think that no one whom I let out committed a murder afterwards, but I am afraid there were a number of cases where people did, and of course that is the kind of decision that is difficult because one has to balance the safety of the public against whether somebody should be kept in prison like a vegetable for a very long period. I agree with all those speakers so far who have said that this is a serious subject which must be decided on its merits.
That is the background. I should like to remind your Lordships that the Secretary of State, in a lonely position, has to take this important decision about an individual's future and balance it against the safety of the public and the feelings of the public and the reactions that there are likely to be if, for example, there were a couple of murders by released prisoners on parole or people who had served their sentences when the public thought they had served much too short a sentence. Those are the difficult decisions to which all this is leading.
I should like to say one more thing arising also from something said by the noble Lord, Lord Mishcon. He said that when these decisions are being taken—and I think he was referring to the decisions being taken by the Secretary of State—the views of the presiding judge are all

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made available to the Scottish Parole Board and are taken into account. I mentioned this on Second Reading and I make no excuse for mentioning it again. The difficulty is that seven, eight, nine or 10 years later the presiding judge is often no longer alive, and if he is alive he is sometimes no longer in a condition where he can remember; he may be very elderly and not in a state to be able to cast his mind back to the particular case. Therefore, because of having met that kind of situation myself on several occasions, I felt that the recommendations which a judge could make just after the case had finished were very important. The degree to which these should be weighed against all the other considerations is a matter of great delicacy which I agree should be discussed, but I do not think one can dismiss this point by saying, as I think the noble Lord, Lord Mishcon, did, that the views and comments of the presiding judge would all be available to the Parole Board. Certainly in my time the difficulty was that the presiding judge was either not there at all or was not able to provide the sort of information that the Parole Board wanted. If, besides the records of the case, he had been able to make some sort of recommendation as suggested in this clause, I think it would have been helpful.
I agree that this is a difficult question. Having myself been responsible for setting up the Emslie Committee, of course I hoped when it reported in 1972 that action would be taken upon it. Legislation has been rather slow, as it often is. I have not heard the full debate, but I wish to put my views as somebody who has been engaged in this process, not as a lawyer, but who has had to take the very difficult decisions at the end of the day.
10.25 p.m.
Lord MISHCON: My Lords, before the noble Lord sits down, and since he mentioned a view that I expressed, I wonder whether he will forgive me if I clarify, possibly, what I intended to say. There is obviously no objection, and can be none, to a practice being initiated whereby the judge at the trial makes a note, at the time, of his views, which can then go to the Parole Board. I realise of course that it is the Scottish Parole Board, but, if I may say so with respect, I still think it is called the Parole
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Board and not the Scottish Parole Board, and therefore I gave the correct name to it. The point at issue here is not whether that is a correct practice, which can easily be initiated by arrangement with the judges. What we are discussing here, as I understood it, is whether it should be mandatory for a recommendation of this kind to be announced.
Lord CAMPBELL of CROY: My Lords, I am grateful to the noble Lord. I am very glad to have given him this opportunity to intervene and clarify what he was saying. I agree that the question of discretion is important, and I hope that my noble friend when he replies will be able to say more about the words in the clause,
"unless he considers that there are special circumstances making it inappropriate for him to do so".
Clearly there is a certain amount of discretion there which means that not every judge in every case will have to make a recommendation. No doubt we shall hear more on that point. But I am glad to have given the noble Lord the opportunity to explain what he was saying, because I also wanted to bring out the point that there is this interval of seven, eight or more years between the trial and the time when the Secretary of State has to consider the case, with the recommendations before him of people who only know about the prisoner in his most recent months.
Lord FRASER of TULLYBELTON: My Lords, I wish to support the amendment proposed by my noble and learned friend Lord Keith. May I just remind your Lordships in one word that the present law of Scotland is that when a person is sentenced to life imprisonment for murder the judge may make a recommendation as to the minimum period of his detention. The judge is not obliged to do that. Exactly the same applies in England; the judge may make a recommendation, but is not obliged to. My information is that both in Scotland and in England very few recommendations have actually been made by judges, presumably because they do not think it appropriate to do so. I certainly do not recall having made a recommendation myself as a judge in those circumstances. I have made inquiries in Scotland and I am informed

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that the present system is working very well. The possible friction which it was feared might develop between the judiciary and the Executive on this slightly delicate matter has not arisen, and the present system works smoothly. I have no reason to think that it works any less smoothly in England, although I have not much information about that.
In these circumstances, I ask, why should the system be changed? I have discussed this with several Scottish judges, not all of them, because it was not practicable. I have not found one who wishes to change the system. Among my noble and learned friends in England with whom I have discussed the matter I have found no enthusiasm for changing the system in England, so far as I know. I must say I very much regret that this debate is taking place at half past ten at night. There are several of my noble and learned friends who are English lawyers who would have wished to be present but owing to the lateness of the hour they are not able to be here. I am not authorised to speak for them, but I know they would have wished to contribute to this debate. I think it is extremely unlikely that they would have wished to change the law in England, which seems to be working well, as it is in Scotland.
In these rather unsatisfactory circumstances, I should like to say as strongly as I can that I think the amendment should certainly be carried and the law should not be changed. I wonder whether the Government have inquired the views of the Scottish judges. Perhaps the noble Earl will tell us. I wonder whether they have asked Lord Emslie his personal view at the present date; perhaps the noble Earl will tell us. As I understood it from what was said at the Committee stage of this Bill, the reasons put forward for change were, first, the recommendation of the Emslie Committee in 1972. I do not want to dwell too much on that. That was eight years ago in the rather early days of the life sentence. Since then a lot of water has flowed under the bridges, and one would like to know whether the Committee or Lord Emslie himself still adhere to their views.
I said in the last debate, and I might repeat it briefly now, that the English Criminal Law Reform Committee have
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a report, I think recently presented to the Home Secretary. I suppose it will be published shortly. It will be interesting to know what they have to say on this topic. It is one of the topics with which I understood they would be dealing. It will be interesting to know what reasons they have. They have had a further eight years' experience since the Emslie Committee reported. I have no reason to think that there is any difference between Scotland and England in this matter. The social conditions are much the same as far as this problem is concerned. I should have thought that the more up-to-date reasons of the English Committee would have been highly relevant to this matter.
The second reason is the party manifesto. I pass over that with a blush that it should be put forward as a justification for this matter. The third reason which has been resurrected tonight by the noble Lord, Lord Campbell of Croy, is that it was difficult for the Secretary of State to know what the trial judge thought when the matter came up some years later, when the time for release arose. I have the very greatest sympathy with any Secretary of State in the position to which the noble Lord referred, who has personally to make a decision of this sort which must often be very distressing and difficult.
However, on this matter events have evidently changed since the noble Lord, Lord Campbell of Croy, was Secretary of State, because the present position is that the trial judge now always, as a matter of routine, makes a report—which is not for publication—immediately after the trial. That report is preserved with the papers, so that when the Secretary of State comes to consider the question of release some years later he will know the view of the judge as at the time of the trial. That particular difficulty does not really arise. The point is that the judge is speaking at the time of the trial, knowing only the man's past history and the circumstances of the murder, but the more up-to-date information before the Parole Board is, I would think, and I understand the modern system of law is, more reliable than the judge's forecast.
Lord CAMPBELL of CROY: My Lords, I am most grateful to the noble and learned Lord for giving way. It was, in fact, because of the difficulties that I

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experienced at that time and complained about that the system was introduced. But, of course, it helped Secretaries of State a long time after me.
Lord FRASER of TULLYBELTON: My Lords, that is very likely reasonable. I did not actually know that, but I fully accept it. I am simply saying that that particular difficulty does not now arise, so there is no reason to change the law to deal with that situation.
My view is that judges ought not to be required to do something which they evidently do not want to do, either in Scotland or in England. Of course, they can easily make nonsense of it if they so wish. The judge has only to say that the minimum period is one day; he would be complying with the law, and much good that would be to anybody. I would not expect judges to adopt that extreme course, but I would expect a system of fairly routine recommendations to develop.
I should think there will be what I might, loosely—speaking, call the ordinary murder, and they would make some sort of standard recommendation for that. There will also be the family murder, using the family in the loose sense of common law wives and so forth, when very often there is a good deal of sympathy for the man who commits the actual crime. It may very often be thought to have happened in rather extenuating circumstances and a short, minimum period might very well be recommended in those cases. I have recently discussed this with one of my noble and learned friends who is familiar with the English courts, and he has told me that he can remember cases in his experience where in a family murder of that sort, if he had had to make a recommendation for a minimum period, it would have been quite short—perhaps two or three years, or of that order.
Thirdly, there is the shocking and atrocious murder where the judge will recommend a rather longer period. However, I should have thought that the recommendations will tend to fall into those three classes. If that is so, I do not think that the recommendation will strike terror into the hearts of wrong-doers, which I suppose is the idea behind this. I think that it will become routine and will have very little effect. Indeed, I think
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that it will be a great disappointment to those, who may exist, who think that judges will recommend long terms of imprisonment habitually, and stand as a terrible warning to people. They will be disagreeably surprised to find that in quite a few cases the judges will recommend quite a short, minimum period, knowing that the actual period may be a good deal longer. But the minimum will be comparatively short. I do not think that those who are looking for a terrifying series of pronouncements from the Bench will get anything of the sort. I think they will tend to get the opposite.
I am not going to go over all the ground covered last time, but I did mention before that there is the possibility of a misleading comparison of the minimum period recommended on a sentence of life imprisonment for murder with the actual sentence for culpable homicide or manslaughter, which is of course liable to be cut down to one-third in some cases and nearly always to two-thirds. That is a comparison which will be misleading, but the public will not understand why it is misleading. In these circumstances it seems to me that judges ought not to be compelled and driven to do something they do not want to do.
May I just finally say this? The judge is going to be compelled to make a recommendation and to say his reasons for so recommending. I wonder whether people have considered this. Do you know what happens at the end of a murder trial? The court is filled and rather tense. The family and relations of the accused are there, and when the jury comes back and announces "Guilty" there is usually a sort of shriek from the gallery and the mother faints and the wife screams and there is a bit of a scene. Is it really to be recommended that the judge shall stand up and say, "Well, on the one hand I have considered this, and on the other hand I have considered that, and on the whole I think three and a half years is the minimum". It is the sort of scene which really revolts one and it is quite absurd, and I think it will be most deplorable if judges are compelled to make recommendations when they do not want to. They have shown that they do not want the power. They have the power to do it when they think it is necessary, and I think the law should be left as it is when it is working not too badly.
Lord FERRIER: My Lords, this is a matter to which I have given a good deal of thought over the years, so far as a layman can, for reasons with which I shall not weary your Lordships, and having heard the speeches from the noble and learned Lords on the Cross-Benches, I shall certainly vote with the noble and learned Lord, Lord Keith, if he divides the House.
Lord MORRIS: My Lords, with great trepidation I rise to support the noble and learned Lord, Lord Keith of Kinkel. I have listened with great care to both noble and learned Lords' arguments at the Committee stage and at this Report stage. I ask only that your Lordships consider carefully the fact that, when not one but two noble and learned Lords step down from Olympus at this ungodly hour, very great weight should be given to this fact on all sides of the House. I implore the noble and learned Lord, Lord Keith of Kinkel, should the Front Bench not give way on this point, to press this amendment, and I also beseech my noble friends to go through the Lobby with the noble and learned Lord.
Lord WIGODER: My Lords, at this late hour in the evening I shall make only two short points. First, the noble Lord, Lord Campbell of Croy, made the observation that there have been cases where prisoners serving an indeterminate life sentence have been released on parole and have committed further offences. That of course is entirely accurate as an observation, but it is not an argument either for or against the amendment which we are now considering. As the noble Lord will appreciate, in order for it to become an argument one way or the other one would have to know how many years that particular prisoner had served and what recommendation would have been made in his case had a recommendation been mandatory. It might have been a longer recommendation, in which case this would be a point against the amendment; it might have been a shorter recommendation, in which case it would carry no weight at all as an argument against this amendment.
The only other point I want to make follows upon what has been said by the noble Lord opposite, who pointed out that not one but two Law Lords have
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spoken in favour of this amendment. It is not any two Law Lords, it is "the" two Law Lords, because I think I am right in saying that the position is that there are nine Law Lords, who are the most experienced and profound lawyers in the whole of Great Britain, and, by long tradition—it may be with statutory authority, though that I am not sure of—there have always been two Scottish Law Lords. Both of those Scottish Law Lords have this evening come and indicated from their experience and their knowledge of the views of their colleagues in Scotland, their support for this amendment. In those circumstances—this is not in any way a party political matter—I hope that the noble Earl will say when he replies that it would be proper and appropriate for the Government to accept the amendment.
10.40 p.m.
Lord ROSS of MA RNOCK: My Lords, the House should feel very grateful indeed to the two noble and learned Lords on the Cross-Benches who have addressed themselves to this subject tonight. It is a tribute to the House and a tribute to the debate that at this late hour we should have the attendance we have; I saw the place very much emptier much earlier. What we are witnessing now is a tribute to the importance of the subject and to the quality of the debate itself.
This is an important issue. It comes down to the question whether or not we want the sentence that is mandatory on a person having been found guilty of murder to carry the greatest weight. At present that sentence is life imprisonment. Power has been given—it was given not all that long ago—to judges, if they feel it right to do so, without reasons, to impose a mandatory minimum sentence. To depart from that and go to the point where the judges shall make a sentence, means that in every murder case in which a person is found guilty, irrespective of the circumstances and irrespective of public opinion, the judge must state a minimum sentence.
With due respect to the noble Lord, Lord Campbell of Croy, I was Secretary of State for eight years, so I have double the experience he has in this sphere. I also had the experience of seeing the public being whipped up with statements like, "It does not matter if it is a life sentence;

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a person can get out after eight years "—the kind of unthinking, emotional reaction in a particular case—when that is not true.
A life sentence means a life sentence. The Secretary of State, after all the advice he gets from the local committees, from the Parole Board, from the trial judge if available—and if the trial judge is not available, a recommendation comes from the Lord Justice-General, and that does not go to the Parole Board, but goes direct to the Secretary of State—at the end of the day has to make that decision. I have known murder cases where the Secretary of State would be pilloried if he did not make an earlier release on licence possible; indeed, it was a kindness to the person being sentenced not to reduce the charge, because they might have been, for culpable homicide, subject to a very much longer sentence.
The point is that life imprisonment, with the ability of the Secretary of State to release on licence, means that it could be after a day, a month, a year or after two, three or four years. But if you put that responsibility on to a judge and he recommends that a person shall be released after a minimum period of two years, it makes a mockery of life imprisonment; and that is the reason, to my mind, why judges in Scotland have not resorted to using the discretionary power they have—because they realise that.
One of the troubles with the Emslie Committe was that at the same time as they reported we had the report of the Edmund-Davies Committee for England and Wales, and they reported in the very opposite direction. I think it is true to say that the attitude of English judges and by practice that of Scottish judges is that they reserved a very long sentence, say 25 years' minimum, for a crime that has appalled the public and for which the public expect that kind of minimum sentence. But that is not the general average. When you depart from these deterring sentences, you make a mockery of the term "life imprisonment". It becomes a meaningless formula.
Probably with the best will in the world the Emslie Committee came to their decision. I had very considerable discussions on this matter and I came to the conclusion that the Edmund-Davies Committee's proposal was the right one. At present
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we have the Law Society of Scotland's report before us. What they say is—there is no doubt at all about it:
"The general view of the Council is that the present law contained in Section 205 of the 1975 Act, which allows a judge to recommend the minimum sentence where life imprisonment is approved, is satisfactory, and the new provisions are opposed as being unnecessary".
Not only do I think that they are unnecessary; having listened to the noble and learned Lord, Lord Keith of Kinkel, and to others who have intervened in the debate, I think that they are dangerous. I hope that the Government will change their mind about this matter.
10.47 p.m.
The Earl of MANSFIELD: My Lords, as has already been said, the matters which have been the subject of this debate have all been fairly comprehensively covered during the Committee stage. I had not wished, nor indeed intended, again to go over the ground which has already been covered very thoroughly. However, in view of the very considerable interest which this matter has aroused in your Lordships' House at what is a late hour, and in view of the very considerable attendance there now is in the Chamber, and bearing in mind the very persuasive arguments—not least those which the two noble and learned Lords have presented—I think it is incumbent on me both to try to justify the decision which the Government made in including this provision in the Bill, and to seek to persuade the House (as I hope I shall) that this is a desirable reform.
At the Committee stage the noble and learned Lord, Lord Keith of Kinkel, set the scene when he said:
"The point which is raised by the amendment is not at all a lawyer's point. As I see it, it is very much concerned with the question of what the attitude of the general public to the administration of justice in the higher criminal courts of Scotland is going to be".—[Official Report, 5/2/80; col. 1250.]
This is a question of administrative law.
If I do criticise the two noble and learned Lords, it is for the fact that when it came to the political content of what I said on the last occasion they did me less than justice, because they put it as the second of the Government's reasons for including this provision in this Bill. In a speech of about, I think, three columns of

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Hansard it occupied nine lines. My very last words were:
"I would not seek to justify anything simply for that reason, but I just put that in for what it is worth". [col. 1255.]
So, my Lords, it is not—
Lord ROSS of MARNOCK: It was not worth very much, my Lords, because that manifesto was turned down by the people of Scotland.
The EARL of MANSFIELD: My Lords, there is no one who can make a bad point better than the noble Lord can, and long may he be with us to do it.
However, I should like to get on to the more serious part of this serious amendment. As has been said, this provision stems directly from the Emslie Report, and I do not think that one can just dismiss the conclusions which were reached. I know that it was some years ago. I know that much water has since gone under the bridge, but I do not believe that public anxiety over the way in which murder trials are conducted and, above all, over the way in which murderers are treated has in any way been allayed in the years which have passed. This measure directly stems from the very serious public disquiet which there is in Scotland.
In paragraph 93 of the Emslie Report, it says—and I think it proper to repeat what I said before—that the effect (of this measure, in effect):
…would be that at the end of almost all trials which result in a conviction for murder the Court, in addition to imposing the mandatory life sentence, would recommend, in the light of its assessment of the offence and the offender, a minimum period of years for which the offender should be initially detained. The making of such a recommendation would enable a distinction to be made in public, by the Court, between one murderer and another. The convicted person and the public would thereby be made aware of the gravity with which the Court viewed the case and any potential offender would be made aware, in a more direct way than is possible with the present sentence, of the likely consequences of a similar crime. At the end of a murder trial which attracted considerable publicity the pronouncement of a sentence of life imprisonment coupled with a recommended minimum period would usefully sharpen the deterrent value of the sentence. The introduction of such a provision would also go some way to strengthen public confidence in the penalty for murder by removing the present anomaly whereby the judges, who are entrusted with the task of saying what custodial element is necessary for, in particular, the purpose of deterrence and prevention in any other Common Law crime, play virtually no part at all in determining the period
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which convicted murderers spend in prison. The present provision for obtaining the trial judge's view on these matters is of little value and contributes nothing to the general deterrent influence of the penalty itself".
I know that the noble and learned Lord, Lord Fraser, said that there are scenes which can be not only unpleasant but harrowing at the end of a trial. Certainly, the noble Lord, Lord Wigoder, and I have both been present in English courts when they are so. In such cases, for instance, as an extremely serious case of robbery, where the trial judge does have to set a sentence, he does have to tell the accused and the now-convicted persons what he thinks of their behaviour; he does have to tell them the sentence he is going to impose and the reasons why he is imposing it in short; and there are expressions of grief on the part of relations and friends of the convicted men. But is that so unpleasant in one case—that is, of murder—that it should, as it were, vitiate any other considerations? I submit not.
I was asked in effect by the noble and learned Lord, Lord Keith, whether I, personally, had had conversations with the Lord Justice-General. The answer is, No. But I know that my noble and learned friend the Lord Advocate is in constant contact and he has had consultations with him and with others. May I take next the question of existing discretionary power?
Lord WIGODER: My Lords, will the noble Earl indicate whether he can help the House as to what are the present views of the noble and learned Lord, Lord Emslie?
The Earl of MANSFIELD: My Lords, I am not going to do so. It is hearsay evidence and I do not think it would be right of me to regale the House with whatever the Lord Justice-General may or may not have said in conversations—and I do not know whether they were private and I do not know the circumstances in which they took place—with my noble and learned friend. I do not think the House would expect me to deal with that sort of conversation.
Lord WIGODER: My Lords, of course I was not asking the noble Earl to deal with that on an unofficial basis. Have the Government not taken any steps to find out officially what the views now are of the noble and learned Lord, Lord Emslie?
The Earl of MANSFIELD: My Lords, the answer to that is, Yes.
Lord MISHCON: My Lords, I am pleased to hear that the answer is, Yes, because without necessarily convincing the House one way or another, I think it would be helpful (if the noble and learned Lord, Lord Emslie, has been consulted officially) if one knew whether or not he was still of the opinion that he was some years ago at the time of the Emslie Report. That does not mean any hearsay evidence or talking in terms of private conversations, but, if official consultation has taken place, may the House know what the results of the official consultations were?
The Earl of MANSFIELD: My Lords, I have given my answer to that and I am afraid that I cannot go further than what I have already said.
Lord MISHCON: My Lords, I ask permission to speak once more and not again. I will not interrupt the noble Earl on this matter again. I am sure the noble Earl will realise the seriousness of his statement in the sense that if Lord Emslie—and I am able now to talk only in terms of hypothesis—had changed his mind and the House was not frankly informed, the House would be misled if the Emslie Report is being quoted.
The Earl of MANSFIELD: My Lords, I am not sufficiently informed to be able to make a creditable and comprehensive reply on behalf of the Government. If I attempted to do so, it would be not right of me. The noble Lord may shake his head and he may make of it what he likes. But I am not in a position to give an account of whatever conversations have taken place on this matter.
Lord MISHCON: Very surprising!
The Earl of MANSFIELD: I can only go on, my Lords. What I had come to, in effect, was an attempt to justify the making mandatory, except in exceptional circumstances, of what has always been, since the death sentence was abolished, a discretionary power. Acting, as I have said the Government have, on the report of this committee, they now seek to make the power mandatory except in exceptional circumstances, and I now come to the point which was put to me as to when exceptional circumstances come about.
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It is right to say that the Emslie Report expressly declines to go into such possible reasons, and one can quite see why, because one would imagine—indeed, one would more than imagine: one would conclude—that that would be up to the good sense of the judges themselves. I could give two instances, perhaps, and the first is one which illustrates what the noble and learned Lord, Lord Fraser, said either tonight or in Committee (or both; I cannot quite remember), and that is the case of what I might call the less heinous murderer, where, if left to himself, a judge faced with this duty would say, in effect, "This deserves a minimal custodial sentence". That, I suggest, would be the sort of occasion on which it would be quite proper for a judge to give the reasons and say, "In these circumstances, I do not propose to lay down a minimum".
The second instance in which I suggest it would be perfectly possible, and indeed proper, for the judge (as it were) not to carry out this duty would be if, for instance, he was of the opinion that the character of the convicted murderer was such that he might be exceptionally (shall I say?) receptive to reformation; that he was the sort of person who the prison system, or any help that might be given within it, would reform particularly quickly; in which circumstances a recommendation would not only he unreal but would perhaps be positively not in the public interest. I think I have now dealt with that particular point.
The Government take the view—and I cannot over-emphasise this—that the pronouncement of these recommendations will serve to enhance the preventive and deterrent effects of the life sentence. As I have said, there is widespread concern at the moment, and this is not only in Scotland, but it exists particularly in that part of the United Kingdom. I do not agree that in what has been called "run-of-the-mill" murder cases a pronouncement of the eight, nine or 10 years will undermine public confidence in the penalty for murder. The average time of imprisonment before release on licence is, I believe, currently about 10 years. This is an immensely long time for an individual to be deprived of his liberty. I take the point that some members of the general public may not appreciate this; but I do not think that it is beyond the ability of

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those concerned to increase the general level of awareness of the life sentence.
I concede of course that the trial judge when pronouncing sentence is in no position to gauge what rehabilative effect a period of imprisonment may have, except in situations which I have illustrated. That is why he is required under this clause to make only a recommendation as to the minimum term which should be served before the offender is released on licence. The release date will, as now, be determined by the Secretary of State in the light of the advice of the Parole Board. To that extent, the position does not change at all from what it is now. They—that is, the Secretary of State and the Parole Board—will not necessarily be bound by the judge's minimum recommendations, and in cases where the offender makes good progress towards rehabilitation in prison he may, if appropriate, be released on licence at an earlier date.
For all these reasons therefore I invite your Lordships to consider that this is a useful measure which could be written into our statute law. I am aware that many remarks have been addressed to me as to what the view of the noble Lord, Lord Emslie, may be now in contradistinction as to what his view may have been when he headed this inquiry.
I think I should leave the matter like this: I do not think that it is entirely profitable to consider the present views—whatever they may be—of an individual as compared to the views of the committee which he chaired. The view which the Government wishes to see now put into this Bill is not the view of an individual; it is the view of a committee which sat and which reported, as I have indicated, in no uncertain terms as to what it would like to see put into the law of Scotland. It is on that basis that I invite the House, and especially my noble friends who may well have been swayed by what I respectfully say is the undoubted advocacy of the noble and learned Lord, not to go into the Lobby in what I would suggest is the wrong direction.
11.3 p.m.
Lord KEITH of KINKEL: My Lords, as I said—and the noble Earl has rightly drawn attention to it—at the Committee
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stage, this is not a lawyer's point, it is very much a point of individual judgment; but to a large extent it is a point of very great concern to the judiciary. It is of some significance that no modern view has been obtained as to the opinion held generally among the judiciary in Scotland. It might at least have been, I would respectfully think, of some assistance to your Lordships. If I may deal with one or two points: first of all, I think that it must be of some significance that, with the possible exception of the noble Lord, Lord Campbell of Croy, no one has spoken in favour of these proposals and against the amendment, apart from the noble Earl. If this is truly to be considered an argument, I do not think there can be any doubt as to which side has prevailed, and no doubt your Lordships will act accordingly.
Some point was made about giving the reasons and the painfulness of giving elaborate reasons in the circumstances normally prevailing at the conclusion of a criminal trial. This matter should be kept in mind: there is no other provision which I am aware of in any statute dealing with the criminal law which requires reasons to be given for any sentence at all. This is something new and unique. It obviously would require consideration by the judges as to the extent of the detail they must go into as to the reasons in this exceptional situation. That is a new, novel and strange situation which I would think is undesirable. Although one might accept it if it were applied to the exceptional case, such as the atrocious murder to which I referred, I would think it not acceptable if it had to be done in every single murder case, unless there were some special reason, and it is very hard to see what the effect of it would be in the special case.
The problem which the noble Lord, Lord Campbell of Croy, encountered during his period as Secretary of State in respect of the difficulty he found in getting the views of a trial judge has now, I think, largely due to altered practice, been done away with. For at least the last eight years, to my certain knowledge, the judge at the conclusion of every murder trial has prepared a contemporaneous record, which is kept with the rest of the papers and is available to the Parole Board and also to the Secretary of State. That is one of the points made in the Emslie Report and is one change which has been made since that report was prepared.

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At the end of the day, I would respectfully suggest that the most creditable course in all the circumstances would be for the Government to withdraw these proposals; but, in the event that they were not prepared to do so, then with regret I should find it necessary, having regard to the importance which I personally attach to this matter, to require a Division.

CONTENTS

Abinger, L.

Glasgow, E.

Segal, L.

Ampthill, L.

Keith of Kinkel, L. [Teller.]

Selkirk, E.

Ardwick, L.

Kinnaird, L.

Sempill, Ly.

Balerno, L.

Kinross, L.

Simon, V.

Blease, L.

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

Southwell, Bp.

Brockway, L.

Stewart of Alvechurch, B.

Brooks of Tremorfa, L.

Milner of Leeds, L.

Stewart of Fulham, L.

Craigavon, V.

Mishcon, L.

Stone, L.

David, B.

Morris, L.

Swinfen, L.

Davies of Leek, L.

Peart, L.

Taylor of Blackburn, L.

Faithfull, B.

Pitt of Hampstead, L.

Taylor of Gryfe, L.

Falkland, V.

Ponsonby of Shulbrede, L.

Tweeddale, M.

Ferrier, L.

Ritchie-Calder, L.

Vaux of Harrowden, L.

Foot, L.

Ross of Marnock, L.

Vernon, L.

Fraser of Tullybelton, L.

St. Just, L.

Westbury, L.

Gaitskell, B.

Sefton of Garston, L.

Wigoder, L.

NOT-CONTENTS

Abercorn, D.

Ferrers, E.

Mansfield, E.

Amherst of Hackney, L.

Galloway, E.

Margadale, L.

Atholl, D.

Gisborough, L.

Mottistone, L.

Bellwin, L.

Godber of Willington, L.

Mowbray and Stourton, L.

Belstead, L.

Grimston of Westbury, L.

Murton of Lindisfarne, L.

Camoys, L.

Harvey of Tasburgh, L.

Reading, M.

Campbell of Croy, L.

Henley, L.

Reigate, L.

Chelmer, L.

Hives, L.

Saint Oswald, L.

Cockfield, L.

Holderness, L.

Sandford, L.

Crathorne, L.

Kinnoull, E.

Sandys, L. [Teller.]

Cullen of Ashbourne, L.

Long, V.

Savile, L.

Denham, L. [Teller.]

Lyell, L.

Trefgarne, L.

Drumalbyn, L.

Mackay of Clashfern, L.

Vaizey, L.

Resolved in the affirmative, and amendment agreed to accordingly.
The Earl of MANSFIELD: My Lords, I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

IMPORT OF LIVE FISH (ENGLAND AND WALES) BILL
Brought from the Commons, read 1a, and to be printed.
11.8 p.m.
On Question, Whether the said amendment (No. 83) shall be agreed to?
Their Lordships divided: Contents, 47; Not-Contents, 39.

EASTBOURNE HARBOUR BILL [H.L.]
Examiners' Certificate that the further Standing Orders applicable have been complied with. Ordered to lie on the Table; Bill committed to an Unopposed Bill Committee.
SALVATION ARMY BILL [H.L.]
Examiners' Certificate that the further Standing Orders applicable have been complied with. Ordered to lie on the Table; Bill committed to an Unopposed Bill Committee.
  LIQUEFIED GAS CARRIERS: POWER TO OFF-LOAD
  LIQUEFIED GAS CARRIERS: POWER TO OFF-LOAD
  THE DISABLED: HOSPITAL FAMILY UNITS
  THE DISABLED: HOSPITAL FAMILY UNITS
  CHILD BENEFIT: PURCHASING POWER
  CHILD BENEFIT: PURCHASING POWER
  FAOC AND FISHERIES IN THE THIRD WORLD
  FAOC AND FISHERIES IN THE THIRD WORLD
  PASSPORT RENEWAL: PROCESSING TIME
  PASSPORT RENEWAL: PROCESSING TIME