Sitting of 30 June 1980

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    GREATER LONDON COUNCIL (MONEY) (No. 2) BILL
    As amended, considered; to be read the Third time.
ORAL ANSWERS TO QUESTIONS
  WALES

    Advance Factories
    Sir Anthony Meyerasked the Secretary of State for Wales what discussions he has had with the chairman of the Welsh Development Agency regarding the level of advance factory construction in Wales.
    The Secretary of State for Wales (Mr. Nicholas Edwards): I have recently discussed with the chairman the agency's construction plans within the existing cash limit. I am glad to inform the House that the agency is in a position to start work on advance factory building totalling over 600,000 sq. ft. This is in addition to the 2·3 million sq. ft. already planned to start this year. 350,000 sq. ft. will be built in the steel closure areas and the remainder will represent a very substantial start on the WDA's fifth advance factory programme outside the steel closure areas. The agency will also be able to resume its land reclamation programme.
    Sir A. Meyer: Is my right hon. Friend aware that that is very good news? In view of the unique efficacy of advance factory construction, both in terms of flexibility and in terms of being highly selective, is he satisfied that the existing limits on the Welsh Development
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    Agency are adequate to enable it to deploy its full resources for this purpose?
    Mr. Edwards: By the announcement today we are ensuring that the existing limits are used to the hilt in the current financial year. However, we are also encouraging the agency to raise additional financial resources from the private sector, and I am confident that it will be able to do so.
    Mr. Coleman: Is the right hon. Gentleman aware of the difficulties that are occurring in West Glamorgan—apart from those created by the Secretary of State for Wales—following the liquidation of Messrs. Potters, the builders? Will he bring this matter to the attention of the WDA in order to secure new contractors, so that these factories, which have already been announced, can come into operation much more quickly than might othewise be the case?
    Mr. Edwards: I shall certainly discuss that matter with the chairman of the WDA.
    Sir Raymond Gower: I welcome the announcement of the building of further advance factories, but in view of the tremendous needs of the Welsh economy at present will my right hon. Friend consider encouraging his Department and the WDA to get together and plan ahead for the acquisition of suitable sites for advance factories in future programmes?
    Mr. Edwards: I agree about the importance of having a continuing programme, and I assure my hon. Friend that the WDA is seeking additional sites. It is now clear that additional sites will be available, apart from those previously announced, for example in the Newport area.
    Mr. Geraint Howells: In view of the high bank interest rate, does the Secretary of State agree that it will be very difficult to entice industrialists to mid-Wales to take over all these advance factories?
    Mr. Edwards: Both in the WDA area and in the mid-Wales area of the DBRW, considerable interest has been expressed in these factories.
    Mr. Hooson: Is my right hon. Friend satisfied that the exceptionally good rate

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    of take-up of advance factories is being maintained in current conditions?
    Mr. Edwards: Interest continues at a high level. Only 2·4 per cent. of the WDA's existing factories are standing vacant. I can report that inquiries and visits are continuing.
    Mr. Alec Jones: I welcome the announcement of this extra space, but as the announced factories are inside the existing cash limits, we were expecting it. Does the right hon. Gentleman agree that we still have tremendous needs, which were referred to by the hon. Member for Barry (Sir R. Gower), with about 99,000 unemployed, 50,000 redundancies announced in the year and now the possible further threat to Port Talbort and Llanwern? Has the Secretary of State seen today's Western Mail, which refers to the fact that the Government's response to the existing crisis has been woefully inadequate? Will he do something about the inadequacy of all his measures?
    Mr. Edwards: I do not accept that verdict. We have a substantial advance factory programme under way, and 47 per cent. of the resources for the entire United Kingdom are going to factory building in Wales. The announcement today is an indication of the intention of the Government and the WDA to see that factory programme rolling forward.

    European Community Loans and Grants
    Mr. Knoxasked the Secretary of State for Wales how much aid the European Economic Community has given in loans and grants to Wales in the most recent 12-month period for which figures are available.
    Mr. Nicholas Edwards: A total of £162 million in the year ending 31 May 1980.
    Mr. Knox: Does my hon. Friend agree that the EEC's contribution to the wellbeing of Wales is impressive? What steps is he taking to draw to the attention of the people of Wales the advantages that membership of the Community brings them?
    Mr. Edwards: I agree about the scale of the EEC's contribution. Since accession, the receipts in Wales have totalled about £668 million in identifiable grants
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    and loans, and we are taking every opportunity to publicise them. We are examining additional ways to do so; for example, by identifying projects that have gone ahead thanks to EEC assistance. In that way the people in the locality affected will be aware of where the finance has come from.
    Mr. Anderson: How does the Secretary of State reconcile what the Government say here and what Conservative Euro-MPs do in Strasbourg? Is the right hon. Gentleman aware that last Friday Conservative Euro-MPs voted against proposals to increase expenditure under the regional and social funds, and therefore missed the opportunity for extra funds to come to Wales?
    Mr. Edwards: I do not believe that that is accurate. As the hon. Gentleman knows, there is disagreement about the budget proposals put forward by the Commission. Nothing has so far happened to prevent Wales from taking full advantage of existing Community resources.
    Mr. Best: Will my right hon. Friend endeavour to encourage greater use of European money for roads and infrastructure projects in Wales? Can he give a categoric assurance that the results of the survey to see whether there should be a tunnel under or a bridge over the Conway crossing will be made known before the Summer Recess?
    Mr. Edwards: With regard to my hon. Friend's first point, it is advantageous that the recent negotiations in Europe have reduced the total resource cost to the United Kingdom of our membership. That therefore gives the Government resources for essential expenditure, such as on the A55, without imposing too great a strain on the economy. We shall make an announcement about the future road programme and the Conway crossing before the Summer Recess.
    Mr. D. E. Thomas: Will the Secretary of State arrange for early discussions with British Rail to ensure that an application is made to obtain EEC regional development grants for the reconstruction of the Barmouth bridge, which it is estimated will cost about £2½ million?
    Mr. Edwards: I shall discuss that matter with my right hon. Friend the

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    Minister of Transport, who is directly responsible for British Rail, and will endeavour to see that if an application goes forward it does so in good time.

    Textile Industry
    Mr. Barry Jonesasked the Secretary of State for Wales what representations he has received about the reduction in the work force in the textile industry in East Flint.
    Mr. Nicholas Edwards: The hon. Gentleman has referred to the difficulties in the textile industry on a number of occasions in the House, and local authorities in the area have expressed concern about employment prospects.
    Mr. Jones: Will the Secretary of State urgently consider locating a major job project in Flint, bearing in mind the recent loss of 7,000 steel jobs and the fact that Courtaulds currently employ only 1,000 people, compared with the post-war peak figure of 10,000? Is the right hon. Gentleman aware that Flint has a male unemployment rate of about 36 per cent., and that hundreds of young people are seeking jobs, often son against father? Is he aware also that the Deeside mill is fighting for its life, partly because of the Government's policy over the high pound, high interest rates and cheap subsidised imports?
    Mr. Edwards: As the hon. Gentleman is aware, Flint is part of a wider travel-to-work area, so the overall rate is not as high as he indicates. I have just announced a major new programme of advance factories, 140,000 sq ft of which will be in the Deeside industrial park. There will be 50,000 sq ft at Wrexham and 30,000 sq ft at Bagillt. That illustrates that there is a major programme of advance factory building in that part of Wales. I remind the hon. Gentleman that the Point of Ayr project should provide useful assistance to the area, and I am sure that he will be glad to know that the British Celanese investment should secure employment in Wrexham.
    Sir Anthony Meyer: Is my right hon. Friend aware that the problems to which the hon. Member for Flint, East (Mr. Jones) draws attention extend also to my constituency and are very grave? Is he further aware that the problems of the textile industry are exceedingly complex
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    and that demands from the Labour Benches for indiscriminate import controls are often unhelpful? Does my right hon. Friend accept that the export trade is valuable to this industry, and should be balanced against the threat from imports?
    Mr. Edwards: My hon. Friend's comments confirm the importance of working under the existing GATT multi-fibre arrangement to control imports from low-cost sources. We have undertaken to ensure that those arrangements are implemented effectively and quickly.
    Dr. Roger Thomas: Is the right hon. Gentleman aware that the footwear industry is also hard hit by the dumping of foreign products?
    Mr. Speaker: Order. This question relates to the textile industry.

    Lamb (Guaranteed Price)
    Mr. Geraint Howellsasked the Secretary of State for Wales if he has any further plans to increase the guaranteed price for lamb in the current year; and if he will make a statement.
    Mr. Nicholas Edwards: The fat sheep guarantee scheme will be replaced in the United Kingdom by the support arrangements to be provided under the recently negotiated Community regime. The arrangements for implementation are currently under discussion.
    Mr. Howells: Can the Secretary of State tell the House whether the new scheme will come into operation in July, or whether our sheep producers will have to wait until August, September or October—that is, until the scheme is finalised?
    Mr. Edwards: We should like the scheme to start in July, which was the date indicated during negotiations. However, it is a complicated scheme and has to be introduced throughout the whole of the EEC, and it is therefore in the hands of the Commission. It is important that the scheme should be introduced before the major autumn sales, as it will have important consequences for the market.
    Mr. Best: Is my right hon. Friend aware of the strength of feeling among those engaged in sheep rearing in my

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    constituency about the need for early implementation of the scheme? Is he aware also that many of those farmers are receiving a smaller financial return from their sheep this year than they did last year? Will he consider the matter urgently?
    Mr. Edwards: Yes, but the new scheme will help firm up the market and give it a strong future. I am sure that my hon. Friend will draw that to the attention of his farmers. I hope that he will also warn them of the dangers of delaying marketing their fat sheep, which could become overfat and either not qualify for the United Kingdom fat sheep guarantee or the EEC variable premium. There is a risk that some farmers will delay because of the new scheme, and thereby lose altogether.

    Welsh Language Teaching
    Mr. Hoosonasked the Secretary of State for Wales whether he has completed his consultations with the Welsh Joint Education Committee and other educational bodies regarding the place of Welsh in the school curriculum in Wales.
    The Under-Secretary of State for Wales (Mr. Michael Roberts): No. Written comments on our consultative document have been offered by a number of bodies, and I shall be discussing this matter with representatives of the Welsh Joint Education Committee next month.
    Mr. Hooson: Does my hon. Friend agree that if we are to have a proper place for the Welsh language in the school curriculum it is necessary to improve the standard of school books and other material in the language?
    Mr. Michael Roberts: Yes. It was partly for that reason that we wrote into the Education Act a power to give specific grants to local education authorities. In administering the scheme we intend to give high priority to Welsh language books.
    Mr. D. E. Thomas: Does the Minister accept that many of us strongly oppose the Government's proposal for a core curriculum? However, should he decide to implement such a proposal, we take the view that Welsh medium teaching should be part of that core in some form in all schools in Wales.
    Mr. Michael Roberts: The linguistic pattern of Welsh throughout Wales is so varied that it will differ from one local authority to another. The point of the consultations is to ensure that Welsh plays an important part in the curriculum of our schools in Wales.
    Sir Raymond Gower: Will my hon. Friend study particularly in his future consideration of this matter the availability of competent teachers of Welsh, particularly in those parts of the country where not so much Welsh is spoken?
    Mr. Michael Roberts: We are concerned with the competent teaching of Welsh and every other subject.
    Mr. Alan Williams: We welcome the extra specific grant, but is the hon. Gentleman sure that the strings attached to it will not be a deterrent? Is it correct that, to obtain the grant, local authorities will have to divert some of their existing programmes as their contribution? Will not that mean a further cutback in existing programmes in the education system, and is there not a risk that that will sour the attitudes of parents and education committees, who already resent the fact that 1 million fewer school books will be bought this year?
    Mr. Michael Roberts: The problem of school books has been with us for a long time, and the right hon. Gentleman ought to know that. As for the questions raised recently by the WJEC. I shall be meeting the committee on 25 July and those matters will be discussed. We want to ensure that the new resources being injected will result, for the most part, in new initiatives. We do not want local expenditure by central Government expenditure.

    Advance Factories
    Mr. Bestasked the Secretary of State for Wales what is the current position on advance factory letting in Wales.
    Sir Raymond Gowerasked the Secretary of State for Wales what is the current position with regard to the letting of advance factories in Wales.
    Mr. Nicholas Edwards: This year 54 factory units totalling 453,700 sq. ft. had been formally allocated up to 20 June.
    Mr. Best: Does my right hon. Friend agree that it is important to make sure

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    that there is adequate provision of small units and a great deal of education and help, particularly for those who are made redundant as a result of closures, so that they can find employment and make use of some of the small units?
    Mr. Edwards: The Welsh Development Agency has included a considerable number of small units in its programme. There are nine small units available in Anglesey. As my hon. Friend is aware, the WDA has also had discussions with the National Coal Board pension fund about a major new initiative for the provision of small units.
    Sir Raymond Gower: In view of the increasing size of the advance factory programme in Wales, will my right hon. Friend consider whether there might be a need to reassess the efficacy of the letting policy, the publicity and the agencies that bring the advantage of such factories to the attention of industrialists in this country and overseas?
    Mr. Edwards: As my hon. Friend is well aware, that matter is being examined by the Select Committee. It would probably be right to await the comments of my hon. Friend and his colleagues on the agencies before taking further decisions. I can tell the House that there is still a great deal of interest in the factories. This year's performance is well up, and is on a par with 1978, when 100 factories were allocated and that was considered a good result at the time. It is a little down on last year, which was a record year, but, considering the present state of the economy, interest continues at a remarkably high level.
    Mr. Rowlands: Is the right hon. Gentleman aware that no advance factory building programme can cope with another steel plant closure? Will he and the Government therefore assure the House and the people of Wales that they will not endorse any further plant closures in Wales, because Wales has been expected to suffer more than enough of the steel rationalisation programme? Is the right hon. Gentleman aware that the industrial and political patience of the Welsh people will run out rapidly if the Government continue on their present course?
    Mr. Edwards: The hon. Gentleman is aware that the new chairman of the
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    BSC does not take over until tomorrow. He has not yet given the Government his assessment of the situation, and I am unable to comment on plans that have not yet been presented.
    Mr. Alec Jones: Is the right hon. Gentleman aware that we are all bemused sometimes by the figures on factory building and the size of the units? Is he also aware that we are concerned to try to relate the 54 factories and the 450,000 sq. ft. of space to which he referred to the size of the problem facing us in Wales? Can the Secretary of State confirm, or deny, that the number of jobs likely to be created by the 54 factories is fewer than 2,000? Can he say whether those 2,000 are included in the 19,000 jobs in the pipeline about which we have heard much recently, or whether they are in addition to that figure?
    Mr. Edwards: With the square footage that I am talking about, the number of jobs will be nearer 2,500 than under 2,000.
    Mr. Alec Jones: The right hon. Gentleman has got it wrong.
    Mr. Edwards: If the right hon. Gentleman wants precision on the matter, I can tell him that the number of jobs to be created is expected to be 2,390 from the 453,700 sq. ft. to which I referred. I stand by those figures.
    We updated the figure for jobs in the pipeline from month to month. The figures that we are giving for jobs in the pipeline are the current ones.

    Steel Industry
    Mr. Roy Hughesasked the Secretary of State for Wales if he has had any recent discussions with representatives of the British Steel Corporation to discuss the scale of redundancies in works in Gwent.
    Mr. Nicholas Edwards: I last met the chairman and the chairman designate on 26 May. I discussed with them various matters relating to British Steel Corporation works in Wales.
    Mr. Hughes: When will the Secretary of State inform his Cabinet colleagues that the Government's policies are creating chaos in Wales, particularly in our vital steel industry? If he cannot reconcile himself to speaking up for Wales, why does he not pack up?
    Mr. Edwards: The latest Government policy has been to announce that we will guarantee the debts of the Brtish Steel Corporation, which would otherwise be bankrupt, and provide additional financial assistance if that is necessary when the new chairman of the BSC, who takes over tomorrow, has produced his assessment of the needs. We also made it clear that the new chairman must continue the essential task of making the BSC competitive, because it has to trade in a competitive world.
    Sir Anthony Meyer: Will my right hon. Friend confirm that the money that the Government will have to produce to ensure the continued trading viability of the BSC has to come from somewhere, and that the Government must calculate whether the resources being pumped into the BSC are not taking away more jobs in other industries than they are likely to save?
    Mr. Edwards: There can be no doubt that the loss in the previous financial year of £450 million and the news that the external financing limit of £450 million for the current year is likely to be exceeded by about £400 million must be directly destructive of jobs in other industries.
    Mr. Abse: On Thursday the Secretary of State shocked the House by informing us that either another £400 million had to be found or the BSC would be liquidated. He said that on the basis of what he was told in a letter that he received on 6 June. The Secretary of State did the Select Committee the courtesy of appearing before it on 10 June.
    Will the right hon. Gentleman tell the House the answer to this question: did he or did he not know, was he or was he not told, of that serious situation when he appeared before the Select Committee? If not—if he is being treated as a whipping boy or as a subordinate who is told nothing in the Cabinet—will he give an undertaking to the House that if Llanwern is closed he will maintain the dignity of his office by resigning from the Cabinet, as Wales would expect him to do?
    Mr. Edwards: Presumably when the hon. Gentleman referred to a statement by the Secretary of State last week he was referring to the statement by my
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    right hon. Friend the Secretary of State for Industry, because I did not make a statement. It was clear—from the evidence given to the Select Committee—that the current position of the British Steel Corporation was extremely serious. All that my right hon. Friend did on Thursday was to come to the House, which is the right place to report these matters, tell the House the facts and announce that he would guarantee the debts of an organisation that would otherwise have had to be in liquidation.
    Mr. Rowlands: Did the right hon. Gentleman know?
    Mr. Best: Will my right hon. Friend have regular meetings with the new chairman of the British Steel Corporation so as constantly to monitor the situation to make sure that we are not expecting the corporation to run down its works too far, and to ensure that the prognosis for future demand is kept under constant review, so that that is a correct forecast, bearing in mind the difficulties of trying to look beyond any 12-month period?
    Mr. Edwards: Every forecast made by the corporation over the past five years has proved to be grossly optimistic. I am sure that my right hon. Friend and my hon. Friend the Minister responsible, the Minister of State, Department of Industry, who is on the Bench with me will keep the closest eye on the forecast, but it must be said that the market is deteriorating very sharply.
    Mr. Alan Williams: Does the Secretary of State realise that it must be a matter of the greatest concern to the House, and particularly to the Opposition, that four days after Sir Charles Villiers made his statement to the Secretary of State for Industry that a £400 million extra cash requirement was likely this year, he, the Secretary of State for Wales, apparently concealed that information from the Select Committee on Welsh Affairs, which he himself set up, or was unaware of the information at that time? Will he assure us that he intends not just to intervene, as in the past, but to fight for the Welsh plant, because there is no way in which we in Wales will accept the closure of Llanwern or Margam? If he fails to save those plants, the whole of Wales will expect his resignation.
    Mr. Edwards: I concealed nothing from the Select Committee. I answered every question freely and fully. I do not concede for one moment that it is only right hon. and hon. Members on the Opposition Benches who have a concern for these matters. If they had a concern for them, they would have done well not to encourage the strike that has done so much damage to BSC.

    House Building
    Mr. Colemanasked the Secretary of State for Wales what estimates are available to his Department of public sector and housing association housing starts in Wales for the three years 1980–81, 1981–82 and 1982–83.
    The Under-Secretary for Wales (Mr. Wyn Roberts): As I said in reply to the hon. Member for Cardigan (Mr. Howells) on 25 June, I cannot make firm estimates, because within the single block housing investment allocation it will be for individual local authorities in Wales to decide what resources to use for new house building in 1980. As for future years, we must await their submissions of housing investment programmes later this year.
    The number of housing association starts similarly will depend on the present and future plans of the associations.
    Mr. Coleman: But is the Minister aware that in my constituency—
    Mr. Bill Walker: Reading.
    Mr. Coleman: I can read. Perhaps the hon. Gentleman cannot. I shall start again. The hon. Gentleman is simply wasting Welsh Question Time.
    Is the Minister aware that in my constituency there have been no housing association starts this year? Any building going on was started two years ago. Is the hon. Gentleman aware also that local authorities have no money to start building houses, to give loans, or to give grants, except for those which are mandatory? Is the experience of Neath typical of Wales? What are the prospects for people waiting to be housed in Wales in the next one year, two years or three years? Can the hon. Gentleman say?
    Mr. Wyn Roberts: I can tell the hon. Gentleman that the housing authority in
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    his constituency has this year had 80 per cent. of last year's grant, which is what it was promised by the previous Government in November 1978. It is one of 33 authorities which this year have had 80 per cent. of last year's grant. There are 14 other authorities in Wales that have had more than 80 per cent. of last year's grant. It is not simply new house building with which local authorities and housing associations are concerned. They are concerned also with rehabilitation, improvement for sale and the extension of home ownership.
    Mr. Garel-Jones: My hon. Friend cannot give us firm estimates about the future, but can he give us some facts about the number of starts made from, say, 1974 to 1979 under the previous Government?
    Mr. Wyn Roberts: I can tell my hon. Friend something about the record of the previous Government. Between 1974–75 and 1979–80 they cut the housing moneys in Wales by no less than one-third.
    Mr. Alec Jones: The hon. Gentleman is very keen on mentioning the previous Government's commitment. Is it not true that the previous Government told local housing authorities in Wales that they could continue with their full programme and that the Government would finance them? Secondly, is it not true also that housing expenditure in Wales has been cut from £217 million in 1978–79, when only 5,500 houses were built, to £110 million in 1983–84? It is less than true to say that the hon. Gentleman cannot give some indication. A cut of that size must mean far fewer houses being built in Wales and longer waiting lists, and our homeless people waiting even longer.
    Mr. Wyn Roberts: The right hon. Gentleman referred to the White Paper projections of expenditure up to 1983–84. I reiterate that between 1974–75 and 1979–80 his Government reduced housing expenditure in Wales from £303 million to £203 million. We are only continuing a course that was started by the previous Government.
    Mr. Jones: Will the hon. Gentleman now answer the first part of my question? Is it not true that the last circular issued by the Labour Government committed the Government to financing the full housing programme of housing authorities in Wales?
    Mr. Wyn Roberts: What the right hon. Gentleman's Government promised in the letter of November 1978 to the local authorities was that they would this year reeive 80 per cent. of the moneys granted last year.
    Mr. Jones: And the rest. Go on.
    Mr. Speaker: Order.
    Mr. Roberts: There was also, admittedly, a tolerance factor. We have not allowed that tolerance factor, because we want the local authorities to adhere firmly to their cash limits.

    Wales (Special Action Area)
    Mr. Ioan Evansasked the Secretary of State for Wales what proposals he has submitted to the European Economic Community for Wales to be designated as a special action area; and if he will make a statement.
    Mr. Nicholas Edwards: I have given the Commission a pilot study covering industrial South Wales as part of its initiative on integrated operations.
    Mr. Evans: Would it be possible for the details to be put in the Library, so that we may see what the Secretary of State has submitted? Does the right hon. Gentleman recall that Employment and Social Affairs Commissioner Vredeling said that he was disturbed to find such a massive rundown of the steel industry in Wales, in view of the repercussions that it was having on the coal industry and the general economy? What action will the Government take if nothing is forthcoming from Brussels?
    Mr. Edwards: I do not think that it would be appropriate for the document to be placed in the Library at this stage. It is only a provisional draft document, one of a number that are passing between the Commission and the Welsh Office while the document is being developed. A copy is being passed to the Select Committee on Welsh Affairs, which has asked for it, so the hon. Gentleman will no doubt see it in due course.
    All that I would say about the Commissioner's point of view is that it is the responsibility of those who have to run the British Steel Corporation to see that it is competitive in world markets. Putting off the evil day is in the long run
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    destructive of even more jobs and threatens the industry's future.
    Mr. Hooson: Is my right hon. Friend satisfied that the administrative arrangements between the Welsh Office and the local authorities are adequate to ensure that we tap all possible European funds?
    Mr. Edwards: Yes, Sir. I am sure that we are making full use of the resources available to us under EEC arrangements. I have in the past been critical of the quality of some of the schemes coming forward from local authorities. On the whole, they are improving, and there is an adequate supply, but we should always like to have an even wider choice of good quality schemes from the local authorities.
    Mr. Barry Jones: The right hon. Gentleman talked of putting off the evil day. Will he appreciate that we in North East Wales hope that we have put behind us the worst of the steel redundancies, having lost 7,000 jobs? Can he give us an assurance that the jobs remaining at Shotton are safe?
    Mr. Edwards: The hon. Gentleman knows that in an industry that depends, at the end of the day, on the markets. I cannot give any guarantee about the long-term future.
    Mr. Budgen: When my right hon. Friend makes his statement, will he point out that any increased payments from the EEC will, inevitably and ultimately, be balanced by increased payments to the EEC?
    Mr. Edwards: It might be to the advantage of this country if a larger share of the benefits of the EEC were to come into the form of industrial assistance that would be of benefit to this country, unlike some arrangements within the Community, that benefit other countries, but nor this country.

    Local Authorities (Expenditure)
    Mr. Andersonasked the Secretary of State for Wales what discussions or other contact he has had with Welsh local authorities concerning over-spending; and what sanctions he has in mind to ensure compliance with his policy.
    Mr. Nicholas Edwards: On many occasions, including meetings with the

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    Welsh Consultative Council on Local Government Finance, I have made it clear that local authority expenditure must be kept within the Government's expenditure targets. For England and Wales, the returns of local authorities' planned expenditure for this year indicated current expenditure well in excess of our target and my right hon. Friend the Secretary of State for the Environment and I have asked all local authorities to revise their budgets by 1 August. I trust that cooperation and good sense will prevail and sanctions will not be necessary.
    Mr. Anderson: Will the Secretary of State confirm that Swansea and Afan are within the Government's penalty zone? Will he accept that the rate in the pound is no real guide to an authority's actual expenditure? Is not the Government's so-called rough justice no justice at all and a further example of the Conservative view that the man in Whitehall knows best—better than the local authorities?
    Mr. Edwards: All that we are asking is that the local authorities should conform to the overall economic policies of the Government on public spending, as they have always done under previous Governments. I am sure that the hon. Gentleman will encourage his local authority to act in that way. If it has reduced its expenditure it will not be affected by any action—representing rough justice or not.
    Mr. Delwyn Williams: Will my hon. Friend give an assurance that if local authorities in the South overspend yet again they will not be bailed out yet again at the expense of authorities, such as those in Powys, which have always obeyed every order to cut back and now face further cutbacks, which they cannot afford?
    Mr. Edwards: The district authorities in Powys have a good record this year. Their rate increases are among the lowest anywhere. We hope that we shall be able to proceed on the basis that only a few serious offenders will have to be penalised under the powers available to us.
    Mr. Alan Williams: Will the Secretary of State bear in mind that many Welsh local authorities, West Glamorgan and Swansea included, are experiencing falling populations at the same time as an
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    increase in the proportion of elderly in the population? Rate increases therefore become inevitable. At a time of soaring unemployment, how can he justify the use of sanctions and jackboot methods to withdraw money from areas that need more pumped into them?
    Mr. Edwards: Because public spending is helping to kill productive industry and destroy jobs. There can be no excuse, at a time when the country needs to economise for local authorities in many parts of the country increasing their manpower.

    Local Authority Rents
    Dr. Roger Thomasasked the Secretary of State for Wales what is the average rent for local authority dwellings in Wales; and by what percentage he expects it to increase by 1981.
    Mr. Wyn Roberts: Provisional figures for 1980–81 show the average unrebated rent to be £8·04. The percentage increase by 1981 will depend on the decisions of local authorities taken in the light of any further Government guidelines, and within the framework of the new subsidy system which will come into operation in 1981–82.
    Dr. Thomas: As the Minister is rather coy about predicting the percentage increase in rents, does he feel that it will be within the Government's inflation forecast for 1981, or will council house tenants be hit by more than average rises again this year?
    Mr. Wyn Roberts: It was the Labour Government who restored the freedom to local authorities to fix their rents. While the Government have indicated guideline average rent increases to local authorities of £1·50 for 1980–81 and 60p from October 1980, in the context of the rate support grant settlement and the HIP allocation arrangements it is for the local authority to decide the appropriate level of increase for the tenants, taking into account the need to charge no more than is required to balance the expenditure falling on the housing revenue account after allowing for Government subsidies, contributions from the rate fund and provision for a reasonable working balance.
    Mr. Best: Bearing in mind the small proportion that rents reflect in the total cost of provision of up-to-date local

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    authority housing, does my hon. Friend agree that it will be much cheaper in the long term for many council house tenants, when the Housing Bill receives the Royal Assent, to buy their council houses than to continue to pay ever-increasing rents?
    Mr. Wyn Roberts: I agree with my hon. Friend that we want to encourage home ownership and council house sales. There is a significant demand for home ownership. The previous Government said that they intended to keep the rise in rents broadly in line with the rise in earnings. They failed to do that. We are trying to correct the situation.
    Mr. D. E. Thomas: Will the Minister explain that, as a result of his Housing Bill and the abolition of the no-profit rule on housing revenue accounts, high rents for rentpayers will subsidise ratepayers?
    Mr. Wyn Roberts: No. I disagree with the hon. Gentleman's view of the effect of the Housing Bill. On the whole, I think that the effect of the Bill will be largely beneficial. We acknowledge that, while there will always be people who want to buy their own homes, there will always be those who wish to rent their homes. The Government have increased the protection given to poorer tenants. We have recently increased the maximum rebate payable under the scheme from £10 to £23.

    Unemployment Forecasts
    Mr. Rowlandsasked the Secretary of State for Wales when he expects unemployment in Wales to exceed 100,000.
    Mr. Nicholas Edwards: Very soon, I regret to say, if present trends continue.
    Mr. Rowlands: It will continue to be 100,000—plus next month, and beyond that to perhaps 120,000 or 130,000. Does the right hon. Gentleman agree that, in these circumstances, it is nonsense to withdraw grants from special development areas and development areas in August 1980, given the enormous upward trend in unemployment and the large number of redundancies, amounting to well over 50,000 in the last 12 months, in the Welsh economy?
    Mr. Edwards: I am sure that it is right to concentrate grants on areas that need
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    them most and where the unemployment figures are at their highest.
    Sir Anthony Meyer: Does my right hon. Friend agree that if employers in Wales had flexibility over wage levels—which is rendered impossible by nationally bargained increases—it would be substantially easier to attract industry to Wales?
    Mr. Edwards: I am certain that in many industries excessively high wage settlements have destroyed jobs.
    Mr. Roy Hughes: Does the Secretary of State appreciate that if the puny efforts at factory building in the Newport area are anything to go by, together with the parsimonious attitude of the Government in not granting the town special development area status, Newport is likely, in the not-too-distant future, to be a major contributor to that magical figure of 100,000 unemployed?
    Mr. Edwards: We have allocated a major part of the £48 million package to the Newport area and to the Cwmbran area that helps to serve it. I have announced this afternoon a substantial extension of factory building and site provision for Newport.
    Mr. Hooson: Does my right hon. Friend agree that failure to tackle the problem of inflation would be a guarantee of even worse unemployment figures?
    Mr. Edwards: I am certain that if inflation is not tackled, in the long run the unemployment figures will be even higher. Tackling that problem remains the top priority of the Government.
    Mr. Alec Jones: Does the right hon. Gentleman agree that he has just confirmed that under him unemployment in Wales has risen by about 19,000 in one year? If that is a measure of his contribution to Wales, it is one that we could well do without.
    Mr. Best: What did the previous Government do?
    Mr. Jones: A lot better. Does the right hon. Gentleman agree also that the changes in regional policies announced by the Government last June—partially relieved for Llanwern and Port Talbot by the fiddling extra pieces announced for the Port Talbot and Llanwern steel

    1079
    closure areas—are inadequate to meet the crisis which has now spread to the whole of Wales, not only in steel closure areas but in North Wales, South Wales and Mid-Wales? Has the right hon. Gentleman seen the Manpower Services Commission's review for 1980, which indicates that the proportion of unemployed under the age of 19 will be 20 per cent. in many parts of Wales? What on earth does the right hon. Gentleman intend to do for those young people?
    Mr. Edwards: I find it hard to take lectures on unemployment from a member of the Government who more than doubled unemployment in Wales. There were years during which the right hon. Gentleman was responsible for this matter when the figures were quite as bad. Indeed, they have not yet risen to the highest figure that we suffered under his Government.
    As for the right hon. Gentleman's suggestion that we should extend to the whole of Wales the highest levels of grant and assistance, he must realise that if we followed that principle throughout the United Kingdom we should have indiscriminate subsidies, which would bring no benefit to the areas which most needed it. If the right hon. Gentleman thinks that that makes a coherent form of industrial policy, he must be capable of believing anything.
    Mr. Rowlands: On a point of order, Mr. Speaker. In view of the utterly complacent view of the Secretary of State about unemployment in Wales, I beg to give notice that I shall raise the matter at the earliest opportunity on the Adjournment.

  FILM INDUSTRY
  Mr. Dormandasked the Chancellor of the Duchy of Lancaster what steps he is taking to promote the appreciation of films.
  The Under-Secretary of State for Education and Science (Mr. Neil MacFarlane): The British Film Institute promotes film as an art form and receives substantial support from public funds for this purpose. The parliamentary grant-in-aid which I have proposed for the current year should enable the institute to maintain a level of activity
  1080
  broadly comparable with that of last year.
  Mr. Dormand: In view of the inadequate provisions in the Films Bill, to which presumably the hon. Gentleman refers and which went through the House recently, does he not feel that he has an ever greater responsibility in this matter? Indeed, nothing has been done since the Government came to power. Is it not a fact that the cinema, of all the arts, attracts more customers than any other aspect of the arts? Will he give special attention to the regional film theatres and the Children's Film Foundation?
  Mr. MacFarlane: The grant-in-aid for the British Film Institute announced recently is £5·67 million, as against £4·5 million for last year. As for the concentration of the Government's links with the British Film Institute, it must remain the prerogative of Ministers not to interfere with the British Film Institute in the course on which it chooses to embark. However, the regional arts associations link up with the British Film Institute, and I have no doubt that some of the hon. Gentleman's comments will be read by the various representatives of those authorities.
  Mrs. Dunwoody: Is it not true that what is happening is that the money allocated to the British Film Institute is not being spent in the same proportion in the regions as was once the case? If they are not given adequate grants, will they not find it very difficult to maintain regional film theatres?
  Mr. MacFarlane: It is interesting to note that the British Film Institute has set up an advisory committee on funding and development, with the main objective of trying to obtain further funds from private sources. I have no doubt that the hon. Lady, who has some interest in these matters, will choose to give her assistance to that source of fund raising.
  Mr. Faulds: Would not British films flourish and prosper much better if responsibility for them were taken from the Department of Trade and put under that of the Chancellor of the Duchy of Lancaster? Will the hon. Gentleman make representations to his colleagues to bring about that necessary and healthy change?
  Mr. MacFarlane: I am certain that my right hon. Friend the Chancellor of the Duchy of Lancaster will feel considerably warmed by the esteem in which the hon. Gentleman holds him. The British Film Institute is the only agency that comes under the general direction of the Office of Arts and Libraries. The National Film Finance Corporation comes under the Department of Trade, and in that respect I could not give any assurance to the hon. Gentleman today.

  ARTS (SPONSORSHIP)
  Mr. Dalyellasked the Chancellor of the Duchy of Lancaster if he will make a statement on his discussions with leading figures in the City of London on the financing of the arts.
  The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): I have had discussions with the chairman of the five London clearing banks about increasing their sponsorship of the arts and about the possibility of setting up a clearing banks foundation for the arts with an endowment, the income from which could be used to provide support for artistic events.
  The banks assured me that they are already spending large sums on support for the arts, that they were planning to increase their efforts, but it was important to them, as competitive enterprises, to decide for themselves how they used their money.
  I found these discussions very useful in clarifying the position of the clearing banks and in explaining to them the Government's policy of encouraging an increase in private sector support for the arts.
  Mr. Dalyell: Did the right hon. Gentleman ask for £500 million? In the light of the profits that the banks are making, and are likely to make, in these inflationary times, should they not either show some public benevolence along these lines—and not only in relation to the arts—or submit themselves to the kind of tax that the oil companies have had to meet with the petroleum revenue tax?
  Mr. St. John-Stevas: I did not ask them for £500 million, as was erroneously reported in The Times under the byline
  1082
  of Mr. or Miss Roman Eisenstein. It was an inaccurate report. I do not know where it came from.
  I was satisfied that the banks were making a considerable contribution to the arts. They concentrate on different spheres of activity—Lloyds, for example, on schoolchildren and young people; the Midland on certain major projects such as the Royal Ballet touring company, the Big Top, the York mystery plays and the Covent Garden proms; Williams Glyn on the North-West; and Barclays on rescuing D'Oyly Carte. I was satisfied, as a result of these conversations, that they would increase their support materially for the arts. This made the approaches very well worth while.
  Mr. Fell: Will my right hon. Friend bear in mind the splendid work of that child of the City, the City and Guilds College? Will he visit the establishment, which lies only five minutes by car from the House of Commons, and give it all the support that he can?
  Mr. St. John-Stevas: I agree with my hon. Friend that it is an excellent institution which does very good work for the arts. He suggests that I visit it. I shall be delighted to do so if it happens to ask me.
  Mr. Arthur Lewis: During the right hon. Gentleman's discussions with these eminent gentlemen about grants, and so on, did any question come up about giving further grants to that wonderful theatre at Stratford, which currently has a marvellous show which originally was entitled "Ditch the Bitch"—the title has now been changed? Did he discuss that, because everyone is talking about it and saying how necessary it is to give the theatre more money?
  Mr. St. John-Stevas: The hon. Gentleman and I must move in different circles. No one is talking to me about that play. Certainly I did not raise the matter with the banks. That was probably just as well, since I have never seen such unanimously bad notices for a play as that one received.

  MUSEUMS AND GALLERIES(CHARGES)
  Mr. Nicholas Bakerasked the Chancellor of the Duchy of Lancaster if he will now consider the introduction of

  1083
  charges for admission to museums and galleries so as to preserve standards in times of economic difficulty.
  Mr. St. John-Stevas: No, Sir.
  Mr. Baker: Will my right hon. Friend not accept at face value the views of the artistic establishment on this one, bearing in mind the success of "The Vikings" exhibition at the British museum, the fact that people generally value what they pay for, and that foreign visitors, to whose museums we make a substantial contribution when we go to their countries, would be prepared to pay? Does not my right hon. Friend see that a system of charging might provide a means by which works of art which might otherwise leave the country can be bought for the British public?
  Mr. St. John-Stevas: I am sorry that I cannot agree with my hon. Friend, but I am not sorry about the substance of the disagreement. That is a distinction which hon. Gentlemen will immediately see.
  We have been round this course before and I do not wish to go round it again. It is open to local museums to charge if they so wish, and it is open to the national museum to charge for special exhibitions—such as "The Vikings" exhibition—if it wishes to do so. It must be left to them. I have no intention of introducing general charges for museums.
  Mr. Faulds: Will the right hon. Gentleman accept that he will have the total support of the Opposition in opposing the reintroduction of museum charges, which lower attendances and damage the public purposes of museums and galleries?
  Mr. St. John-Stevas: That expression of support gives me no reason to change my mind.

TEXTILE INDUSTRY (LANCASHIRE)
Mr. Straw: 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 mounting crisis in the Lancashire textile industry."
1084
My immediate reason for raising this matter today is the announcement on Thursday last of the redundancy of 91 workers at the Mossbridge Yarns mill in Blackburn following the announcement 10 days ago of 90 redundancies at the Waterfall mill in Blackburn. Many of those made redundant are my constituents.
Given the scale of redundancies across the whole of industry, I can understand that 180 redundancies declared in one town may appear not to be a sufficient reason for moving the Adjournment of the House, but because of the organisation of the textile industry into relatively small units and factories, individual redundancies and closure applications rarely involve more than 200 or 300 jobs at any one time. Therefore, there never will be a day, given the nature of the industry, when one can point to 5,000 jobs going in a single, dramatic announcement as, for example, can happen in the steel industry.
What I can point to, however, is the fact that 9,000 jobs have been lost in the textile industry since Christmas. One-fifth of the Lancashire textile industry has been wiped out in six months. When I made a similar application on 6 May, job losses stood at 4,500, with 20 mills having been closed. Now, almost two months later, the total stands at 9,000 lost jobs, with 53 mills closed. In Blackburn last month unemployment went up by 1,000 in four weeks.
The importance of the issue, Mr. Speaker, is obvious. Sixty thousand people depend for their livelihood on employment in the Lancashire textile industry. According to the Financial Times, half those jobs are at risk if present conditions persist.
The urgency of the situation is that unless firm Government action is taken more and more jobs will go. That point, as I am sure you will understand, Mr. Speaker, is well illustrated by what has already happened in the industry over the last two months.
As the Leader of the House knows only too well, we have repeatedly asked him for a debate on the textile crisis and, while sympathy from him has been in abundance, no action has followed. The only way we shall get a debate on this issue, I think, is by an emergency application being granted under Standing Order No. 9.

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Death can come just as surely by a thousands cuts as by a single bullet. The Lancashire textile industry is suffering a slow but sure death through the Government's complacency and inaction. I respectfully beg of you, Mr. Speaker, to grant this application.
Mr. Speaker: The hon. Member for Blackburn (Mr. Straw) gave me notice this morning before 12 o'clock that he would seek leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that he believed should have urgent consideration, namely,
"the mounting crisis in the Lancashire textile industry."
The hon. Gentleman has drawn the attention of the House to a very serious matter. He has submitted many facts to us. He knows, and the House knows, that I do not decide whether the serious issues to which he has referred shall be debated. I merely decide whether they should take precedence over the business for tonight or tomorrow.
As the House, knows, under Standing Order No. 9 I am directed to take into account the several factors set out in the Standing Order but to give no reasons for my decision. I listened with anxious care to the hon. Member, but I must rule that his submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

WELSH AFFAIRS
Motion made, and Question proposed,
That the matter of the Welsh language, being a matter relating exclusively to Wales, be referred to the Welsh Grand Committee for their consideration.—[Mr. St. John-Stevas.]
Mr. Heffer: On a point of order, Mr. Speaker. I should like to ask for your guidance before we pass the motion. The motion says that the matter of the Welsh language is one "relating exclusively to
1086
Wales." I do not know what to do about the motion, Mr. Speaker. I do not wish to object, and I do not wish this matter not to go to the Welsh Grand Committee. However, I do not believe that the Welsh language is exclusive to Wales. I went to Liverpool university in the evenings to study Welsh language and Welsh history. Therefore, the Welsh language is not a matter exclusively for Wales.
I am not certain what I should do. I do not want to object to the motion, because I believe that the matter should go to the Welsh Grand Committee. Perhaps you, Mr. Speaker, as a Welshman, can help me.
Mr. Speaker: I am much obliged to the hon. Member. I confess that I had not realised that he had been to Liverpool university in the evenings to study Welsh. However, the wording of the motion follows exactly the wording of Standing Order No. 7 (52).
It is, therefore, in order to put this matter before the Welsh Grand Committee, rather than to say that it is not of interest to other hon. Members, that it is worded in that way. I will put the motion to the House.
Question put and agreed to.

CIVIL AVIATION [MONEY] (No. 2)
Queen's Recommendation having been signified—
Resolved,
That, for the purposes of any Act of the present session to provide for the reduction of the public dividend capital of the British Airways Board, the subsequent dissolution of the Board and the vesting of all its property, rights, liabilities and obligations in a company nominated by the Secretary of State and to amend the Civil Aviation Act 1971, it is expedient to authorise any increase in the sums issued out of or paid into the Consolidated Fund or the National Loans Fund which is attributable to provisions of that Act setting a limit of £200 million on the aggregate amount outstanding in respect of the Civil Aviation Authority's initial debt and of the principal of any money borrowed by the Authority.—[Mr. Cope.]

ORDERS OF THE DAY

  CIVIL AVIATION BILL
  As amended (in the Standing Committee), considered.
  3.38 pm
  Mr. John Smith: On a point of order, Mr. Speaker. I should like to make a minor point about the selection of amendments. Amendments Nos. 6 and 7, in the names of myself and my hon. Friends, are grouped together. It so happens that amendment No. 54 raises the same point. I think it would be for the convenience of the House if amendment No. 54 were grouped with amendments Nos. 6 and 7. I understand that the Government have no objection to my proposal, which should shorten our debate.
  Mr. Speaker: Those words always appeal to me.
  The Under-Secretary of State for Trade (Mr. Norman Tebbit): I beg to move,
  "That the order in which proceedings are taken shall be New Clauses 5 to 14 and 16 and 17, amendments to clauses 1 to 9, amendments to schedules 1 and 2 and to part I of schedule 3, new clauses 3, 4, 15, 18, 2 and 1, amendments to clauses 10 to 25, new schedules, amendments to part II of schedule 3 and amendments to the title."
  I think that this will be for the convenience of the House. The wording of the motion is different from that of the motion on the Notice Paper. The alteration has the agreement of the Opposition.
  Question put and agreed to.

  CIVIL AVIATION BILL
    New Clause 5

      NOMINATION OF DIRECTORS OF SUCCESSOR COMPANY
      "Pursuant to the provisions of section 2(2) to this Act the Secretary of State shall nominate at least two non-executive directors of the successor company".—[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. Speaker: With this we may discuss new clause No. 14—Appointment of Non-Executive Directors of Successor Company.
      Mr. Smith: The new clause ensures that the Government shall nominate at least two-non-executive directors to the board of the successor company to British Airways. New clause 14, in the name of the hon. Member for Brentwood and Ongar (Mr. McCrindle), has much the same effect.
      The Bill, which we opposed strenuously on Second Reading and in Committee, is dangerous and foolish. It seeks to change British Airways from being a successful public corporation into a private sector company. However, the Government say that they do not wish to sell 100 per cent. of the shares. They do not wish to dispose of all their interests in the successor company. Indeed, they say—and we have only ministerial assurances, for what they are worth—that they will retain 51 per cent of the shares.
      The Government propose to sell up to 49 per cent. of the value of British Airways to the private sector. We do not know yet what proportion they will sell, nor, therefore, the proportion that they will retain. We do not even know whether they will carry through the exercise. All the signs are that if they attempt to float shares in the reasonably near future the valuation accorded by the market to them will be so low as to be a gross undervaluation of British Airways. That would constitute a substantial fraud on the taxpayer. We have grave doubts about whether the proposal will be carried through. However, we must proceed on the assumption that the Government will go ahead with the operation.
      Our case is that at least two of the directors of the successor company should be appointed by the Government. In Committee we opposed the sale of shares at all. We also argued that a majority of the directors should be nominated by the Government because the Government will continue to own the majority of the shares. Our present proposition is modest.
      Mr. Russell Kerr: It is modest enough.
      3.45 pm
      Mr. Smith: It is extremely modest. Our original proposition was that the majority of directors should be appointed by the Government, but we would really like the Government to abandon their foolish policy.

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      Let us consider the Government's proposition. They will retain 51 per cent. of the ownership of the successor company, but they plan to have no directors on the board which will run that company. The Government say that they do not want to interfere in the running of the company, although they will be the majority owners. It is a startling proposition that the majority shareholders in a company should, before the company is set up, say that they will have nothing to do with the appointment of directors. Can anyone imagine a private sector holding company saying "We own 51 per cent. of the company but we do not want anything to do with it. In fact, we are so keen on having nothing to do with it that we shall not have even one director on the board to look after our interests"?
      If the successor company comes into existence, the British public will have a majority ownership. I do not know how long that position will be maintained. That is one of the reasons why we want at least one director on the board to look after the substantial British interest and investment. It is a startling and monstrous proposition that the British public owning 51 per cent. of the shares should not have even one director on the board that controls that investment.
      When that argument was put to the Secretary of State on Second Reading, he was, as is often the case, hopelessly confused. He did not seem to understand precisely what the Government plan to do with their majority shareholding. We pursued the issue carefully in Committee. All that we heard from the Under-Secretary of State was that in extreme situations, such as if the minority shareholders want to get rid of the whole board, the Government might step in and use their majority votes at the annual general meeting.
      The Government are standing back and handing over control of the company to the private sector minority. If the Government sold the majority of the shares it would be unreasonable to deny that majority section control of the board. However, not only is there to be a fraud on the public in terms of the asset value to be obtained for British Airways, but there is a startling twist in the public sector versus private sector argument, namely, that the public sector is to divest itself of all con-
      1090
      trol, even though it owns a majority of the shares. The proposition is so startling that it is almost unbelievable that any Government would have the face to propose it.
      The Government are using the same device and selling off shares in British Aerospace, but two Government directors are to sit on the board. A distinction is being made because British Aerospace is a major Government defence contractor. It is a difference, but it does not explain why one company should have two Government directors and the other should not. The Secretary of State for Industry, who obviously does not keep in close touch with the Secretary of State for Trade, said that it was a good idea to have two outside directors on the board of a company. That does not appear to strike the Secretary of State for Trade as having any value.
      The Government propose not only that the assets should be sold but that the whole control of the company should be given to the private sector, even though it will hold a minority shareholding. That is an outrageous and monstrous proposition to which Parliament should not assent.
      Mr. Michael Colvin: The right hon. Gentleman refers to the whole control of a company. He is a lawyer and he probably understands such matters better than I. What does "whole control" mean? He insinuates that 51 per cent. of the shares necessarily gives "whole control". Surely whole control of a company can be in the hands of a group with a much smaller proportion of shares.
      Mr. Smith: That is correct. There would be a case for having Government directors on the board even if the Government held fewer than 51 per cent. of the shares. With 51 per cent. of the shares being in the Government's hands that merely strengthens the case for having Government directors. Shareholders can have effective control of a company with fewer than 51 per cent. of shares if they control the largest voting block. There might also be provisions in the articles of association of a company giving particular rights to certain classes of shareholders. Perhaps the hon. Gentleman can explain how anyone with 51 per cent. of the shares in an undertaking can

      1091
      say that he does not want to have anything to do with running it. The directors will be in charge of the day-to-day running of the company.
      The Government are giving away control of British Airways, our most import ant flag-carrying airline with the largest network of international routes in the world, to a minority, private sector holding. That is a fantastic proposition.
      British Airways has been developed to its present international position not only by the skill of those who run it but by substantial public investment. What is likely to happen to the new company? We are suspicious of the Minister's assurances that the Government will retain a 51 per cent. holding.
      Mr. Tebbit: We have given no such assurance.
      Mr. Smith: In Committee there were many references to the Minister proceeding on the assumption that the Government will retain a 51 per cent. holding. If he cannot even assure us of that, the position is even more serious.
      Mr. Tebbit: I think that I made it perfectly plain in Committee that it was the present policy of Her Majesty's Government to hold 51 per cent. or more of the shares but that that policy was not guaranteed by me or any of my colleagues to continue indefinitely.
      Mr. Smith: The Under-Secretary is saying that he cannot inform us what the Government's policy will be in the next few months. I thought that his position was that for the life of the Government they would retain a 51 per cent. shareholding, but perhaps the hon. Gentleman has taken a U-turn, a Z-turn or a W-turn, or whatever other manoeuvres are carried out by the Government, and he feels unable to assure us on that score. His statement this afternoon provides an added reason for having Government directors on the board of the new company. If the Government are so uncertain about whether they want to keep control of the company, that is all the more reason for their having directors to superintend it.
      Mr. Tebbit: I cannot see what all the fuss is about. I can understand the right hon. Gentleman's point of view. He put
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      it in Committee. I cannot understand why he should think that my view has changed or that anything I have just said differs in any way from what I said in Committee. It does not.
      Mr. Smith: I am always a believer in the possible repentance of the sinner, and I had thought that in the time since we considered these matters in Committee some of these important matters would have dawned on the Under-Secretary. As is often the case, I was unduly generous in my hopes for the hon. Gentleman. I was wildly and unreasonably optimistic, and I apologise for having given the hon. Gentleman the benefit of the doubt in this matter, because it was clearly something that he is not pleased to have.
      We therefore do not know what the Government will do with their shareholding. If they cannot tell us, even for the life of the Government, that they will maintain the 51 per cent. holding, when will they make up their minds? Will they change their policy of holding 51 per cent. within the next six weeks, the next year or the next 18 months? There will be hopeless uncertainty surrounding the issuing of shares in the company, and potential investors will want to know the Government's policy. The Under-Secretary had better be able to tell them more than he has told us so far, either in the House or in Committee.
      We are very suspicious about what is going on. The whole idea has been sold to the public on the basis that the Government are selling off a minority of shares to the private sector and on the basis that there will be certain assurances for the airline employees and everyone else on the basis that, although the Government will not control events, they will hold a majority shareholding. As anyone who knows the airline industry is aware, it is going through difficult and troubled times. The profit and loss accounts and the balance sheets of the major world airlines, most of which are located in the United States, indicate the extent of the trouble. They have been caught between falling prices and rising fuel costs. It has been extremely hard for any airline to achieve profitability. This fact applies to British Airways and all other British companies be they in the public or private sector, as well as to international organisations.

      1093
      British Airways faces an added complication in that it is about to embark upon one of the most important re-equipment programmes in its history. It is phasing out the noisier aircraft for the quieter aircraft that are on order. The vast programme is expected to cost about £2·5 billion. However, total uncertainty will be created by the manoeuvre in which the Government are engaged because the Government guarantee on borrowing, which applies automatically to a public corporation, will be withdrawn.
      If the company's assets are seriously undervalued, as there is a danger they will be, when the shares are sold the whole of this borrowing programme—not all the money will be borrowed, since a substantial amount will come from the airline's resources—will be put at risk. If that happens and the company finds it difficult to carry out its buying programme, it may have to consider the possibility of realising some of its assets to produce the cash it needs. That is when we become most concerned about what will happen to some of the profitable subsidiary activities of British Airways.
      I have in mind particularly the helicopters division which is extremely successful and profitable and is one of the major carriers between production bases and platforms in the North Sea. Two major operators are engaged in this business, Bristow, the private sector company, and British Airways. I believe that British Caledonian also intends to participate. It would be scandalous if the British Airways helicopters subsidiary were sold off to be gobbled up by a private sector competitor. It is a profitable undertaking, which is efficiently run. Its sale would be a shocking example of the Conservative policy of selling off State businesses that make a profit while leaving those that do not to be carried by the taxpayer.
      We see that policy in operation across the board. My guess is that the proposals that the Government are likely to make for the British National Oil Corporation may be the most scandouous of all when they will seek to get rid of important public assets to the private sector. We see the policy in operation in other transport undertakings as well.
      In order to forestall such an event it would be most useful to have Government directors on the board who could speak up for the public interest because
      1094
      this 51 per cent. shareholding which the Under-Secretary will not guarantee is open to be raided at any time, especially since the company will be controlled by the minority shareholding interest. In these circumstances it would seem to us only prudent to have the protection which two Government directors would provide. It would not be complete protection, I agree, but those directors would be able to speak up about what was happening if such a raid on the company's resources were contemplated by the Government.
      In addition, there is a perfectly reasonable case for having Government directors. They are present in other public corporations. The BNOC, with the establishment of which I was involved in a previous capacity, has two civil servants on the board, one from the Treasury and the other from the Department of Energy. That arrangement works extremely well and I see no signs of the Government changing it. There are other areas where the Government, having a stake in the business, insist on representation on the board. I know that the hon. Member for Brentwood and Ongar believes that there is a lot to be said for having non-executive directors on the board, particularly when there is a substantial public investment in the company.
      Mr. Cranley Onslow: I am not sure that the right hon. Gentleman is strengthening his case. If he is suggesting that it would be a good idea to have two civil servants on the board of British Airways I do not see how he could regard them as being ideal custodians of the public interest against the supposed preferences of the Government for whom they would be working.
      Mr. Smith: The hon. Gentleman should listen more carefully, because I was not developing such a case. He has set up an Aunt Sally that needs no knocking down. The hon. Gentleman knows perfectly well that I referred to the innovation in another public corporation—BNOC—on the board of which sit two civil servants. The most important factor is to ensure that there are directors on the board who do not represent the minority shareholding group.
      One wonders what harm there could conceivably be in having Government

      1095
      directors on the board, why the Government have so resolutely set their face against this proposition. In Committee I thought that this was a point on which they might have given way, because it would not run a coach and horses through the Bill. In addition, it was an arrangement that the Secretary of State for Industry had proposed for the new British Aerospace company. There cannot be great difficulties in operating in that way because the Department of Industry thinks that it will be able to work perfectly successfully with two Government directors on the board of British Aerospace.
      Throughout the Committee stage we heard not a single argument from the Government that it would be difficult, awkward or undesirable to have Government directors on the board of the new company. This thoroughly bad idea in principle is offensive to any conception of equity when a minority shareholder is given total control over the board. Any motion that this is some attempt to fund some new middle way between total public ownership and total private ownership is subverted by the proposition that the private sector will gain control for less than half the money. That is what it amounts to, and it is a ridiculous proposition.
      4 pm
      Guardians are needed because we cannot trust the Government. The Under-Secretary made that crystal clear in his intervention. They do not know whether they want 51 per cent. They know that for the next week or so, but they have no idea what will happen after that. It is a serious issue when the control of the company is at stake. Consider all that is invested in the company—all those who have committed their lives to the company at all stages of management, staff and work force. Their future may depend upon the whim of the Under-Secretary or his senior colleagues, who are in such a state that they do not know whether they want to keep 51 per cent. That is all the more reason why they should have people on the board to whom they can look as the guardians of the public interest. They would be Government directors.
      We would like a majority of directors. That is the only equitable solution to the
      1096
      problem. As we do not have a majority in the House we are prepared to settle for something less than that. We may not even achieve that, but if we fail to do so it is because the Conservative Party is not willing to listen to reason, but is prepared to drum the Government's proposals through the House by use of the force of the majority rather than by an appeal to the reason of the House.
      Mr. R. A. McCrindle: During the 10 years that I have served as a Member in the House the number of occasions on which I have found myself in substantial disagreement with the leadership of my party is extremely small. But I must say that on this occasion, as will be deduced from the fact that I have tabled new clause 14 in similar terms to new clause 5 moved by the right hon. Member for Lanarkshire, North (Mr. Smith), I find myself in substantial agreement with the argument that there should be some element of involvement by Government-nominated directors in the successor company.
      Perhaps I could claim some small benefit from the fact that, when the Opposition originally tabled their amendments in Committee, it was their wish to have a majority of all the directors appointed by the Secretary of State and at that time I put forward a similar proposition to that which I am putting forward today. Perhaps I could claim that the new clauses owe more of their parentage to the argument which I consistently deployed than to the Opposition arguments.
      I noted that the right hon. Member for Lanarkshire, North engaged in an assessment of almost the whole purport of the Bill while moving a new clause that has a relatively small significance in relation to the total. I do not intend to follow his example, although I agree with the idea of appointing directors via the Secretary of State. I do not accept some of his wider suggestions about what is likely to happen if and when the Bill is enacted. He had basic doubts that the Government would carry through the aims and objectives of the Bill. I have no such doubts. Nor do I wish that that should be so. The difference between the right hon. Gentleman and myself is that I approve of the general aim of part I of the Bill. I hope that it will lead to considerable

      1097
      success in the injection of private capital into the successor company. The Opposition and myself part company there. I wish to see a successful company take over from British Airways.
      That would be better achieved if there were two nominees of the Secretary of State on the board. I accept that the airline industry is going through troubled times. I concede that the timing of the launching of the shares will be absolutely crucial. I also concede that for the next year or so it will be extremely difficult to achieve a successful launching of the minority shareholding which is to be offered to the public. That leads the Opposition to the conclusion that we should abandon the whole project. I do not reach the same conclusion. The timing is critical—and that is not a new conclusion for me. On Second Reading I indicated some concern that the timing chosen might be dictated more by political factors than by economic factors, and that that would not be in the best interests of succeeding in what the Government and I are united in attempting to achieve.
      I wish this measure success. I remind the House that it is not intended to be a full denationalisation measure. The objective of this part of the Bill is not to sell off British Airways but to inject an element of private capital participation into a new limited company. I stress that because it is an extremely important point. Surely I am correct in saying that the objective of the Bill, no matter what may be the objective of any successor Bill which may be introduced even within the lifetime of the present Parliament, is not to denationalise British Airways but merely to inject an element of private capital into a limited company. It would be wrong not to continue participation on the board of directors on behalf of the majority shareholders. Because the majority shareholding will be retained by the Government they are in duty bound to represent the majority shareholders—in other words, to represent the taxpayers who are the majority shareholders—in one fashion or another.
      One of the better ways of ensuring that the taxpayers' interests continue to be borne in mind by the new company would be for the Secretary of State to appoint two directors. They would not take part in the everyday running of the new company, as that would be at variance with
      1098
      the Government's proposals, but they would be non-executive directors simply and solely representing the taxpayers who continue to own a majority of the company.
      Mr. Colvin: I follow my hon. Friend's argument, but if the Secretary of State is to retain in excess of 51 per cent. of the shareholding in the new company, and it is the shareholders who elect the directors, he could use his power as the majority shareholder to elect whom he wishes to the board. Why does that have to be written into the Bill as is suggested in new clause 14?
      Mr. McCrindle: It was perhaps unfortunate that my hon. Friend did not have the privilege of serving on the Standing Committee on the Bill. If he had, I think he would have heard my hon. Friend the Under-Secretary of State say on more than one occasion that it was the Government's intention merely to allow the shareholders to appoint the directors. If I read that correctly, that is another way of saying that, without necessarily involving himself as the majority shareholder on behalf of the taxpayer, it was a perfectly conceivable—in fact, expected—result that the minority shareholding, that is to say, a maximum of 49 per cent., would be left to appoint the directors.
      If I am correct in saying that that is the position that has been outlined by my right hon. Friend the Under-Secretary of State, I imagine that perhaps I am on the point of obtaining my first convert, at least on the Government Benches, because clearly the point of my hon. Friend's intervention would not then apply.
      Mr. Onslow: My hon. Friend will recall that he and I did not agree in Committee on much of this, and I shall not bother him by rehearsing those arguments in an intervention. He has stated the case as he sees it for there being two people on the board of the new company simply and solely because the Minister puts them there to protect the taxpayers' interest. Will he tell us what sort of people he has in mind as being selected for this purpose, and precisely what their instructions from the Minister would be?
      Mr. McCrindle: That is a somewhat astonishing intervention. The Secretary of State should first have the power to

      1099
      make the appointments. Then, as time goes by, any Government change of policy should be reflected in what those people say, because they are continuing to represent the 51 per cent. shareholding and the taxpayer. It is right that we should leave the Secretary of State to make the appointments and then from time to time to inspect the appointees, so that they may reflect Government policy in relation to British Airways as it develops.
      I can think of no company of any sort where the majority of the shareholders are not represented on the board of directors. I do not have to look just at private companies; I can look at public corporations. I look not only at the example given by the right hon. Gentleman, namely, British Aerospace, where there are indeed to be two appointees of the Government as non-executive directors. I look considerably into the past and I recall that since 1918 British Petroleum has been in a position not dissimilar to that proposed under the Bill for British Airways. Unless I am very much mistaken, since that time the British Government have appointed one or two persons to the board of British Petroleum, and, pace the intervention of my hon. Friend the Member for Woking (Mr. Onslow)—who had left the Chamber but has just returned—I cannot recall a major occasion on which it has been suggested that those two people were necessarily the puppets of the Government nor that their presence on the board of British Petroleum necessarily prevented British Petroleum from carrying out its objectives and becoming one of Britain's more prosperous companies.
      I do not think it at all acceptable that we should have either a private company or a corporation of a mixed type such as is proposed here under the name of British Airways Limited. I simply do not believe that it is correct that there should be no representation on the board of any sort.
      4.15 pm
      I may be told that British Aerospace is a different matter because there are defence involvements. I may be told that British Petroleum is something that happened a long time ago, and that, if we were creating British Petroleum now, we would not appoint non-executive
      1100
      directors, in which case I would perhaps contrast the position not with that of other British companies but with other airlines where there is an element of Government involvement on behalf of the taxpayer.
      I am not here speaking of some small airline in some small country. I am speaking of European airlines of such strength and importance as Lufthansa, SAS, Alitalia, Swissair and KLM. To some degree or other, in all these cases there is an involvement by the Government on behalf of the taxpayer, and in all the cases, as far as I have been able to ascertain, there is a representation on behalf of the taxpayer, through the appointment of the responsible Minister, on to one or other of the boards. I say one or other of the boards because in one or two of these cases there are two boards.
      Whether we look at the comparison of a private company—unrepresented, even though there is a majority shareholding—or at British Aerospace or British Petroleum, as precedents in the public sector here, or whether we look to Europe, at airlines of comparable strength and importance to British Airways, the position remains the same. Where there is retained on behalf of the taxpayer a majority involvement in any one of these circumstances, then, through the responsible Minister, there is the appointment of at least one director.
      I have suggested that these directors should be appointed purely on a non-executive basis because I repeat that that is the pattern in British Petroleum and in British Aerospace. It is the pattern to a large extent in the European airlines to which I have referred, and so, in my contention should it be the pattern in British Airways Limited.
      I accept, as the right hon. Gentleman said, that British Airways are facing very considerable difficulties in the period that lies immediately ahead. They are faced with difficulties of rising oil prices and of fares which are under the microscope in the EEC and in other ways. They are faced with all the threats that whole or partial de-regulation may bring in its train. They must look across the Atlantic to the example of the United States airlines and see that they are in for very troubled times indeed in terms of continuing profitability.

      1101
      There is an additional element in regard to British Airways—that they are about to become a mixed public-private corporation. Government policy will be extremely important for airlines in the immediately foreseeable future. In those circumstances, it would be impossible for British Airways Limited to ignore developments in Government policy. There is a very real need for my new clause not only in regard to the taxpayer but also in order to keep British Airways Limited advised of the changing thinking on aviation that will no doubt overtake the Department of Trade.
      I hope that my hon. Friend the Under-Secretary of State, whatever else he may challenge, will not challenge the suggestion that there may be a change of policy, because some of us have observed from recent ministerial pronouncements concerning aviation that a change of policy may very well take place under the present Government.
      Mr. Barry Sheerman: Many of us on the Labour Benches found the arguments advanced cogently by the hon. Member for Brentwood and Ongar (Mr. McCrindle) very convincing on this aspect of the Bill, at least in Committee, and I am only sad that more Conservative Members are not present to hear their colleague's condemnation of the absence of any Government-appointed directors on the proposed new board of British Airways.
      Sitting on the Opposition Benches, it is interesting to note that during the hon. Member's speech certain Conservative Members were leaving the Chamber in order to get the annual report of British Airways. It is a pity that some of them did not read it some time before we started on the long hours of debate in Standing Committee.
      I shall not speak for long on the new clause because the arguments have already been very well rehearsed in Committee, but I should like to make a very important point that is essential to the whole debate on directorships. It seems to many Opposition Members that the root of the problem is the fact that the Government have an inability to understand that there is a sophisticated and important relationship between Government and autonomous and quasi-autonomous bodies.
      1102
      The history of the 13 months of the present Government has shown us that the Government look in very black-and-white terms at the relationship between Government and other bodies in which they have an interest or might have an interest. Their whole attitude towards quangos has led us to a ridiculous position in which many bodies doing a great deal of good work have been undermined and some have been abolished, and a great deal of good will in the community has been lost because of this blanket black-and-white attitude—that anything that is a quango, a quasi-autonomous non-governmental body, is necessarily bad.
      That is a parallel to the Government's attitude towards the nationalised industries. That seems to be that there must be nationalised industries or there must be private industry, and never the twain shall meet. I am one of those Opposition Members who believe that the future of British industry and of British civil aviation is bound up with a complex relationship between Government and private industry. It necessarily must be, in terms of civil aviation, because of the complex and international nature of civil aviation, and the relationship between Government and civil aviation in Britain must be one of sensitivity, flexibility and change.
      This Bill is the wrong kind of Bill to introduce, because I believe, as do many Opposition Members, that it is a short step from this Bill to the complete selling off of the public interest in civil aviation and the national flag carrier of British Airways. Many of us believe that the reason why the proposal to have two Government appointed non-executive directors has been so fiercely resisted by the Government, and the reason why the Under-Secretary is so unforthcoming about whether this is the policy for all time, is that when most Ministers stand at the Dispatch Box, they say "This is Government policy, and we have had done with it." They do not have to fill in any qualifications, any hesitancy, any building-in of escape clauses. It is either Government policy or it is not Government policy.
      We have today had rehearsed what we heard time and again in Committee: that it is the Government's policy as of this moment; it is Government policy today. It might not be Government policy tomorrow, next week or next year. So

      1103
      there is a hesitancy about all the pronouncements regarding the Bill. The Bill is full of question marks, and/or "maybes" and "ifs". When will the Bill be implemented? When will the shares in British Airways be sold off? At what juncture, when and in what way, and how many? What will be the precise relationship between the Government and the new board? We are not altogether sure about that.
      When we reach part II, the House will see that my qualifications about the difficulty of the Government's relationship with other bodies outside is highlighted by the strange relationship envisaged between the Government and the CAA, a relationship which, in Committee, we thought had been spelt out relatively clearly. However, two weeks ago we had the announcement about the decision of the Secretary of State for Trade on granting licences for routes to Hong Kong. Many Opposition Members were amazed then because all the arguments that were heard in Committee were turned on their head. Unfortunately, the Under-Secretary was not in the Chamber then. I think I am right in saying that. It was probably a very good thing to spare his blushes in relation to what he said in the hours and weeks that we spent in Standing Committee, because at that juncture everything that he had said was reversed.
      Mr. Tebbitt: I would not want to trap the hon. Gentleman into discussing matters which will no doubt be discussed on a more appropriate part of the Bill. However, I should remind him that the anxiety which he and his colleagues expressed in Committee was that the CAA would make bad decisions and would not be overruled by the Secretary of State.
      Mr. Sheerman: I certainly agree that we were making a rather different case from that of the Under-Secretary. However, on Report we expect Governments to make the same arguments as were made in Standing Committee and to adhere to them and to maintain the kind of relationship which they envisaged a few weeks ago—although at the same time they make an announcement on route licensing which seems to stand everything that the Government said in Committee on its head.
      1104
      I return to the main thrust of my remarks. The central ambivalence about external bodies will be highlighted during this Report stage. The relationship between British Airways and the present Government is an uneasy one, as is the relationship between the Government and the CAA. It is about time that we discussed a proper and efficient relationship between the Government and autonomous and quasi-autonomous bodies. From my limited experience, it seems to me that one of the clear things at which we should aim is a proper relationship between the Government and the boards of nationalised corporations. I include those organisations not totally owned by the Government—the British Petroleum-style organisations.
      The Minister has very often denied that there was a comparison with BP, but when one looks at the literature that the Conservative Party has produced over the past few years one constantly sees references to the BP model. If they were honest, the Government would admit that it is a BP model in many respects that they found most beguiling when they were designing this new format for British Airways. The one great difference, as the hon. Member for Brentwood and Ongar pointed out, is that the relationship is different in comparison with BP, in that there will be no representation from the Government on the board of British Airways. We find this rather strange.
      It is to repeat the arguments to say that I believe that my constituents who are perhaps involved in their leisure time in organising the management and running of things such as working men's clubs would be horrified about the principle that an organisation has 51 per cent. of its shares—perhaps more than 51 per cent.—owned by someone outside who is not represented on the management committee. That does not make sense to ordinary people outside. From what I can judge from response on the Conservative Back Benches from Members who did not serve on the Standing Committee, it does not make sense to them either. If there were more Conservative Members on the Back Benches at present, I think that they would be persuaded by the case which we are making on these two clauses.
      It does not make sense to have no Government representations on the BA board. I am sure that, as the people

      1105
      realise that their national airline is being taken away from them by a group of people who are purchasing only a a minority of the shares, that old fashioned statement will percolate through—"We wuz robbed."
      4.30 pm
      Mr. Onslow: Before I turn to the content of the new clauses, I want to say something about the speech of the right hon. Member for Lanarkshire, North (Mr. Smith). One could tell from his speech that he is a lawyer. It was clearly a compôte of all the arguments which had occurred to him, whether mutually consistent or not, inflated into objects which he hoped would frighten, and therefore convince, his audience. These are the typical scaremongering tactics that we became familiar with in Committee from the right hon. Gentleman. He did not say much that he had not already said in Committee. He did not convince the Committee, even though he was then arguing a different proposition. In Committee he argued that a majority on the board of the new company should be Government directors, which is not what he is arguing today.
      Mr. John Smith: The hon. Gentleman will remember that we put a number of propositions in Committee and that the one that the House is now considering was not defeated. There was a draw.
      Mr. Onslow: If the right hon. Gentleman had been listening he would know that I did not say that it was defeated; I said that he argued chiefly a different proposition in Committee—that a majority of the board should be Government appointments. The right hon. Gentleman's scaremongering tactics included an attempt to suggest that the board's intention on attaining its independence—that is, in effect, what we are hoping to achieve—is instantly to set about selling off the most prosperous parts of its operations. I must declare an interest as a consultant to Bristow Helicopters Ltd, a company which did much more of the pioneering on the North Sea than British Airways did. It would never occur to me to tell Bristow's that it had a chance of acquiring British Airways helicopters. The Monopolies and Mergers Commission would stop it. That is not a sensible proposition.
      1106
      The right hon. Gentleman knows that what he has said is nonsense, but he trotted it out as a ritual bone to throw to the hon. Member for Feltham and Heston (Mr. Kerr), who needs something to gnaw on from time to time. I am sure that it has served a useful purpose in that context.
      Mr. Russell Kerr: I do not need the publicity.
      Mr. Onslow: I am sure that, if the hon. Member did, he would astonish us all by making a speech. If he says that he does not want publicity, I take his word for it.
      The right hon. Member, for Lanarkshire, North seems to have a curious fixation about the forward investment programme of British Airways and the inevitability, as he sees it, that it will be carried through exactly as it was originally conceived, whether circumstances have changed or not. The right hon. Gentleman reminded us that the airline market has changed a great deal. He knows that the re-equipment plan was formulated in market conditions very different from those of today. If he believes that the board of the new company should be slavishly bound to follow every decision made two, three or four years ago—about the acquisition of 747s or whatever—without using its own intelligence and knowledge of market changes to review those decisions, his business experience must be very small.
      If the right hon. Gentleman supposes that that is the function of the new board—simply to implement all the decisions taken in the days of nationalisation—he cannot be directing his mind to the functions of the new board. Those functions will be to run the company in the "best interests" of the shareholders. I take those words from the several excellent speeches by my hon. Friend the Under-Secretary in Committee.
      The House will find my hon. Friend's remarks best summed up in column 189 onwards of the Committee Hansard. It may be a little misled by the fact that these sensible arguments are attributed to the hon. Member for Huddersfield, East (Mr. Sheerman), in which case I imagine that hon. Members might have skipped them. Even the hon. Member for

      1107
      Huddersfield, East must have skipped them.
      I remind the House particularly of what the Minister said:
      "There will be no Government directors as such. Like any other shareholder, the Government would be able to use their vote in respect of resolutions proposed by the board relating to membership of the board.
      I do not readily foresee circumstances in which the Government would use their majority to veto the proposals of the board in this respect."—[Official Report. Standing Committee B, 24 January 1980; c. 190.]
      I believe that that means that the Government would expect the resolutions put to the board to be broadly consistent with their own preferences—in other words, that the people who were to be nominated for membership would have had their names canvassed to the Government, that the Government would have said "Yes, we think that these are the people who can run the business in the best interests of the taxpayers and the shareholders. We see no reason to vote against them".
      Mr. John Smith: Political vetting.
      Mr. Onslow: "Political vetting", says the right hon. Gentleman—
      Mr. McCrindle: My hon. Friend intervened earlier to suggest that what he thought I was proposing was that there should be puppet directors on the board. If all this canvassing has gone on beforehand, what is the fundamental difference in his proposition?
      Mr. Onslow: I am very sorry, but I shall turn to my hon. Friend in a moment, so that he can turn his attention to me. I want to deal with the right hon. Gentleman while I am on this point and to ask him who on the list of non-executive members of the present BA board he expects would not reappear because they had been politically vetted? I remind the right hon. Gentleman who they are, in case he does not have the latest BA report and accounts by him—
      Mr. Clinton Davis: Why?
      Mr. Onslow: Because I want to be sure that I have the facts at my fingertips. I know that the hon. Member for Hackney, Central (Mr. Davis) is careless in his research, but I like to give the House the best information I can.
      1108
      I remind the right hon. Gentleman that Dorothy Barrett, Alan Fisher, Albert E. Frost, Sir Henry Marking, Sir Peter Parker and Jeffrey Maurice Sterling are the non-executive directors listed in the latest available BA report and accounts. I do not detect that they are all of one political persuasion.
      Mr. John Smith: That is not all of them.
      Mr. Onslow:I am sorry.
      Mr. Smith: I think that the hon. Gentleman is not accurate. I think that there is another director who is not named.
      Mr. Tebbit: Yes, since that report was published.
      Mr. Onslow: Yes, but I am sure that he would not claim to have been appointed because his political persuasion was the first recommendation that he had. Therefore, the point about political vetting is a very silly one, even for the right hon. Gentleman to make.
      Mr. John Smith: The thought occurred to me, in an interrogative fashion, only because the hon. Gentleman was contemplating thorough canvassing of people who would be put on the board—canvassing presumably done by the Government. The point of canvassing people is no doubt to find out their views. If the hon. Gentleman would be happy to see independent-minded people on the board, what is the point of all this canvassing that he envisages?
      Mr. Onslow: I am sorry, but the right hon. Gentleman has a genius for getting hold of the wrong end of the stick. What I meant and what I said was that the Government, as the majority shareholder, would be likely to be asked, before names were put forward to the AGM, whether they were suitable. It is not the Government who will do the canvassing but the board of the company, which presumably would consult its shareholders before making important decisions.
      The right hon. Gentleman does not know boards which do these things—that is his loss—but I think that he would, from his former responsibility for company affairs, endorse the view that a board of directors should keep in touch with its shareholders as best it can about such important matters as board appointments.
      Mr. John Smith rose—
      Mr. Onslow: No, I will not give way, or we shall be up and down all the time.
      I now turn to the point that I put to my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle). What sort of people would he see sitting at the board table with the Government's dog collar around their necks and what does he think they would particularly do? Would they be different from the present non-executive directors? Has my hon. Friend some different qualifications in mind? Does he suppose that in one year or two years the board of British Airways non-executive directors will be different from those who are at present non-executive directors? If so, why does he feel that?
      Thirdly, my hon. Friend told us that these non-executive directors in the Government dog collar would change their advice to the board as Government policy changed. That was what led me to say that they were puppets—although ventriloquists' dummies might have been a more accurate description. I cannot see that they can be said to have a will of their own if that is what he envisages their function as being.
      Mr. McCrindle: In order to save a long intervention, the summary reply to my hon. Friend is that I foresee non-executive directors appointed by the Government to the board of British Airways as being similar to the non-executive directors appointed by two other Secretaries of State to other similar boards. The question to which my hon. Friend must address his attention is: where is the fundamental difference between the type of company to which I have referred and the proposed British Airways Limited?
      Mr. Onslow: It is not that at all. The fundamental question is why should the people whom my hon. Friend wishes to see sitting there—simply because the Government have sent them there as dummies—be there at all? My hon. Friend has not told us this. He has not told us why he thinks that the overall composition of the board will differ so widely from the people who have run British Airways in the past with considerable experience, success, great public responsibility and an awareness of their
      1110
      duty to the taxpayer as the provider of the funds. Does he think that they will all be swept aside? Who will replace them? What fundamental change does he think will come over the board because of this measure? My hon. Friend has not suggested any reason why this might happen. He has just said that it would be a good idea to have two members of the great and good sitting there in case something goes wrong.
      Mr. John Smith: Did the hon. Member for Woking (Mr. Onslow) dissent from the proposition put forward by the Secretary of State for Industry on Second Reading of the British Aerospace Bill when he made two points—first, that there was increasing agreement among commentators that company affairs would be strengthened by external directors; and second, that the Government would ensure that the board of British Aerospace Limited would have the benefit of two external directors?
      Mr. Onslow: That has nothing to do with it. We are discussing a different company which intends to do something different. I do not dissent from the point about external directors. I am all in favour of the right hon. Gentleman being educated as widely as possible by being put on some boards so that he can get it into his head how a company works.
      Mr. Tebbit: My hon. Friend the Member for Woking (Mr. Onslow) has obviously grasped the point that seems to have eluded a number of hon. Members—that the Government have made it perfectly plain that there will be non-executive directors on the board of the company. I do not really understand the need for the argument about the role of the non-executive director. That argument is finished, over and done with. We have agreed with it. It is another one of the nightmares of the right hon. Member for Lanarkshire, North (Mr. Smith), which he keeps dragging up to no effect?
      Mr. Onslow: I entirely agree with my hon. Friend. It is a sterile debate into which we have been led by the repetition of the amendments.
      Finally, my hon. Friend the Member for Brentwood and Ongar has not given us a reason why there should be two non-executive directors with this qualification only—that the Government have put them

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      there. Why should the Government do this? Is it so that they can be constantly aware of the changes and shifts in Government policy, or so that other members of the board may be constantly reminded that, if they make decisions which do not conform with Government policy, they might find themselves voted out at the next annual general meeting? My hon. Friend has not said anything about the important point, and the Opposition have not begun to turn their attention to it—the contribution that the appointees in the Government dog collar make to the general efficient management of the company which must be the overall objective and which leads to its taking sensible investment decisions and running the company with the best interests of the country at heart. There is no reason why such people should be on the board and I believe that the amendment should be withdrawn.
      4.45 p.m.
      Mr. Clive Soley: I do not wish to take up too much time, as we have been over this argument many times before in Committee. Clearly the Government will oppose the argument and clearly they will use their majority to reject both new clauses. But we can say with some certainty—whether we take the view of the hon. Member for Brentwood and Ongar (Mr. McCrindle) that it is an injection of private capital, or whether we take the view that it is a move towards denationalisation—that it is abundantly clear that this is a total abdication by the Government of any responsibility to the taxpayer. That is what this is all about.
      There is a terrible lack of understanding, particularly on the part of the hon. Member for Woking (Mr. Onslow), about the interests of shareholders, as opposed to the interests of the taxpayers generally, which may or may not be the same thing. That point is not always grasped, and it is that point to which the Government seldom respond in a debate of this kind.
      This debate is about accountability. If one has two Government directors—whether they are in a dog collar or not—they are answerable to a Minister who is answerable to the House. Given that the people of this country have an interest in a successful national airline, be it
      1112
      nationalised or otherwise, it is right that they should have a voice in the House. Politicians are here to represent the British people and a failure to deliver the goods in an effective interest such as this is a failure of accountability. That is what the hon. Member for Woking fails to understand in his worship of shareholders' rights over and above those of the British public generally.
      I am worried about the whole concept of selling in this Bill. The hon. Member for Brentwood and Ongar made the point that timing was crucial. But when will the timing be right? I find it difficult to think of a time in the next 18 months when it will be right. British Airways are facing major problems, given the general state of the financial market, the changes in the airline business and the apparent determination of the Secretary of State to stir up a price war. Already in the newspapers we see advertisements by British Airways for cheap flights to Hong Kong to try to compete with Cathay Pacific and British Caledonian. The problem is that there is a limited number of airlines that will be able to survive this kind of competition in the coming financial climate. That is the problem. When will we sell the shares, at what price, and to whom? If they are sold in the reasonably near future, I suspect that they will have to be sold at a pretty low price to bring off the sale.
      I am not an expert on finance and I do not claim to be, but this does not look to most people like a particularly attractive investment in the immediate future. If that is so, who will buy and why? There is potential here for asset-stripping and unless there is some import by the Government to represent the British taxpayer on the board a situation will arise in which the shareholders' interests will clash with the interests of the public. In that case the British taxpayer will lose out. The Minister will be responsible for that, not the shareholders. The Minister consistently ducked this question in Committee.
      It is not responsible government to say simply that they have decided to sell off this national asset because they want to sell State organisations, and then say that they will forget the public interest. I understand the Government's philosophy—although I do not agree with it—in wanting to sell State-owned organisations in

      1113
      order to get more money back from the public sector. That aim has been stated again over the weekend. That philosophy cannot be in the long-term interests of the country unless the sale is right and unless there is some Government representation to respond to the public interest.
      In Committee I raised the problem of foreign airlines buying into British Airways. Hon. Members seem to forget—and the Minister did not respond to this in Committee—that in the EEC it is within the law of the Treaty of Rome for one airline to buy in. One reason why other European Governments have a significant holding in their airlines is to prevent that from happening and to represent the public. If there is a desire to see the British national airline decline and others take its place, it should be clearly stated, and there should not be the pretence that it is in the interests of the shareholders and the public not to have Government directors on the board. The only way to protect the interests of the British people is to have Government directors on the board. There is no alternative.
      Mr. Michael Neubert: As on Second Reading, I declare an interest as a travel consultant. I do not have to convince the House of my enthusiasm for competition. Like the Minister, I served on the Competition Bill Committee, which I suspect saved me from serving on the Committee on this Bill.
      My enthusiasm is for fair competition. The Bill would create a novel company. How commercial will the new company be if public directors are not appointed to the board? Up to 51 per cent. of the shareholding not being represented on the board is not typical. British Airways is a public sector monopoly, certainly in its domestic operation and some of its subsidiary activities in this country if not internationally. There is more doubt about what kind of creature the new company will be. A public sector company is objectionable enough. However, if there was private participation and potential profit in a public sector monopoly, it would be thoroughly objectionable and unfair competition by any standards. Government directors could exercise their judgment in the public interest.
      On 17 March, three days before the conclusion of the Committee stage, my hon. Friend the Under-Secretary of State told me in a letter:
      1114
      "As regards the application of monopolies and mergers legislation, the full rigours of the Fair Trading Act and the Competition Bill when it is passed will apply to British Airways when shares are sold just as they apply in the case of any private sector company."
      In regard to that legislation, my hon. Friend puts the new company on all fours with other private sector companies. Can he give us chapter and verse for that? If my hon. Friend can take time to give me a seminar on the matter, I shall be delighted.
      Under the Fair Trading Act 1973 British Airways is excluded from the normal rigours of monopolies legislation. Schedule 7, part I, item 7, wholly excludes the carriage of passengers or goods by air. Will the Bill change that? Will the directors have to take account of that in their activities? I can think of no private sector company with half its shareholding held by a certain shareholder that would not have that holding represented on the board.
      The proposed make-up of the board suggests full-blooded commercialism, with financial support but not direction from the public purse. The company would therefore appear to retain at least one characteristic feature of a monopoly. That kind of monopoly is demonstrated by British Airways' present activities—a use of overweening strength and size to dominate the market. As an illustration, I quote from "British Airways News" of 29 February. In describing British Airways' activities in the holiday market, it says:
      "the airline has a range of holiday products marketed under brand names such as Sovereign, Enterprise, Speedbird, Flair and Martin Rooks. Together they make the airline the second largest tour operator in Britain."
      The next sentence is significant:
      "To have even more control on the development of the market British Airways has moved into hotels worldwide to boost its tour activities."
      With the benefit of public money and prestige, British Airways can act to control the market in which it is operating in competition with private enterprise. That is my concern. How will the Bill change that?
      The Minister's views about the role of the directors have been quoted. It is to run the company in the best interests of the shareholders. That does not surprise me. To what extent will the constitution

      1115
      of the board and the new legislation temper its necessary and existing disposition to exploit a monopoly share of the market?
      On Second Reading the Secretary of State said that there was no intention to divest British Airways of such activities as hotel keeping, running retail travel agencies and tour operating. We have seen examples of the considerable strength that British Airways brings to these activities that are otherwise the province of private enterprise. British Airways has opened a shop in Oxford Street, the most expensive location in the land, with 45 staff and multiple new devices. We are told that British Airways is to be a private sector company like any other. Could any other private sector company afford to do that?
      Can my hon. Friend quote evidence in that regard from the United States, which seems to be a pacemaker in aviation policy with regard to deregulation, among other things? Can be confirm that United States' law precludes airlines from engaging in such subsidiary activities? Public sector directors would at least safeguard the industry against such monopolistic practices. One danger is cross-subsidisation. On 22 March British Airways took a double page in The Daily Telegraph to advertise its total range of services, including inclusive holidays. British Airways now announces that it wishes to be known only as "British", which will make it easier for its multifarious activities to come under one heading. It will be even easier for the disposition of funds for one activity rather than another to be made out of sight of the studious public.
      5 pm
      Even if my hon. Friend the Under-Secretary were able to assure me that under the Bill the new company will be exposed to the full rigours of monopolies and mergers legislation, the company will take a short cut to its new status. It will not have had to go through the hoop of the 25 or 30 per cent. qualification for a monopoly reference. That will confer an unfair advantage on the company even if, from then on, it is liable to the full rigours of monopolies legislation. To make it clearer, who can imagine that if both BEA and BOAC had been private sector companies at the time of their merger there would not have been a reference to
      1116
      consider the monopoly aspects of the merger?
      British Airways has the largest network of routes of any airline in the world. It is a considerable monopoly. It is subject to intense competition on international routes, but that does not apply to its domestic operations or to its spin-off subsidiary activities in this country, which cause me so much concern.
      I hope that my hon. Friend the Under-Secretary will expand a little more than he has been able to do in correspondence with me or on previous occasions when I have raised the matter in the House on how he thinks the new company will compete fairly with existing private enterprise operators.
      Mr. K. J. Woolmer: Rather than going over the grounds for opposing the whole Bill I should like to concentrate on the new clause. We are discussing the Bill, which provides for the effective denationalisation of British Airways, because of the worst combination of ideology on the part of the Government and financial expediency in their aspiration to raise cash by selling shares in what they hope will be a profitable enterprise.
      The new clause is concerned with the appointment of two non-executive directors to the board of the new company. The public want to know why the Government think it right that, while retaining a majority shareholding in the company, they should not appoint any directors, executive or non-executive. Instead of my hon. Friends and some Conservative Members explaining why there should be two non-executive directors to represent the public interest, when the public own 51 per cent. of the shares, the Secretary of State should be explaining why the public's 51 per cent. shareholding is to be accompanied by not one Government appointed director. That is the pertinent matter.
      The new company will not be just another private, Companies Act company. It will be at least 51 per cent. owned by the taxpayer and, as the Under-Secretary frequently pointed out in Committee, it will still be our flag, national airline. Yet the Government have said clearly that they do not intend to mobilise the right to appoint directors. We could get into the odd position of the substantial part of the minority shareholding being

      1117
      purchased by institutions that wished to remain at arm's length from the management and the board of the business. It would be ludicrous if virtually all the main shareholders in our national airline had no wish to have any influence on how the company was run or who appointed the directors.
      The Wilson committee report pointed out recently the need for financial institutions—pension funds and insurance companies—to take a much closer interest in the running of companies in which they have a significant shareholding. The tradition of financial institutions with a major shareholding in companies keeping at arm's length from the running of the companies, their prospects, investment programmes and role in the economy, is increasingly questioned. However, the Government are endorsing a policy of a major shareholding having no representation on the board.
      The matter goes beyond British Airways alone. It is a pity that the question of Government-appointed directors on the board should become a matter of political ideology and disagreement. It is a pity that we cannot discuss the relationship between the public and private sectors, even to the extent of considering the appointment of one or two non-executive directors by the Government, without the matter becoming a doctrinal or ideological issue. That is at odds with the needs of our economy and with the need for the public and private sectors to find better ways of working together and reconciling the public and private interests.
      That may mean an interchange of boards with a mutual understanding of the need for commercial objectives in publicly-owned bodies and the need to take account of the public interest. If it requires an interaction between Government-appointed directors and a largely non-Government appointed board, surely that is the sensible way to proceed.
      It is a matter of regret that the Opposition have had to table the new clause to try to get two non-executive directors appointed to the new board. That should be common ground between the two sides of the House, even though we may differ about how the Government should exercise their influence and with what purpose and how to balance the investment requirements, the market objectives and the public and private interests. Foreigners
      1118
      will regard it as another example of the British sickness that we should disagree over a situation in which the State has more than half the ownership of a public asset and yet, for doctrinal reasons, we cannot reach a political consensus on the need for even a modest representation on the board.
      The hon. Member for Woking (Mr. Onslow) came close to saying that the Government would overcome any difficulties by backdoor winks and nudges. That would be the worst of all worlds. We should be going back to the worst sort of relationship between the Government and boards of directors.
      Either we have an understanding of the relationship between the Government and mixed companies in our economy or we do not. This seemed to me to be an opportunity to mark out a way that would be workable under different political parties. As sure as we are here today, an incoming Labour Government will alter this arrangement. It is a tragedy that the differences are so wide that we cannot even agree on somewhere between no Government appointees and all Government appointees.
      The parties should consider between them how best to work out arrangements between the Government and the nationalised or semi-nationalised industries. I hope that the Minister will not respond simply on the issue of two non-executive directors or on nit-picking issues, but will say why he thinks that there should be no representation of the public interest.
      I believe that the new clause should be added to the Bill not only because of its significance for British Airways but as a demonstration of the attempt by the House to find a way to ensure that the public interest is not cast aside, and to show that we reconcile the commercial objectives of publicly owned bodies with the wider interests of the taxpayer.
      Mr. Tristan Garel-Jones: I had not intended to take part in the debate. I was not a member of the Standing Committee, so I shall be brief. I intervene because as the debate developed I was struck by the staggering obtuseness of the remarks from the Opposition Benches.
      What the Government propose is fairly simple. We have a company of which on formation every director will have been

      1119
      Government-appointed The Government are saying that thereafter normal company procedures will operate.
      The hon. Member for Hammersmith, North (Mr. Soley) spoke about the House having a duty to represent the taxpayer, who, after all, will be the main shareholder. Amen to that. But I suggest that, if asked, the taxpayer would feel much happier about normal commercial practices, rather than constant Government intervention, prevailing in a company.
      The Government's commitment with regard to mobilising their own shareholding is absolutely clear. I quote from what my hon. Friend the Under-Secretary of State told the Committee:
      "The board will…be free to plan and execute its programme of capital and other investments and generally to run the airline on the most successful and profitable basis that can be achieved.
      The only means of influence available to the Government will be by using the voices which attach to their shareholding…
      In the normal course of events, such resolutions cover the usual business transactions at annual general meetings of the company—the appointment of directors—"
      very important—
      "the adoption of accounts, the declaration of dividends, and so on."
      An unbiased reading of my hon. Friend's statement—perhaps he will confirm this when he winds up—is that if Opposition hon. Members in the distant future have any responsibilities for these matters there is nothing to prevent them from using their shareholding to nominate such Government nominees as they choose. So there is nothing obstructive or dogmatic about the Government's proposal.
      I very much welcomed the reasonable tone of the hon. Member for Batley and Morley (Mr. Woolmer), who spoke about the need not to be doctrinal and to seek better ways of managing great State enterprises. I agree with all of that, but if we have had any dogmatic, doctrinal approach it has come from the Labour Party. With that party's constantly shifting policies, one is not aware where it stands at present, but I understand that at some point a commitment was given at the party conference to confiscate any shareholding that went into private hands. That is not a very satisfactory and non-doctrinal approach to
      1120
      seeking the sort of arrangement to which the hon. Gentleman referred and which I would support.
      I hinge my support of the Government's case on the fact that the appointment of directors is an option that is always available to the Government and to the taxpayer as a majority shareholder.
      5.15 pm
      Mr. Woolmer: If the hon. Gentleman is willing to support the Government in rejecting the clause on those grounds, is it equally his understanding that the Secretary of State has said positively that although the Government have the right to nominate shareholders they do not intend to do so? If the hon. Gentleman agrees with that, why does he think it right for the Government to declare, as the Secretary of State did in the House on 19 November, that the Government do not intend to use that right?
      Mr. Carel-Jones: The Government say "except in exceptional circumstances". The option remains open. That is why I think that the Opposition are being obtuse.
      What I believe the Government are saying, and what I believe the taxpayer will welcome, is that they will not be breathing down the necks of the management of British Airways every five minutes. Of course, they sensibly reserve the right, which would naturally accrue to any other party that ever had responsibility for these matters, to use their shareholding in the shareholders' interests, if the need should arise. It is wrong for the hon. Gentleman to suggest that the Government are in any way closing the door. They are not.
      Mr. Woolmer: I was simply quoting from what the Secretary of State said in the House on 19 November. It is in the Official Report in black and white in column 42 that the Government do not intend to use that right.
      Mr. Garel-Jones: I should like to quote from what my hon. Friend the Under-Secretary said in the Standing Committee, of which the hon. Gentleman was a member:
      "I do not readily foresee circumstances in which the Government would use their majority to veto the proposals of the board in this respect. However, should this occur,

      1121
      the Government's prime consideration in exercising their rights would be what is in the best interests of the company."—[Official Report, Standing Committee B, 24 January 1980; c. 189–90.]
      That seems to me to be a reasonable statement. Unless it is a matter of parliamentary tactics that escapes me, I do not understand why the Opposition are making such great play of the matter.
      Mr. Tebbit: From my experience in the Committee, I concluded that the problem for the Opposition was this; they do not understand how these matters are arranged in companies. Therefore, they are unaware that it is the normal practice for a board of directors to submit to the annual general meeting nominations of directors to the board. What my right hon. Friend the Secretary of State has said is that he will not expect himself to nominate directors. But he and I have made it plain that we have the power, and if necessary would be willing to use it, to veto undesirable directors if they should be nominated.
      Mr. Garel-Jones: I am grateful to my hon. Friend for that intervention. We might make an exception in the case of the right hon. Member for Lanarkshire, (Mr. Smith) and nominate him to the board, so that in the long time that awaits him in opposition he might gain some experience in these matters.
      Mr. Bill Walker: I was a member of the Standing Committee, where I listened at great length to the points that were made, just as I am listening today.
      The Government are to be congratulated on grasping the nettle. It is business nonsense to have someone nominated to any company wearing a Government-sponsored label and then to pretend that he somehow acts as the public's conscience. Whatever happens in a company or a board of directors, the primary concern is, and should be, profitability and continued profitable operation to continue the employment prospects of all who work in it. That is much more important than playing politics. Non-executive directors should be appointed to make meaningful contributions to the efficient and profitable direction of the company.
      I welcome the proposal that there will be no Government directors as such.
      1122
      Many people share my view. I am against jobs for the boys, wherever the boys come from. I am not worried which old school they attended or which trade union they were members of.
      Mr. Sheerman: How can the hon. Gentleman be consistent in the point that he makes while supporting his Government on British Aerospace and supporting them on this Bill where the practice is totally different? It seems that the hon. Gentleman does not understand the purpose of non-executive directors.
      Mr. Walker: I have served as a non-executive director and also as an executive director. I can assure the hon. Gentleman that not once in my career have there been complaints that I did not understand what I was doing or that I was not doing it effectively. Those who think that two companies operating in different markets are alike show that they are completely ignorant of business activity and operations. The more interjections we have of the kind made by the hon. Gentleman, the more Opposition Members will show how little they know about making profits and keeping people in jobs.
      The discipline upon board members should be the result achieved by the new company in the market place. That should be the discipline on the directors, so that when they appear at the annual general meeting they are made accountable. I welcome the comments made by my hon. Friend the Under-Secretary of State in Standing Committee when he said:
      "I do not readily foresee circumstances in which the Government would use their majority to veto the proposals of the board in this respect. However, should this occur, the Government's prime consideration in exercising their rights would be what is in the best interests of the company".—[Official Report, Standing Committee B; 24 January 1980; c. 190.]
      The best interests of the company are what matter. The company will be run by directors in whom the shareholders have confidence. That sums up the situation. The directors will be there because the shareholders have confidence in them and the shareholders will only give that confidence at the annual general meeting based on the results achieved by the new company.
      Mr. John G. Blackburn: I am saddened by the tenor of the debate. As a member of the Standing Committee, I found it a hard-working, constructive and happy Committee. I can appreciate the points made by the hon. Member for Batley and Morley (Mr. Woolmer) about the sadness of the division that exists over the new clause relating to non-executive directors. The hon. Gentleman is, in many respects, justified in informing hon. Members of his misgivings that there should be this impasse at the beginning of the Bill's Report stage.
      I would respectfully direct the hon. Gentleman's attention to another sadness. I find it a sadness that we are holding a funeral and an inquest on a company that has not yet been born. I should like to outline some of the positive and constructive things brought about in Committee and now on the Floor of the House regarding the management, at director level, of this company. It has been suggested that this is, or should be, a BP model. I should like to consider the role of BP in that connection. I direct the attention of the House to remarks in Standing Committee.
      "The fact that British Petroleum had a Government director was a significant feature in the relationship although it did not stop it going straight to the Government."—[Official Report, Standing Committee B; 24 January 1980; c. 193.]
      That is extremely important. Those were the comments of the right hon. Member for Lanarkshire, North (Mr. Smith). I know him to be an honourable and truthful man. I believe that this was his experience. Although there was no director, it was still possible for the company to approach the Government.
      Reading on, I find an interesting comment by the Under-Secretary of State which, I think, could be described as the voice of prophecy. The voice of prophecy has become the voice of reality. My hon. Friend said:
      "They are areas in which, clearly, Her Majesty's Government have a policy towards other countries and clearly, an airline, whether it is British Airways Ltd., British Caledonian Ltd. or Laker Airways Ltd., will represent to the Government its views about such matters."—[Official Report, Standing Committee B, 24 January 1980; c. 193.]
      I believe that the board of British Airways has a solemn responsibility, as a board of directors, to plan the execution of its capital and its investment pro-
      1124
      gramme and to bring it to profitability and to continue in that vein. The interesting remarks of the hon. Member for Hammersmith, North (Mr. Soley) were a prominent feature in Committee. When will the shares arrive on the market? What will be the timing? What will be their price? It was stated that care would be needed, for the sake of the future investment programme of British Airways, in ensuring that these matters were handled, correctly.
      I believe that in business life, in political life, and in the House today, we are being called upon to exercise the gift of faith. The shares must be issued at the right time, at the right price and at a time when the market can respond, when capital will be forthcoming for the future and continued success of British Airways Ltd. whether or not it contains non-executive directors. It would be hypocritical for me to say, on a matter of policy, that it was about time the Government got off the backs of industry. I believe that the Government have no right to run industry. This is not the role of Government. I do not believe that there are people qualified, in Governments of any persuasion, to run an industry such as British Airways. Equally, it is a solemn responsibility of any Government to create an environment in which that industry can prosper. I believe that it will prosper without executive directors. What British Airways want now from this House is a vote of confidence and assurance for their future.
      Mr. Tebbit: I must apologise to the House in advance if I find little new to say on this matter. We discussed it at great length in Committee. I do not feel too bad about saying that. With the greatest respect, I feel that the right hon. Member for Lanarkshire, North (Mr. Smith) would be the first to admit that he was not able to find anything terribly new to say today. He spoke, as always, with the same charm and general reasonableness with which he puts forward his arguments. There were, nevertheless, no new arguments advanced.
      My hon. Friend the Member for Woking (Mr. Onslow), as usual, demonstrated a robust understanding of the commercial facts of life. It was a pleasure to hear my hon. Friend shoot down so crisply the spectre which had been raised by the right hon. Member for Lanarkshire,

      1125
      North that British Airways Helicopters might be sold off to Bristow's of all people. He did it with a single sentence reminding the right hon. Gentleman that the powers of the Monopolies and Mergers Commission still existed. It would not be for me to prejudge such a matter, but I think that most of us will see that that was likely to be represented to the Government as creating an undesirable monopoly.
      5.30 pm
      I worry sometimes about the hon. Member for Hammersmith, North (Mr, Soley). He seems to find life so gloomy, dull and depressing. As I said in Committee, he enjoys nothing more than a touch of really good misery. He was full of dark hints about the Government directors who should be appointed, and he said that they should be answerable to the Minister—not to the shareholders. I have to ask him what I recollect asking him in Committee. On what issues and in what circumstances does he think it right that Government-appointed directors should act in the interests of the Government and against those of the company to which they are appointed as directors? Legally, the answer is "Never". If they act against the interests of the company, they are coming close to the edge of improper conduct.
      Mr. Soley: It is very nice of the Minister to think of me as a gloomy person. I do not take that view. Let me put to him the example where the company sees it as advantageous to withdraw from certain routes or even to sell off a certain sector of its organisation to another airline. That might not be in the national interest.
      Mr. Tebbit: I recollect now what the hon. Gentleman has in mind. He wants a private sector company to subsidise one of its activities out of the profits of another at the behest of the Government. He may have in mind what happened when the British Overseas Airways Corporation, under a Labour Government, decided to withdraw from the South American routes which have since been carried on by a private sector company, British Caledonian Airways Limited. He may have in mind the decision of British Airways to withdraw from some domestic routes which have since been carried on and are to be carried on in future by pri-
      1126
      vate sector companies which feel that they can operate them profitably, whereas British Airways quite rightly—not because of inefficiency, but because they are a trunk and international carrier and not a local one—decided that it could not. Does the hon. Gentleman think that it is the business of the Government to decide which routes the company should operate? He has to understand that either the company operates commercially or it does not. He is saying that his view of the job of Government directors would be to see that it did not operate commercially.
      Mr. Soley: I had in mind the running down of certain aspects of the company But let me stand the argument on its head. It is obvious that I shall not convince the Minister with my examples, but why is it that all other major airlines have this sort of Government participation or, if they do not—as is the case in the United States—there are clear regulations about buying in by other airlines?
      Mr. Tebbit: The hon. Gentleman will be able to come to his argument about buying in by other airlines at a later stage. However, he says "other than the United States". He ignores about half the world's international air transport industry if he ignores the United States. If we are talking about air transport, we should start from the proposition that the greatest air transport Power in the world, the United States, may know something about how to arrange these matters. It is a private enterprise way. It is for the rest of the world to justify the means by which nationalised carriers in Europe, for example, ensure that the consumer pays about twice the fare per mile for a comparable journey than he would in the United States. Presumably that is the role in the mind of the hon. Member for Hammersmith, North of the Government director. It is to make sure that the consumer pays more than he need by forcing the airline into non-commercial practices.
      The remarks of the hon. Member for Huddersfield, East (Mr. Sheerman) were very interesting. He seemed sure that Governments should always claim that their policies were immutable and unchanging. He thinks that I am a very odd sort of Minister to say that this is the Government's policy and that it will remain the Government's policy so far

      1127
      ahead as we can see. But I do not guarantee that it will remain the Government's policy for all time, because circumstances may change and judgments may change. I do not guarantee that even this Administration will maintain a 51 per cent. holding for ever.
      I should not have thought that that marked some political bias, arrogance or anything of that kind. It is a realistic attitude. If the Government are to have anything to do with commerce, above all they must shape their policies in accordance with the circumstances of the day, and those circumstances cannot be set out on a tablet of stone as though they were there for ever, in the way that the Labour Party set out its economic policies in the nineteenth century and has made no progress ever since. That is literally true. They were written in the nineteenth century, and they have not changed since because they are in the constitution of the Labour Party. Unhappily, the death of Mr. Gaitskell probably robbed the Labour Party of the chance to come into the twentieth century. It is still in the nineteenth century, and its economic policy is still written on the tablets of stone or on the original sheets of paper.
      Mr. Sheerman: The Minister cannot get away with it by always grossly caricaturing the Opposition's arguments when we are trying to make a reasonably sophisticated point which I am sure he picked up in Committee. We were trying to make points from which he could learn something. My argument was that most Ministers said "This is our policy" without hedging it round with qualifications, as he did. It marks out that difference between the Minister and his Front Bench colleagues. I remind him also that the Labour Party was founded in this century. It is the Conservative Party whose economic doctrines today belong to the nineteenth century.
      Mr. Tebbit: The hon. Gentleman may think that I am an unusual Minister. He is entitled to that opinion. However, the Government's policy is and, so far as I can see, will remain, to keep a 51 per cent. or greater holding for as long as it suits them. That policy is unchanging. How much suits us may change from day to day. The hon. Gentleman must take it in that sense.
      1128
      I come to the speech of the hon. Member for Batley and Morley (Mr. Woolmer). The hon. Gentleman may not be aware that the boards of companies feel under an obligation to keep in touch with their major shareholders, even if the major shareholders do not nominate directors to their boards. Although much more obscure than the hon. Member for Hammersmith, North, the hon. Member for Batley and Morley was just as threatening about the role of Government directors in requiring the company to obey the Government and not commercial needs. I do not think that I need say any more to emphasise the dangers.
      My hon. Friend the Member for Romford (Mr. Neubert), as always, made a case which was balanced, reasonable and sensible. He spoke about the extent of the application of competition policy to airlines. Schedule 7 to the Fair Trading Act 1973 sets out certain activities which are excluded from the scope of monopoly references under section 50 of that Act. My comments at column 527 of the Official Report of the Committee proceedings related to merger control under section 65(3), which is not restricted in the same way as section 50.
      There are no plans to amend the reference in schedule 7 to the carriage of passengers or goods by air. That is not necessary, because the licensing functions of the Civil Aviation Authority and the presence of foreign operators on foreign routes ensure that there is adequate competition. It would, therefore, not be necessary to use the powers in that way. My point is that British Airways are excluded from complying with any part of competition law only to the same extent, and precisely to the same extent, as are British Caledonian, Laker and other airlines. So they are not in a privileged position in that sense.
      There will be no special Government financing for British Airways so it would not be true that when the company is formed taxpayers' money will be used to subsidise some acitvities. The Government may subscribe for voting shares or what may in effect, become voting shares and we shall have further discussion on that precise definition later. The Government will not have any obligation or power to make or guarantee loans.
      The company will be an independent company. If it wishes to have an office

      1129
      in Oxford Street, Piccadilly Circus or anywhere else, it will have to decide that is in its commercial interests. That will be a matter for the directors acting purely in the commercial interests of their company.
      There is no intention on my part to make British Airways divest itself of its hotels or other interests any more than I would wish to make British Caledonian divest itself of its hotels or travel interests. We must treat all companies alike. I am not an expert in United States law—nor indeed in British law, let us be honest about it—so I hesitate to say what the position is in the United States. I shall inquire and let my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) know. To my knowledge, both Pan American and TWA have interests in hotels. Clearly, therefore, that is possible under United States law. However, I think that it would be wrong of my hon. Friend to expect that Government directors on the board of British Airways would in any way act against the interests of the company.
      My hon. Friend the Member for Watford (Mr. Garel-Jones) summed up the position neatly and clearly on most of the matters we have discussed. He put his finger on it without saying it in so many words. The trouble is that the Opposition think that a company meeting is something like the NEC of the Labour Party or the Labour Party conference. It does not run like that because, apart from anything else, everybody there has the same objective. It starts, therefore, on a different basis—that is, the profitability of the company.
      My hon. Friend the Member for Perth and East Perthshire (Mr. Walker) spoke lustily of the need for directors to pursue the commercial interests of the company. My hon. Friend the Member for Dudley, West (Mr. Blackburn) was right to emphasise that what we must do now is get British Airways launched as soon as possible and let it get on with its job. We had lengthy debates on that in Committee and my hon. Friend the Member for Brentwood and Ongar had something to say then. He has tabled new clause 14, which is for discussion this evening. Although I appreciate that it would operate only while the Secretary of State held more than 50 per cent. of the issued shares, I have to say to my hon. Friend
      1130
      that neither his new clause nor that of the Opposition would be appropriate provisions in this private sector company in which the Government do not commit themselves for ever to retaining a majority of the shares.
      5.45 pm
      The provisions would be viewed by other investors as an unacceptable priviledge attaching to one particular shareholder, and because that shareholder is the Government it could give the impression that the successor company was a creature of Government little different from its predecessor, and that its activities might be, at any rate to some extent, influenced by the Government against the interests of the company in the way that the hon. Member for Hammersmith, North would like.
      Mr. Sheerman: The Minister has still not explained the difference between this board and the board of British Aerospace. Why is there this simultaneous discrepancy between the two companies? If this were a Conservative Government 10 years ago, I could understand it. But this is a simultaneous piece of legislation.
      Mr. Tebbit: I had hoped that I would not have to explain this again to the hon. Gentleman. I am, of course, willing to do so and the explanation may come anew to those who were not members of the Standing Committee. Let me put it this way.
      British Airways Limited is not a monopoly, or near monopoly, in the sense that British Aerospace is in its sector. They operate in different areas. Those are two points to begin with. The third point, which is perhaps one of the most important, is that British Airways Limited, and British Airways at the moment, are not defence contractors to the British Government but British Areospace is. Therefore, the relationships between the British Airways—Corporation or Limited—and British Aerospace with the Government in future are different on at least three counts.
      It is not surprising therefore, that we have come to different conclusions about the manner in which the boards would be set up. The only reason why the hon. Gentleman remarks upon it is that the conclusions have come about at the same time. If they had been separated, as he said, by 10 years he would not have been

      1131
      surprised. But he is surprised that two Government Departments could look at the facts before them, come to a judgment on those facts, reach conclusions and find that those conclusions were different. They are different facts in different industries.
      That may be a surprise to the hon. Gentleman. It is no surprise to me. I am not in the least perturbed about it, nor is my right hon. Friend the Secretary of State for Industry, so I make no apology for it. It is the appropriate way for us to conduct our affairs in relation to British Airways Limited.
      I have to emphasise that the company will initially be managed by a board of directors, all of whom will be appointed by the Government. [Interruption.] As the Government will own 100 per cent. of the shares when the company is formed, it is difficult to think of anybody else who could appoint directors. That should not cause undue surprise. The board will consist of full-time executive directors and part-time non-executive directors. The role of the non-executive director is an important one and we take it very seriously. We do not indulge in political bias when we appoint those directors.
      I am not sure to what extent I shall please my hon. Friends when I remind the House that Mr. Alan Fisher was reappointed to his post as a non-executive director of British Airways under this Administration. He was reappointed regardless of what any of my hon. Friends, or anyone else, may think of his activities outside British Airways. He was reappointed because he had proved himself to be a useful director. That is the sense in which the Government approach these matters. It may cause a great deal of surprise to Opposition Members that we should do that, but we do it.
      Mr. Garel-Jones: In view of Mr. Alan Fisher's obvious proficiency as a director, will my hon. Friend consider making him a full-time executive director of the new company?
      Mr. Tebbit: Perhaps my hon. Friend has the post of director of industrial relations or something of that sort in mind. I shall bear in mind my hon. Friend's views when it comes to the point.
      The essential point is that this company will have to be run by directors in whom
      1132
      the shareholders, including the Government, have confidence. The qualification for board membership will be an ability to contribute to the successful running of the airline and not to please Ministers.
      Not a great deal more can be said. We dealt with the matter in Committee. I know that my hon. Friend the Member for Brentwood and Ongar differs from me. I understand his view. He finds it difficult to accept that this rather unusual proposal is right. I hope that he accepts that the Government and most of our hon. Friends believe that it is the best approach. The company will not be the Government's creature. Investors need have no fear that the company's interests will be subordinated to the whims of Ministers. This is the best way to secure investment and the company's future. I have no hesitation in commending this approach to my hon. Friends. The House would be wise to reject the new clauses.
      Mr. Clinton Davis: Characteristically the Minister has avoided all the essential arguments. The debate has been characterised by the pretence by Members, with one or two exceptions, that they have a unique experise in the commercial facts of life. It is no wonder that sections of British industry are floundering.
      The Minister says that there is a difference between British Aerospace and British Airways. He says that British Aerospace is a defence contractor whereas British Airways is not. That is true, as far as it goes. But he did not address himself to the general point made on Second Reading of the British Aerospace Bill by the Secretary of State for Industry that there was a strong case for having non-executive directors and that
      "the Government will ensure that the board of British Aerospace Limited will have the benefit of two external directors"—[Official Report, 20 November 1979; Vol. 973, c. 222.]
      namely, those representative of the Government interest.
      Mr. Tebbit: I am sorry to be boring, but I have just made it clear that the Government will ensure that there are non-executive directors on the board of British Airways. The only difference is that we shall not appoint the individuals concerned.
      Mr. Davis: The Minister is being obtuse. The Secretary of State for Industry believes that, apart from the

      1133
      arguments that the Minister adduced, it is necessary for the Government to have two representatives on the board of British Aerospace. That has been shown to be overwhelmingly right, not only in Committee but in today's debate.
      The Minister is flouting the experience of the Secretary of State for Industry. I do not mind if he does, since the Secretary of State for Industry behaves curiously from time to time. However, to say that the argument is nonsense is to repudiate the arguments expressed by the Secretary of State for Industry in that important debate and in that important context. More than that, it is to repudiate the Bank of England's view. The Bank has said that it is increasingly desirable for institutional investors to play a bigger part in company activities.
      The Minister said that this is an unusual way of conducting affairs. He is right. The largest investors, the Government, say in advance that they have no intention of mobilising their rights or to safeguard the majority, except in circumstances that cannot be conceived. Would any other majority shareholder renounce in advance the right to influence board decisions? That is inconceivable. The Government are behaving unintelligibly. The issue should not have been controversial. The Government should have taken the action themselves, as the Secretary of State for Industry did.
      Who will appoint the directors if the institutional directors do not? The minority will do it and that is not sensible. It was never thought to be sensible for British Petroleum—and I recognise that that is a different case. The Government recognised that it was not sensible to proceed in that way with British Aerospace. There is a need for the provision contained in the new clause.
      The Government eschew the experience of the European flag carriers. Even the
      Swiss, who have a small Government interest, appoint Government directors in one form or another. Are the European flag carriers to be regarded as poodles of their Governments, as the hon. Member for Woking (Mr. Onslow) so elegantly said? The United States Government have deemed it appropriate to protect their airline interests in a different way. I do not believe that the Under-Secretary of State really believes that there is a totally unrestricted market enterprise philosophy in the United States.
      The Minister is not interested in foreign experience except when it suits him to cite it. He has shown an unreasoning attitude. The case that he has sought to deploy is unconvincing and the House should reject it.
      Mr. Garel-Jones: I wonder whether—
      Mr. Speaker: The hon. Gentleman has sat down.
      Mr. Garel-Jones: On a point of order, Mr. Speaker. I wonder whether—
      Mr. Speaker: Order. The hon. Gentleman had better wonder about me.
      Mr. Garet-Jones: On a point of order, Mr. Speaker. I wonder whether, in summing up the debate, the hon. Member for Hackney, Central (Mr. Davis) was in order in not making any reference to the fact that under the terms of the—
      Mr. Speaker: Order. I think that the hon. Gentleman is about to pursue the argument. The hon. Member for Hackney, Central (Mr. Davis) made his own speech. If he has not satisfied the hon. Member I know that he will be as disappointed as I am.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 226, Noes 285.

      Division No. 378]

      AYES

      [5.57 pm

      Abse, Leo

      Bradley, Tom

      Clark, Dr David (South Shields)

      Adams, Allen

      Bray, Dr Jeremy

      Cocks, Rt Hon Michael (Bristol S)

      Anderson, Donald

      Brown, Hugh D. (Provan)

      Cohen, Stanley

      Archer, Rt Hon Peter

      Brown, Robert C. (Newcastle W)

      Coleman, Donald

      Armstrong, Rt Hon Ernest

      Brown, Ron (Edinburgh, Leith)

      Concannon, Rt Hon J. D.

      Ashley, Rt Hon Jack

      Buchan, Norman

      Conlan, Bernard

      Ashton, Joe

      Callaghan, Rt Hon J. (Cardiff SE)

      Cowans, Harry

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

      Callaghan, Jim Middleton & P)

      Cralgen, J. M. (Glasgow, Maryhill)

      Barnett, Guy (Greenwich)

      Campbell, Ian

      Crowther, J. S.

      Barnett, Rt Hon Joel (Heywood)

      Campbell-Savours, Da

      Cryer, Bob

      Bidwell, Sydney

      Cant, R. B.

      Cunliffe, Lawrence

      Booth, Rt Hon Albert

      Carmichael, Nell

      Cunningham, George (Islington S)

      Boothroyd, Miss Betty

      Carter-Jones, Lewis

      Cunningham, Dr John (Whitehaven)

      Bottomley, Rt Hon Arthur (M'brough)

      Cartwright, John

      Dalyell, Tam

      Davidson, Arthur

      Janner, Hon Greville

      Race, Reg

      Davies, Rt Hon Denzil (Llanelli)

      Jay, Rt Hon Douglas

      Radice, Giles

      Davis, Clinton (Hackney Central)

      John, Brynmor

      Rees, Rt Hon Merlyn (Leeds South)

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

      Johnson, James (Hull West)

      Richardson, Jo

      Deakins, Eric

      Johnson, Walter (Derby South)

      Roberts, Allan (Bootle)

      Dean, Joseph (Leeds West)

      Jones, Rt Hon Alec (Rhondda)

      Roberts, Ernest (Hackney North)

      Dempsey, James

      Jones, Barry (East Flint)

      Roberts, Gwilym (Cannock)

      Dewar, Donald

      Jones, Dan (Burnley)

      Robertson, George

      Dixon, Donald

      Kaufman, Rt Hon Gerald

      Robinson, Geoffrey (Coventry NW)

      Dobson, Frank

      Kilroy-Silk, Robert

      Rodgers, Rt Hon William

      Dormand, Jack

      Kinnock, Neil

      Rooker, J. W.

      Douglas, Dick

      Lamble, David

      Roper, John

      Douglas-Mann, Bruce

      Lamborn, Harry

      Ross, Ernest (Dundee West)

      Dubs, Alfred

      Lamond, James

      Rowlands, Ted

      Duffy, A. E. P.

      Leadbitter, Ted

      Sandelson, Neville

      Dunnett, Jack

      Leighton, Ronald

      Sever, John

      Dunwoody, Mrs Gwyneth

      Lestor, Miss Joan (Eton & Slough)

      Sheerman, Barry

      Eadie, Alex

      Lewis, Arthur (Newham North West)

      Sheldon, Rt Hon Robert (A'ton-u-L)

      Eastham, Ken

      Lewis, Ron (Carlisle)

      Shore, Rt Hon Peter (Step and Pop)

      Ellis, Raymond (NE Derbyshire)

      Litherland, Robert

      Short, Mrs Renée

      English, Michael

      Lofthouse, Geoffrey

      Silkin, Rt Hon John (Deptford)

      Ennals, Rt Hon David

      Lyon, Alexander (York)

      Silverman, Julius

      Evans, Ioan (Aberdare)

      Lyons, Edward (Bradford West)

      Skinner, Dennis

      Evans, John (Newton)

      Mabon, Rt Hon Dr J. Dickson

      Smith, Rt Hon J. (North Lanarkshire)

      Ewing, Harry

      McCartney, Hugh

      Soley, Clive

      Faulds, Andrew

      McCrindle, Robert

      Spearing, Nigel

      Field, Frank

      McDonald, Dr Oonagh

      Spriggs, Leslie

      Fitch, Alan

      McElhone, Frank

      Stallard, A. W.

      Flannery, Martin

      McGuire, Michael (Ince)

      Stoddart, David

      Fletcher, Ted (Darlington)

      McKay, Allen (Penistone)

      Stott, Roger

      Foot, Rt Hon Michael

      McKelvey, William

      Strang, Gavin

      Ford, Ben

      MacKenzie, Rt Hon Gregor

      Straw, Jack

      Forrester, John

      Maclennan, Robert

      Summerskill, Hon Dr Shirley

      Foster, Derek

      McNally, Thomas

      Taylor, Mrs Ann (Bolton West)

      Fraser, John (Lambeth, Norwood)

      McWilliam, John

      Thomas, Dafydd (Merioneth)

      Freeson, Rt Hon Reginald

      Magee, Bryan

      Thomas, Mike (Newcastle East)

      Garrett, John (Norwich S)

      Marks, Kenneth

      Thomas, Dr Roger (Carmarthen)

      George, Bruce

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

      Thorne, Stan (Preston South)

      Gilbert, Rt Hon Dr John

      Marshall, Jim (Leicester South)

      Tilley, John

      Ginsburg, David

      Mason, Rt Hon Roy

      Tinn, James

      Golding, John

      Maxton, John

      Torney, Tom

      Gourlay, Harry

      Maynard, Miss Joan

      Varley, Rt Hon Eric G.

      Graham, Ted

      Meacher, Michael

      Wainwright, Edwin (Dearne Valley)

      Grant, George (Morpeth)

      Mikardo, Ian

      Walker, Rt Hon Harold (Doncaster)

      Grant, John (Islington C)

      Millan, Rt Hon Bruce

      Watkins, David

      Hamilton, James (Bothwell)

      Mitchell, R. C. (Soton, Itchen)

      Wellbeloved, James

      Hamilton, W. W. (Central Fife)

      Morris, Rt Hon Alfred (Wythenshawe)

      Welsh, Michael

      Harrison, Rt Hon Walter

      Morris, Rt Hon Charles (Openshaw)

      White, Frank R. (Bury & Radcliffe)

      Hart, Rt Hon Dame Judith

      Morris, Rt Hon John (Aberavon)

      White, James (Glasgow, Pollok)

      Hattersley, Rt Hon Roy

      Moyle, Rt Hon Roland

      Whitehead, Phillip

      Haynes, Frank

      Newens, Stanley

      Whitlock, William

      Healey, Rt Hon Denis

      Oakes, Rt Hon Gordon

      Willey, Rt Hon Frederick

      Heffer, Eric S.

      Ogden, Eric

      Williams, Rt Hon Alan (Swansea W)

      Hogg, Norman (E Dunbartonshire)

      O'Halloran, Michael

      Wilson, William (Coventry SE)

      Home Robertson, John

      O'Neill, Martin

      Winnick, David

      Homewood, William

      Orme, Rt Hon Stanley

      Woodall, Alec

      Hooley, Frank

      Owen, Rt Hon Dr David

      Woolmer, Kenneth

      Horam, John

      Palmer, Arthur

      Wrigglesworth, Ian

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

      Park, George

      Wright, Sheila

      Huckfield, Les

      Parker, John

      Hudson Davies, Gwilym Ednyfed

      Pendry, Tom

      TELLERS FOR THE AYES:

      Hughes, Mark (Durham)

      Powell, Raymond (Ogmore)

      Mr. George Morton and Mr. Austin Mitchell.

      Hughes, Roy (Newport)

      Price, Christopher (Lewisham West)

      NOES

      Adley, Robert

      Boscawen, Hon Robert

      Butcher, John

      Aitken, Jonathan

      Bottomley, Peter (Woolwich West)

      Butler, Hon Adam

      Alexander, Richard

      Bowden, Andrew

      Cadbury, Jocelyn

      Amery, Rt Hon Julian

      Boyson, Dr Rhodes

      Carlisle, Kenneth (Lincoln)

      Ancram, Michael

      Braine, Sir Bernard

      Carlisle, Rt Hon Mark (Runcorn)

      Arnold, Tom

      Bright, Graham

      Chalker, Mrs Lynda

      Atkins, Robert (Preston North)

      Brinton, Tim

      Channon, Paul

      Baker, Kenneth (St. Marylebone)

      Brittan, Leon

      Chapman, Sydney

      Baker, Nicholas (North Dorset)

      Brocklebank-Fowler, Christopher

      Clark, Hon Alan (Plymouth, Sutton)

      Beaumont-Dark, Anthony

      Brooke, Hon Peter

      Clark, Sir William (Croydon South)

      Bell, Sir Ronald

      Brotherton, Michael

      Clarke, Kenneth (Rushcliffe)

      Bendall, Vivian

      Brown, Michael (Brigg & Sc'thorpe)

      Clegg, Sir Walter

      Benyon, W. (Buckingham)

      Bruce-Gardyne, John

      Cockeram, Eric

      Best, Keith

      Bryan, Sir Paul

      Colvin, Michael

      Bevan, David Gilroy

      Buchanan-Smith, Hon Alick

      Cope, John

      Blackburn, John

      Buck, Antony

      Cormack, Patrick

      Blaker, Peter

      Budgen, Nick

      Corrie, John

      Body, Richard

      Bulmer, Esmond

      Costain, A. P.

      Bonsor, Sir Nicholas

      Burden, F. A.

      Cranborne, Viscount

      1136

      1137

      Critchley, Julian

      Kellett-Bowman, Mrs Elaine

      Pym, Rt Hon Francis

      Crouch, David

      Kimball, Marcus

      Raison, Timothy

      Dean, Paul (North Somerset)

      Kitson, Sir Timothy

      Rathbone, Tim

      Dickens, Geoffrey

      Knox, David

      Rees, Peter (Dover and Deal)

      Dorrell, Stephen

      Lamont, Norman

      Rees-Davies, W. R.

      Douglas-Hamilton, Lord James

      Lang, Ian

      Rhodes James, Robert

      Dover, Denshore

      Langford-Holt, Sir John

      Rhys Williams, Sir Brandon

      du Cann, Rt Hon Edward

      Latham, Michael

      Ridley, Hon Nicholas

      Dunn, Robert (Dartford)

      Lawrence, Ivan

      Ridsdale, Julian

      Durant, Tony

      Lawson, Nigel

      Rifkind, Malcolm

      Dykes, Hugh

      Lee, John

      Rippon, Rt Hon Geoffrey

      Eden, Rt Hon Sir John

      Lester, Jim (Beeston)

      Roberts, Michael (Cardiff NW)

      Edwards, Rt Hon N. (Pembroke)

      Lewis, Kenneth (Rutland)

      Roberts, Wyn (Conway)

      Eggar, Timothy

      Lloyd, Ian (Havant & Waterloo)

      Rost, Peter

      Elliott, Sir William

      Lloyd, Peter (Fareham)

      Royle, Sir Anthony

      Emery, Peter

      Loveridge, John

      Sainsbury, Hon Timothy

      Eyre, Reginald

      Luce, Richard

      St. John-Stevas, Rt Hon Norman

      Fairgrieve, Russell

      Lyell, Nicholas

      Scott, Nicholas

      Faith, Mrs Sheila

      Macfarlane, Neil

      Shaw, Michael (Scarborough)

      Farr, John

      MacGregor, John

      Shelton, William (Streatham)

      Fell, Anthony

      MacKay, John (Argyll)

      Shersby, Michael

      Fenner, Mrs Peggy

      Macmillan, Rt Hon M. (Farnham)

      Silvester, Fred

      Finsberg, Geoffrey

      McNair-Wilson, Michael (Newbury)

      Sims, Roger

      Fisher, Sir Nigel

      McNair-Wilson, Patrick (New Forest)

      Skeet, T. H. H.

      Fletcher, Alexander (Edinburgh N)

      McQuarrie, Albert

      Speed, Keith

      Fletcher-Cooke, Charles

      Madel, David

      Speller, Tony

      Forman, Nigel

      Major, John

      Spence, John

      Fowler, Rt Hon Norman

      Marland, Paul

      Spicer, Jim (West Dorset)

      Fox, Marcus

      Marlow, Tony

      Spicer, Michael (S Worcestershire)

      Fraser, Rt Hon H. (Stafford & St)

      Marshall, Michael (Arundel)

      Sproat, Iain

      Fraser, Peter(South Angus)

      Marten, Neil(Banbury)

      Squire, Robin

      Fry, Peter

      Mates, Michael

      Stanbrook, Ivor

      Galbraith, Hon T. G. D.

      Mather, Carol

      Stanley, John

      Gardiner, George (Reigate)

      Maude, Rt Hon Angus

      Steen, Anthony

      Gardner, Edward (South Fylde)

      Mawby, Ray

      Stevens, Martin

      Garel-Jones, Tristan

      Mawhinney, Dr Brian

      Stewart, Ian (Hitchin)

      Glyn, Dr Alan

      Maxwell-Hyslop, Robin

      Stewart, John (East Renfrewshire)

      Goodhew, Victor

      Mayhew, Patrick

      Stokes, John

      Goodlad, Alastair

      Mellor, David

      Stradling Thomas, J.

      Gorst, John

      Meyer, Sir Anthony

      Tapsell, Peter

      Gower, Sir Raymond

      Mills, Iain (Meriden)

      Taylor, Robert (Croydon NW)

      Gray, Hamish

      Mills, Peter (West Devon)

      Taylor, Teddy (Southend East)

      Griffiths, Eldon (Bury St Edmunds)

      Miscampbell, Norman

      Tebbit, Norman

      Griffiths, Peter(Portsmouth N)

      Mitchell, David (Basingstoke)

      Temple-Morris, Peter

      Grimond, Rt Hon J.

      Moate, Roger

      Thomas, Rt Hon Peter (Hendon S)

      Grist, Ian

      Molyneaux, James

      Thompson, Donald

      Grylls, Michael

      Monro, Hector

      Thorne, Nell (Ilford South)

      Gummer, John Selwyn

      Montgomery, Fergus

      Thornton, Malcolm

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

      Moore, John

      Townend, John (Bridlington)

      Hamilton, Michael (Salisbury)

      Morgan, Geraint

      Townsend, Cyril D. (Bexleyheath)

      Hampson, Dr Keith

      Morris, Michael (Northampton, Sth)

      van Straubenzee, W. R.

      Hannam, John

      Morrison, Hon Charles (Devizes)

      Vaughan, Dr Gerard

      Haselhurst, Alan

      Morrison, Hon Peter (City of Chester)

      Viggers, Peter

      Hastings, Stephen

      Mudd, David

      Waddington, David

      Havers, Rt Hon Sir Michael

      Murphy, Christopher

      Wakeham, John

      Hawksley, Warren

      Myles, David

      Waldegrave, Hon William

      Hayhoe, Barney

      Neale, Gerrard

      Walker, Bill (Perth a E Perthshire)

      Heath, Rt Hon Edward

      Needham, Richard

      Walker-Smith, Rt Hon Sir Derek

      Heddle, John

      Nelson, Anthony

      Wall, Patrick

      Henderson, Barry

      Neubert, Michael

      Walters, Dennis

      Heseltine, Rt Hon Michael

      Newton, Tony

      Ward, John

      Hicks, Robert

      Nott, Rt Hon John

      Watson, John

      Higgins, Rt Hon Terence L.

      Onslow, Cranley

      Wells, John (Maidstone)

      Hogg, Hon Douglas (Grantham)

      Oppenheim, Rt Hon Mrs Sally

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

      Holland, Philip (Carlton)

      Page, Rt Hon Sir R. Graham

      Wheeler, John

      Hooson, Tom

      Page, Richard (SW Hertfordshire)

      Whitelaw, Rt Hon William

      Hordern, Peter

      Parkinson, Cecil

      Whitney, Raymond

      Howell, Rt Hon David (Guildford)

      Patten, Christopher (Bath)

      Wickenden, Keith

      Howell, Ralph (North Norfolk)

      Patten, John (Oxford)

      Wiggin, Jerry

      Howells, Geraint

      Pattie, Geoffrey

      Williams, Delwyn (Montgomery)

      Hunt, David (Wirral)

      Pawsey, James

      Winterton, Nicholas

      Hunt, John (Ravensbourne)

      Peyton, Rt Hon John

      Wolfson, Mark

      Irving, Charles (Cheltenham)

      Pollock, Alexander

      Young, Sir George (Acton)

      Jenkin, Rt Hon Patrick

      Porter, George

      Johnson Smith, Geoffrey

      Price, David (Eastleigh)

      TELLERS FOR THE NOES:

      Jopling, Rt Hon Michael

      Prior, Rt Hon James

      Mr. Spencer Le Marchant and Mr. Anthony Berry.

      Joseph, Rt Hon Sir Keith

      Proctor, K. Harvey

      Kaberry, Sir Donald

      Question accordingly negatived.

    New Clause 6

      GOVERNMENT SHAREHOLDING IN SUCCESSOR COMPANY
      "Pursuant to the powers vested in him by section 3 to this Act the Secretary of State shall retain at least 51 per cent. of the issued shares".—[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.
      Mr. Speaker: With this, we may take new clause 16—Restriction on disposal of Secretary of State's shareholding—and new clause 17—Secretary of State's majority shareholding.
      Mr. Davis: Some of the arguments about the Government's retaining a 51 per cent. shareholding in the successor company have been rehearsed in the previous debate. I noticed a different nuance in the way in which the Minister approached the question of retaining a majority interest as against the message that he sought to convey in Committee. When I have put forward my evidence to support that contention, I shall give way to the Minister if he wishes to reply. I wish to quote a number of the Minister's remarks in Committee. He said:
      "it is the Government's policy to maintain a majority holding in the shares."
      As a way of exhibiting confidence in the company, he said:
      "We still have sufficient confidence…to maintain our 51 per cent. shareholding."—[Official Report, Standing Committee B, 29 January 1980; c. 233–4.]
      The Minister said also:
      "as far as I can see ahead at the moment, it will be desirable for the Government to retain a majority holding."—[Official Report, Standing Committee B, 31 January 1980; c. 307.]
      Later on he said something of the same nature, as reported in c. 416 of Hansard.
      In what circumstances would that desirability to retain a Government shareholding change? Does the Minister foresee that it is likely to change within the next year, two years or three years? He said today that it was the present intention of the Government. That represents a difference of emphasis at the very least. If the Minister would like me to give way on that point, I shall be happy to do so.
      Mr. Tebbit: It might shorten the debate if I respond now. The hon. Gentle-
      1140
      man will recollect that when I said that it would be as far ahead as I could see, I made it clear that I was not willing to say how far that was. I said that the Government
      "will not seek to control even whilst they hold the majority shareholding."
      I said also:
      "I have never bound the Government in the long term to maintaining a majority shareholding. I have not said that our plans would be to dispose of it, but I have not bound the Government to it."—[Official Report, Standing Committee B, 13 March 1980; c. 956.]
      That remains the position. I do not wish to alter the impression that springs from the remarks that I made in Committee.
      Mr. Davis: We emerge with the position that the Minister did not intend to convey a different impression from that which he conveyed in Committee. He argued in Committee that to maintain a majority shareholding would depict a continuing Government confidence in the airline, that it was desirable to do so, that it represented a good investment and that he had confidence in that investment. The House will be grateful to the Minister for adhering to that view, because I believe that he conveyed a somewhat different impression today.
      6.15 pm
      The Secretary of State made that point either on Second Reading or in questioning when he first introduced his policy before the Conservative Party conference. It was before the conference because he wanted to exhibit his well-known virility to the ladies who attended. Each to his own taste; and that is the way that the Minister chose it to be.
      Alitalia has a 90 per cent. Government share; KLM, 70 per cent.; Lufthansa about 80 per cent.; SAS, 50 per cent.; and Swissair about 12 per cent. Apart from Swissair, those enterprises felt that it was necessary to retain a majority interest. One of the reasons for that is the very reason adduced by the Minister—at least in part to justify his retention of a 51 per cent. interest—namely, to exhibit confidence in the State carrier. They regard that as important in the air service negotiations that have to be undertaken.
      In Committee, the hon. Member for Tynemouth (Mr. Trotter), in an interesting intervention said:
      "I have always worked on the assumption that there would be a majority public shareholding in British Airways. If there is not to

      1141
      be a public shareholding, that would be a very different concept from the one I envisaged."—[Official Report, Standing Committee B, 29 January 1980; c. 206.]
      The impression was clearly conveyed to the hon. Gentleman that this was not a temporary policy but something to be continued because, as the Minister said, it was desirable to do so. We are left in some doubt about where the Government stand. Perhaps the Government prefer us to be left in some doubt. We believe that the whole concept of the sale of British Airways shares is misbegotten. It is one that the Government have pursued because it is doctrinaire-ridden. There is very little to commend it. In the present international airline industry it is difficult to conceive how, in the next few years, the shares will become an attractive proposition.
      A status report on the United States airlines prepared by a company called Paine Webber Mitchell Hutchins Inc concluded that there would be lower airline earnings in 1980. There is nothing controversial about that. It said that there would be no big earnings recovery in 1981. It said:
      "In order to achieve large near term gains in stock prices, a large rebound in 1981 is a must. Otherwise, the group may continue to drift lower and/or at best offer dead money for some time. Neither possibility argues for heavily owning these stocks."
      That was a description of the United States market. Even though British Airways may have emerged from the crisis of 1979–80 in a rather more favourable position than many of their competitors, that is nothing to write home about. They only managed to break even.
      The position affecting British Airways and most other airlines in the world is not optimistic for the next few years. What sort of track record does that provide for any flotation of shares? I believe that the Government have recognised that. They have not proceeded with the Report stage at any pace. We have been out of Committee for a long time. There does not appear to be much urgency even though for some extraordinary reason—which I can only believe is connected with that which I have already attributed to the Secretary of State—the Government were in such a rush in July of last year. Now they have decided to go slow. They would do better to forget about it altogether. That would be the best way to remove the anxiety that is being caused
      1142
      at the moment to our flag carrier. It has enough to contend with already in the very difficult field of international competition, without having these unnecessary anxieties imposed upon it. A great deal of uncertainty is introduced for no good reason.
      How would it benefit productivity? How would it benefit better industrial relations? Would it not help to stabilise the position and help to erase the anxieties of the work force if the Government were to say "We were wrong. We did not listen to anybody when we decided to embark upon this proposal. Now we have decided that this is a completely wrong climate in which to introduce it." That would be the best way to provide the reassurance about which the Minister spoke in Committee—to drop this madcap scheme altogether.
      The hon. Gentleman then said that it would be a good thing, at least for the time being—I do not want to put any words into his mouth—if the Government were to maintain a 51 per cent. interest, because it was a good deal for the taxpayer. That is the view he takes. If it is such a good deal for the taxpayer, why not keep all the shares, taking the argument on that basis? The Minister should feel bound to answer that point tonight.
      The Government have refused to say how many shares or what proportion of the shares they intend to float, or when they intend to do it. I can understand the Government's reticence about speculating as to when they might float the shares. In fairness to the Minister, he made a compelling point about why the prospectus should not be made the subject of a statutory instrument. Indeed, we have decided not to pursue the point for that very reason. Nevertheless, if the Government are to retain a 50 per cent. interest, the taxpayer is entitled to know rather more than the Government have begun to disclose about their objectives.
      The Minister said, in relation to the 51 per cent. argument, that it is a balance. He has not suggested that we are indulging in a weird fantasy here, as no doubt would be suggested by the hon. Member for Woking (Mr. Onslow). The Minister has said that it is a balance, and a fairly fine balance at that. The Minister argued:
      "Not all policies have to be set in statute. I think that is the best defence I can make"

      1143
      —[Official Report, Standing Committee B, 31 January 1980; c. 307.]
      That is most charming, and I know the hon. Gentleman to be very charming from time to time—contrary to the experience of some of my hon. Friends. We enjoyed him in Committee; he was good value. But that is a pretty flimsy defence. If I had suggested such a thing when I was a Minister, the hon. Gentleman would have sailed in with all guns blazing. It is a totally flimsy defence. Many important policies have to be set out in statute, and this is one of them.
      Mr. Tebbit: In my own defence, I think I ought to read what I said:
      "I think that is the best defence I can make in many ways against the blandishments of the right hon. Gentleman in offering me all these alluring alternatives of possible holdings which the Government might have in the future company."—[Official Report, Standing Committee B, 31 January 1980; c. 307.]
      That was in the context of an offering of various percentages which the Government should by statute hold. I take the hon. Gentleman's point, but I have to defend myself, at least mildly.
      Mr. Davis: That is a bit of mitigation, as they say in the criminal courts, rather than defence. The hon. Gentleman is not acquitted of the charge. He went on to say that he could not bind his successors. That is an extraordinary argument. That is precisely what he is trying to do by the Bill—to bind his successors. The best way for him not to bind his successors is not to embark on the legislation. That is another very good reason for not doing it.
      It would be perfectly reasonable—even basing the case on the hon. Gentleman's arguments—for him to accept the clause, which, according to him, is finely balanced. What we find difficult to accept is the argument "Trust me, trust Norm, everybody's good friend". I do not think that he would have trusted us, and I am not sure that I should trust him.
      Whatever feelings of friendship I have towards the hon. Gentleman from time to time—and sometimes we forget those—we are a little sceptical of some of the promises made by Ministers in this Government. The Government are sceptical about some "norms", and I do not know why they should make an exception here. After the record of the last 13 or 14
      1144
      months over prescription charges, which were not to be increased, and over the doubling of VAT, and so on, it is asking a bit too much to expect us to repose our trust in him.
      I turn to new clauses 16 and 17. They may not be the last word in drafting. The Opposition do not have the benefit—if it is a benefit—of the parliamentary draftsman. Sometimes, as I know from experience, he can create certain difficulties. I can say that now, but the Minister cannot.
      In new clauses 16 and 17, we are suggesting alternative approaches.
      New clause 16 suggests that the Government should not dispose of a total holding at any given time
      "exceeding ten per cent. of the shares…without the prior approval of both Houses of Parliament".
      It also suggests that such approval should not be sought except within certain specific periods.
      The alternative approach to that, in new clause 17, is that the Government should not
      "relinquish majority control…without first obtaining the approval of both Houses of Parliament".
      There is also a similar provision as to the time within which that can be done. There is nothing very important about the timing. That could be changed if it were thought to be wrong. The Minister is always fair enough to concede that we are debating a principle.
      If the Government intend to embark upon a change from majority shareholding, they should be obliged to come to the House. They would probably get their way if it happened during the lifetime of this Parliament, because they have a secure majority, but at least the House would be able to comment on the matter; it would be drawn specifically to the attention of the public. When we are talking about such a valuable stake in a national enterprise, the Government should do no less.
      If the argument has been finely balanced before in regard to the much more general way in which we have approached the matter, surely the Government will be reasonable and say that there is something in the argument, and that they will at least look at it carefully before the Bill is debated in another place.

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      We submit that either of these propositions is reasonable, and in particular we commend new clause 17.
      There is a burden that lies very heavily on the shoulders of the hon. Gentleman to indicate why it would be wrong for Parliament to exercise this measure of scrutiny or surveillance—it is hardly control—over the position. I hope that the hon. Gentleman will respond positively in the way that I have invited him to do.
      6.30 pm
      Mr. Sheerman: It is repetitious to say that I do not intend to speak for very long on this group of new clauses. It will be evident to those who sat for long hours in Committee that at times we had very enlightened debates there. To a relatively new Member such as myself, it is surprising that we reach this stage debating on the Floor of the House arguments on amendments that we rehearsed through previous months. We have in our hands the collected works of our travail over the months. Perhaps these impress the public, our electors, through the large number of words and column inches. But one wonders: all for what? Brilliant arguments were advanced in Committee on the Opposition Benches. There were erudition and rapier wit and thrust, sometimes on both sides of the Committee. But here we are debating the same points as we made in Committee. Opposition Members seem to have convinced the Government side of very little, and vice versa. It is a sad reflection that the Committee system ends up in a voting system in which most of those concerned have not been intimately connected with the debate.
      Many of us have become quite expert—I say that with due modesty—about aviation. I represent part of Huddersfield, which is not close to any of our great airports. My constituency has interests in trade, textiles, chemicals and engineering. Aviation seems to be a far cry from my constituency interests. However, my constituents are extremely concerned about the new clauses and the principles locked into them. That is because they are the one guarantee that they might have about a little bit of investment that they made years ago. Like all good investments, perhaps this one was made on their behalf by people whom they had elected to represent them over
      1146
      the years. Since 1945 many of my constituents have lived in the fond hope and belief that successive Governments have acted in the national interest. In Committee we had some debates on the national interest which would have done justice to departments of political theory. We debated the concept and nature of the national interest. I suppose that we had quite an average university seminar on the subject. All that we concluded was that we would have to agree to disagree about it.
      I put the national interest simply as it strikes most of my constituents. It is the belief that the Government are elected to serve the people—not just the Conservative Party or the Labour Party, but all the people whose hopes and futures are bound up in what we call the common good. I believe that British Airways is seen as a part of some collective common good, common weal, call it what one may. I believe that most people believe that British Airways is theirs, that they own it, and that in some ways they should have a Government representing them who recognise that fact and who believe that their interests should be served over a long period, and not just over a period of time in which Governments come and go. My hon. Friend the Member for Batley and Morley (Mr. Woolmer), whose constituency borders mine, has made the very good point that it is absolutely right that across the party divide there are issues which must be of common concern over a far greater number of years than the four or five for which most Governments exist.
      I believe that this is a particular case in point. We are talking about the percentage of shares which will be vested in the Government and the percentage which will be sold off on the stock market. Conservatives, be it at their party conference or in this House, very often talk about entrepreneurial abilities and talents. It seems that, if the Conservative Party has a mandate, Conservatives would say that it is to unleash the entrepreneurial instinct and talent under the present Government. Given their lights, we can see them going about that task.
      However, from the Opposition Benches it often looks as though, instead of unleashing entrepreneurial talent and giving opportunities for men and women who can put land, labour and capital together in order to produce a product which

      1147
      people want to buy around the globe, when Governments proclaim this commitment they are very often working less on the mentality of the entrepreneur and more on the ethos and morals of the market trader. It seems to me that "the market trader" is much more of a description which applies to the Under-Secretary. I do not say that in a rude way. We certainly do not want to reduce the level of the debate. However, there he is, representing the Crown in this matter and giving us assurances about the future of British Airways, but he cannot prevent us from suspecting that what he has on the front of his barrow—the nice, shiny, rosy apples—are not even for the Opposition's consumption, and that the seedy, maggoty apples lying behind the up-front display are the bitter apples which must be eaten not only by the electorate and at a Conservative Party conference but also by those liberal elements which exist within the Conservative Party.
      The reason why we are making our case very strongly is that when the Minister is talking about the case against the amendment—I refer particularly to the question of the 51 per cent. shareholding—what he is really doing is speaking over his shoulder to the more liberal and enlightened elements of his own party, because they know very well of the commitment to British Airways as a national institution, a national investment and a public enterprise, of which most people are relatively proud.
      There is a sizable element within the Conservative Party, both within the House and outside it, to whom the Minister is talking in order to try to persuade them that the rosy apples that he displays are the real goods which they will be getting. I illustrate that by saying that what they are being offered and what was explained to us in Committee is that we are not really denationalising a national institution and a national investment just at a stroke. People got rather fed up with the "at a stroke" mentality or illustration. What the Conservatives are doing, according to the Under-Secretary, is very gradually injecting a bit of entrepreneurial ability, a bit more commercial mindedness, and just changing a little the general picture within British Airways. It is quite civilised and is something with
      1148
      which every intelligent Young Conservative would agree.
      Mr. Woolmer: An intelligent Young Conservative?
      Mr. Sheerman: If there is such a creature.
      We cannot pin the Minister down. We used to refer to him affectionately in Committee as a polecat, but he preferred to be known as a ferret, ready to attack any rabbits that came within range. The Minister is providing a set-up which will con the electorate and elements in his own party into believing that, under the guise of gradualism, the party will nibble into British Airways. In fact, this Bill will provide the apparatus for selling off BA, probably for far less than it is worth, to sections of the community who are wealthy enough to take on the shares when they are offered at an appropriately inauspicious moment.
      We are genuinely concerned that a national investment will be offered for sale when the Government are in a tight corner, the balance of payments is in a bad way, the Chancellor's economic nostrums are working even less well, and the Government have their backs to the wall. In order to do something to retrieve the position, we fear that they will sell off BA at a knockdown price. That would be the worst kind of tragedy.
      The Minister will probably assure us that this is a nightmare and that it is based on fantasy, that no one with common sense could possibly subscribe to it. But I urge hon. Members to take seriously a national institution and an investment made on people's behalf over generations.
      Most people in this country do not invest in stocks and shares. They do not even have a friendly bank manager in the wardrobe to advise them. A high proportion do not have a bank account. They would not know a stockbroker if he knocked them down in the City. They are not familiar with financial institutions. Many do not even have a Post Office Savings Bank book. But they realise, in an inchoate way, that they have an investment, they have put something by for a rainy day, in British Airways.
      Such people have every right to expect financial probity, common sense and honesty from the custodians of their wealth.

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      Perhaps I am being rather simple—[HON. MEMBERS: "Hear, hear."] Perhaps, but a simple attitude to complex problems—attempting to understand rather than give answers—is often a great advantage in political life. A more simplistic approach to problems is often what is needed.
      I ask the Government to respond to the belief that they are the custodians of a great heritage and a great piece of wealth owned by millions of people. They should take a more responsible attitude to this parcel of wealth. Rather than creating a structure which will allow future Governments to sell off BA lock, stock and barrel, they should act in the interests of the British people and of the future of democratic government.
      6.45 pm
      The Government, even at this late date, could change their minds about how many shares they will sell and even give us a positive assurance such as we are used to from men and women of conviction. I thought that this was the era of conviction politics, when a politician would say "I believe that this will be the position now and for as long as my reputation is nailed to the mast of this Government."
      I have often pressed the Under-Secretary of State to be converted. I gave him many chances in Committee to erect the Tebbit memorial to integrity and to conversion on the road to Damascus. I ask him tonight to say that, so long as his colours are nailed to the mast in this matter, the Government will retain a 51 per cent, stake in this company, that that is the only way to ensure that this public wealth and investment is looked after properly. I ask him to say that the Government will not sell off this wealth to speculators and sharp operators.
      We know that these are not good years for selling off such an operation as British Airways. If we are not careful, it will become a point of principle in the Conservative Party—a sort of reverse logic—that they must sell off at least 49 per cent., if not more, by the next general election. If that is so, a grave disservice will be done to the people of this country. I ask the Government to think again.
      Mr. Michael McNair-Wilson: If I really believed that the Government were seeking to sell off a British asset, to deprive the taxpayer of his
      1150
      inheritance, I might find some sympathy in my heart for new clause 6. But I do not believe that the hon. Member for Huddersfield, East (Mr. Sheerman) believes that proposition any more than I do. He must recognise, as I, and the Government, have recognised, that British Airways will need new entrepreneurial skills if they are to hold their place in the market.
      I call in aid of that statement, first, British Airways' own annual report. On page 8, it says:
      "British Airways has always believed firmly that a strong entrepreneurial spirit is needed for effective marketing of its passenger, cargo and mail capacity This approach has also been employed to good effect in the profitable management of our relevant ancillary activities."
      So BA recognises that entrepreneurial skill is required, of the sort that Sir Freddie Laker has so amply demonstrated by the enormous one-man revolution he has created in the world's airlines, the sort of skill that Mr. Adam Thomson brought into the second force with British Caledonian, an airline which manages to operate successfully and profitably without any of the appalling events with which the hon. Member for Huddersfield, East, sought to terrify the House—about BA falling into the hands of sharp operators who would bring this great airline to its knees.
      I believe that new clause 6 highlights the objective of the Bill. Of course the Opposition were bound to move it because, if they were successful, the Bill would fail in one of its main tenets. The Opposition would be sentencing British Airways to continued nationalisation without any arguments in favour of nationalisation as such. It is as if they were saying that British Airways has been supremely successful as a nationalised corporation and therefore it should remain that way.
      I question that premise immediately. I do so as a former member of the Select Committee on Nationalised Industries—a Select Committee which we may have to reconstitute. That Committee started to provide the sort of accountability that nationalised industries for too many years had not been forced to meet. I accept that the Committee was an imperfect weapon. Here I pay tribute to the hon. Member for Feltham and Heston (Mr. Kerr), who is not here at present. He

      1151
      recognised that if that Select Committee was to do the job that Parliament had set it up to do, it would have to make the nationalised industries recognise that they could no longer live in an ivory tower, accountable to no one. He insisted that each one of them brought their annual reports before our Committee, and we went through those reports just like shareholders going through the general meeting.
      Bit by bit we began to create the concept of accountability and the need for the chairmen of those great industries to account to Parliament for the way in which they had discharged their duties. That Select Committee has gone now, and without it, accountability has gone. I know that annual reports are sent to the Secretary of State and that they are still obtainable in the Vote Office, but thereafter there is no further process, or anything that any of us in Parliament can do. Therefore, the taxpayers' money, which is so often indulged in large sums by the Government in nationalised industries, is no longer a matter for us in this Chamber. The money is spent on our behalf and we are told in that gladsome phrase that we own the nationalised industries. Why are we not rejoicing? The answer is that we are not always convinced that our money has been spent in the most effective way.
      Mr. Clinton Davis: How does the hon. Member perceive that there is accountability as long as the Government persist in the policy of retaining a majority shareholding in the successor company? How is that public accountability to be demonstrated? Does the hon. Member believe that it should be there at all?
      Mr. McNair-Wilson: I had the good fortune to be on the Select Committee on Nationalised Industries when British Petroleum came before it. I heard the then chairman of BP explain that, although the Government owned 49 per cent. of the company, he felt, in almost every sense, that it operated as if it were in the private sector. That meant that the company accepted the disciplines of the private sector. It accepted the need to prove to its shareholders that it was administering its business as well as it knew how and using its assets to the greatest possible benefit, both of the company and the shareholders.
      Mr. Clinton Davis: Is the hon Member casting serious aspersions on the present board of British Airways? Certainly the Minister did not do so. Is the hon. Member saying that the board is not carrying out its duties properly, or not at all?
      Mr. McNair-Wilson: The hon. Member must not put words into my mouth. He asked me how I saw the future of British Airways when the Government no longer owned 51 per cent. of the shares. I used the example of British Petroleum to illustrate that this would have a profound effect on British Airways. That did not in any sense suggest that the present management was deficient in the discharge of its duties.
      I well remember the inquiry of the Select Committee into British Airways just after BOAC and BEA had amalgamated. I remember that one of the witnesses before the Select Committee said that the result of the amalgamation was to create not one airline, but three. He claimed that there were three different groups of people fighting each other to have the final say. There were the new people in British Airways, and the old people from the other two companies. If that is so—and I suspect that there is some truth in it—it could be that this gigantic airline with its many subsidiaries and offshoots into other areas of commerce, has grown too big to be managed successfully. It may be that the idea of profit centres has been lost because the airline has become so gargantuan. It may well be that, looked at in a commercial light, some very exciting changes could occur in its structure to make it more effective.
      Mr. Clinton Davis: What does that mean?
      Mr. McNair-Wilson: It means that the first thing that the new management will have to decide is whether the structure of British Airways is right. The hon. Gentleman knows that the structure has been changed at least twice since British Airways were set up three or four years ago. If one has to change the management structure twice after such a short time, one is bound to ask whether that structure is right. Those running the airline are clearly not convinced that it is right.
      Secondly, we must ask ourselves whether a proper return on the assets

      1153
      available to British Airways is being obtained. British Airways admit that they have fallen down on their target this year and in other years. Then, of course, the advantage of being a commercial enterprise, as opposed to a State-dominated one, is that commercial considerations will come to the fore to a much greater extent. Instead of the meddling of Ministers—and I hope that my hon. Friend will not take offence—we shall see the true managerial functions of those running the airline coming into play. No doubt they will use the atrophied muscle that they have at present—human ingenuity, ideas and improvisation—to ensure that the airline is modern in every aspect of its management approach. Again, many people will say that British Airways' management is not as good as it should be and because of that the airline is not able to meet its targets.
      Mr. Sheerman: What evidence does the hon. Member have for that statement? This is a serious attack on the quality of British Airways' management. I have found that management to be very good and full of entrepreneurial talent. This is the nub of the Bill. Why are we ruining a perfectly good, efficient nationalised corporation? It has a good record, it is profitable. By what criteria does the hon. Member claim that it is unsuccessful?
      Mr. McNair-Wilson: Before I answer the hon. Member, I must say that I am glad to see the hon. Member for Feltham and Heston in the Chamber. He knows that just before the general election last year the Select Committee on Nationalised Industries started an inquiry into British Airways with the task of looking at its management structure and its effectiveness as a nationalised corporation. We did not start the inquiry merely for the sake of doing so. It was started because we each had a playback to the effect that matters were not as right as they should be at British Airways. Although we did not complete the inquiry, the hon. Gentleman should not imagine that everything in the garden was, is and always will be, rosy.
      7 pm
      Mr. Russell Kerr: I hesitate to interrupt, as the hon. Gentleman has a wide knowledge of certain aspects of nationalised industries. One of the tenets of that hard-working Committee was to let
      1154
      the facts speak for themselves. I should hate to think that there was any imputation against the record of British Airways. We did not reach a collective view about British Airways being worth-while or otherwise. As an old stager on the Committee, the hon. Gentleman would be the last person to wish such an imputation to exist without proper evidence to support it.
      Mr. McNair-Wilson: The inquiry made little progress because of the election. It is no less than the truth that we set up the inquiry because there was concern. Our inquiry never proved whether that concern was genuine. At a meeting at London airport we put to Mr. Ross Stainton and his colleagues some of the problems that worried us. There may be minutes of that meeting available for hon. Members to read.
      We should not assume that everything in British Airways' garden is rosy. I do not believe that even British Airways believes that to be so. The chairman's statement says:
      "At £110 million, the result, while satisfactory in a difficult year for the airline industry, is nonetheless some £30 million short of British Airways' own target."
      When British Airways is prepared to state that it has fallen short by 20 or 30 per cent. of what it hoped to achieve it is difficult to say that everything is rosy.
      Mr. Clinton Davis: The hon. Gentleman will want to be fair. At present little is rosy for the aviation business, in particular for American airlines, having regard to their returns over the past year.
      Mr. McNair-Wilson: I shall not pursue the broader point about American airlines. I repeat the words of the chairman of British Airways:
      "At £110 million, the result, while satisfactory in a difficult year for the airline industry, is none the less some £30 million short of British Airways' own target."
      Doubtless that shortfall can be explained, but it is not unreasonable to say that something better could be achieved.
      I quoted the remark that British Airways is now three airlines. As chairman of BEA, Sir Anthony Milward, understood as well as anyone the problems of amalgamating two airlines that do essentially different jobs. When asked whether he thought that the amalgamation made sense, he said that he did not believe that

      1155
      it was possible to run a single airline when there were long haul and short and medium haul operations which required different skills and types of aircraft. He believed that even though the airlines were given the single name of British Airways, that would not get over the problems of managing such an enterprise or produce a better airline. That advice was not taken, and British Airways emerged.
      The Government are asking themselves whether British Airways has failed to meet its targets as often as it could because of circumstances outside its control or because of an essentially faulty structure with which to manage its enterprise. Our conclusion is that the management structure is faulty in a number of respects. In particular, like so many nationalised industries, it is at the mercy of the prying fingers of Ministers, who choose to develop their policies whether or not they make commercial sense or are likely to increase the airline's efficiency. I do not have to recount how many aircraft British Airways has been required to buy because it suited the Government of the day. That is not the best way to maximise State assets.
      If we can step back and put management decisions and the running of the business in the hands of those with the necessary management skills, commercial judgment and knowledge of the industry, the best days for British Airways lie ahead. I do not know whether those best days lie in one airline with one name or perhaps BEA and BOAC reconstituted. As a Member of Parliament I do not seek to advise those who understand such matters. I do not believe that British Airways has achieved the results that we might have hoped from the promise given when it was set up. I therefore oppose new clause 6 and commend the Government policy on British Airways.
      Mr. Woolmer: The remarks of the hon. Member for Newbury (Mr. McNair-Wilson) ranged wide. He demonstrated with forthright honesty the attitude of many Conservative Members to the Bill. They see it as an act of denationalisation. The hon. Gentleman does not even regard a 51 per cent. ownership as fulfilling his expectations. The nub of the matter for many Conservative Members is whether British Airways remains publicly owned. The 51 per cent. Govern-
      1156
      ment ownership is therefore important and should be properly considered.
      The Secretary of State, in introducing the Bill, and the Under-Secretary of State on a number of occasions have emphasised that they do not intend to go below 51 per cent. at present. It is worth considering why the Government feel it necessary to emphasise that the Bill is not designed to meet the underlying objective of many Conservative Members. It would not be right for the Bill to go through unless the Government's intentions are made clear. It would be wrong to say that it was not intended to use the Bill for the final act of denationalisation if that were the real intention. The House should be told clearly the Government's intentions.
      I was disturbed by the implication of the hon. Member for Newbury that all nationalised industries are automatically worse in many respects than privately owned industries. A glance at whole areas of nationalised industry will show that productivity, investment, seeking export markets and competing with imports are not the sole virtues of the private sector.
      There are deep problems in privately owned and nationally owned enterprises. Whether or not share ownership slips past or stays below the magic 50 per cent. is not the make-or-break factor in productivity or what the hon. Gentleman calls entrepreneurial flair. The productivity record of many nationalised industries is better than that in many areas of private industry.
      One of the areas of private industry that I know best is the textile trade, which, for various reasons, has an historically poor record of innovation, keeping up with market trends and investment. In latter years, faced with tremendous pressure, the industry has made great improvements which are much to its credit. The decline in the textile trade has not occurred because it is a nationalised industry, but if it had been a publicly owned industry all its woes would have been blamed on public ownership. We must not get tangled up in arguments that have no substance.
      I found the arguments of the hon. Member for Newbury on accountability a little confused, but he seemed to suggest that nationalised industries were not as

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      accountable to their shareholders as are privately owned industries. However, he went on to refer to how Parliament was seeking to make nationalised industries accountable in a way that some private companies would find objectionable. Shareholders' meetings of most private companies are farcical. True accountability and oversight of the owners of private business does not take place at such meetings.
      The hon. Member for Newbury was drawn into commenting on the present position of British Airways. I do not wish to comment in detail on the management of the airline. It is easy in the House to voice support for the management of a company or to voice caution and concern, but this is not the best place to explore the performance of managements, unless there are urgent reasons that force the House to do so.
      7.15 pm
      The airline business throughout the world is not in a happy state. The state of our economy and most of our industries is even more unhappy, with high interest rates, the high value of the pound, high inflation, and a depressed domestic market which brings with it depressed activity. It would be unfair to bandy across the Floor of the House arguments of principle on the Bill which do not depend on whether British Airways is going through a bad few weeks or few months. The Bill will stand or fall by different assessments of the best way to administer our airlines and individual businesses.
      British Airways and many other airlines have been suffering problems in recent months. The flotation and sale of shares in the new company will be a success only if potential investors regard it as a profitable concern, not merely immediately but for a number of years. That position will have to be brought about before there can be a successful flotation or the sale of a substantial number of shares.
      We have a mutual interest here. Whether British Airways stays completely nationally owned or a proportion of the shares are sold, the taxpayer and the private shareholder will wish British Airways to be a profitable concern. That is common ground.
      On the assumption that the airline will be a profitable concern, it is important to ask why a substantial proportion of
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      shares should be sold. Over the years, the British taxpayer has footed the bill to make sure that British Airways remained our national flag airline. With that has come the present role of British Airways and the role that will, I suspect, remain the cornerstone of the airline's operations.
      As the taxpayer has paid in good years and in bad, he should have the benefit of profits when the airline makes them. The Government appear to take the line that if a nationalised industry is making a profit it should be sold and if it is making a loss it is a target for being beaten around the head. Neither nationalised industries nor the taxpayer can win.
      If a nationalised industry is making a profit that could bring a return to the taxpayer and help to keep down taxes, the Government will sell it. If it is making a loss so that the taxpayer has to foot the bill, the industry gets a public hammering. That is not satisfactory.
      The Bill was introduced to the House as one example of the Government's willingness to denationalise—the word that eventually emerged was "privatise"—certain sectors of nationalised industry.
      Mr. Michael McNair-Wilson: Would not the hon. Gentleman agree that British Airways not owned by the State and making a profit will pay a substantial amount to the State in taxation on their profit? But if it makes a loss the taxpayer will not suffer at all. Therefore, in effect, the taxpayer does rather better if the company is in the private sector than if it is in the State sector.
      Mr. Woolmer: My point was that for the sale of shares to have any chance of success British Airways would have to be seen to be profitable and to have a clear promise of significant profits for some years ahead. In the present state of the airline industry and with, unfortunately, the possible impending state of the world economy, it would be a brave person who said tonight that a successful flotation was likely to take place for some time. I say that not as a debating point but as a reasonable assessment of a difficult market.
      On the assumption that British Airways were turned round to profit, the question of losses or otherwise would not enter into the matter. If that were not

      1159
      so, I do not believe that the institutions would be willing to consider buying shares.
      Secondly, British Airways is not simply another company. The Minister has said a number of times that it will be a Companies Act company and that the Government will sell off shares in it. But British Airways is not just another company. It is the national flag airline. What do the Government think they will mean by the "national flag airline" in the future? The Under-Secretary said repeatedly in Committee that British Airways would remain the national flag airline. When he explained why it was desirable that the Government should retain at least 51 per cent. of the shares, he gave these two reasons:
      "First…it will be a good investment…Second…there is a token there of the Government's continuing interest and support for the national flag carrier…"[Official Report, Standing Committee B, 31 January 1980; c. 307]
      carrier. If the latter is a reason for the Government's maintaining at least a 51 per cent. ownership for the foreseeable future, what do the Government mean by that phrase? Does it signify that British Airways are indeed something a bit extra, a bit special and deserving and calling for rather more public and Government support than there would be for a normal private airline?
      The third reason why I think that the clauses should be accepted is that the position should be clear for the prospective shareholders. There are hon. Members who know more about these matters than I do, but it seems to me that if the Government of the day are considering selling off shares in a previously nationalised concern prospective private shareholders should know whether they will be faced with a continual dribble to the market of a proportion of the shares. That would have an effect upon the price they would be prepared to pay and on their feeling of security that the market would be supported and would not be undercut by the selling of another 10 or 15 per cent. of the shares. Moreover, they would want to know how firmly committed the Government were to the notion of British Airways as the flag airline. If the ownership came down to 20 per cent. or 30 per cent., that argument would begin to wane.
      1160
      Private prospective shareholders should have some certainty as to the limits on the sale of Government shares. That is another argument in favour of supporting the clause. If it is not, I shall be grateful if the Minister or other Conservative Members will explain its weakness. If a major institution that owned 100 per cent., or even 70 or 80 per cent., of the shares of a company suddenly announced that it would sell off between 0 per cent. and 80 or 90 per cent. of its shareholding at some time in the future, possibly as quickly as it could, to raise cash for itself, that would have an unsettling effect on the market for the shares of that company.
      I suspect also that the Government will have to provide some certainty to the market, that they will have to give an indication of what limit there will be on the timing of the selling of shares. I cannot believe that they will be able to tell the market "Buy 30 or 40 per cent. of the shares from us this year, and possibly in a few months' time we shall want to sell off another 20 or 30 per cent.".
      Fourthly, I suspect that a secondary but important reason why the Government have in mind selling off shares has not been simply to denationalise them but to raise cash towards reducing the public sector borrowing requirement. Indeed, the sale featured in the ways in which the Chancellor of the Exchequer was to bring down that infamous thing called the PSBR. That is not the best reason, or even a good reason, for selling off an unlimited and unknown proportion of shares.
      My fifth point is really a question to the Under-Secretary. Why do Ministers continually emphasise that they have in mind a lower limit than 51 per cent.? It was emphasised strongly on a number of occasions. Why was it emphasised so strongly if it does not matter? If it does not matter that the ownership is kept at no less than 51 per cent., why keep emphasising it? Why did the Secretary of State himself originally emphasise it, and why was it emphasised in Committee? If 51 per cent. does not matter, if it does not affect entrepreneurial drive, the board's commercial independence or the ability to adjust to market conditions, why object to the 51 per cent. being in the Bill? If the Minister objects to its being in the Bill, how does he explain his so far fairly

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      firm adherence to that figure as the limit below which he would not go?
      The House has already been told that a number of other airlines have a majority Government shareholding. The Minister today found it helpful to look to the United States for other examples, but he knows quite well that if he turned to Europe he would find a whole number of airlines of major nations where the position was quite the opposite, where there was a substantial majority of Government or public sector shareholdings.
      The Minister will know the facts and figures better than I do. What I have said is certainly true of Lufthansa and, I think, of Alitalia. It is no accident. It is because the European airline market is not the same as the American—in history, present structure or future opportunities.
      The sixth point is the artificial distinction made at one time between the commercial manner of management and the proportion of shares owned by the public sector. The Minister asserted firmly in Standing Committee that it is not the Government's present intention to reduce the shareholding below 51 per cent. The reason for going even that far is to liberate the company into becoming a Companies Act company in order to exercise managerial independence and to be free from Government interference.
      It is compatible, according to the Government's argument, to have 51 per cent. share ownership and the commercial freedom and independence of the Government that they wish to achieve. If the commercial independence of the board is not to be jeopardised by a 51 per cent. share ownership, I ask again what is the objection to keeping a 51 per cent. share ownership. I am at a loss to know. Apart from an ideological wish, in some sense, to get below 51 per cent., it appears to have no connection with profitability because profitability has to exist to sell 1 per cent. of the shares. It appears to have no connection with the managerial, commercial independence of the board because that appears fully to satisfy Ministers. The 51 per cent. is becoming rather a symbol in the same way as it was not possible to accept two non-executive directors.
      7.30 pm
      Conservative Members adopt such a fixed ideological position that they can-
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      not even consider things that appear sensible and rational in their own argument. The argument for two non-executive directors was lost. Now the Government argue that 51 per cent. share ownership is compatible with all their objectives except the ideological commitment that they will denationalise. To denationalise, they must eventually get below 51 per cent. That is a singularly unreasonable way in which to treat a company and to go about considering a balance between public and private interests. That is why the Labour Government, when we take power, after the Conservative Government have denationalised British Airways or any other body, will do just the opposite. We shall go to and fro, like a ping-pong ball, between nationalisation and denationalisation.
      Mr. Colvin: On the question of to-ing and fro-ing, it has not emerged from the debate—I apologise if there was any mention of the matter during my absence from the Chamber—that there has been much play by the Opposition of the percentage of shares that the Government will retain in British Airways. At no time have the Opposition stated what would be their policy in regard to the shareholding in British Airways. Is it their intention, at some far distant future date when they may have the opportunity to do something about British Airways, to buy back enough shares from the market to make up 51 per cent.? Or do they go along with the expressed intention of the hon. Member for Nuneaton (Mr. Huckfield), who sits on the Opposition Front Bench, with regard to British Aerospace, when he says that it is Labour Party policy to take back from the owners of the shares any that are sold by the Government without paying compensation? Would that be the policy of the Opposition, if they ever achieved power again, regarding the shares sold by this Government to the private sector, including shares sold to employees in the industry on preferential terms? The hon. Gentleman may care to elucidate.
      Mr. Woolmer: The hon. Gentleman will recall, if he was present during the Second Reading debate, the precise way in which my right hon. Friend the Member for Lanarkshire, North (Mr. Smith) dealt with that point. The pity is that the Government, in introducing the novel

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      concept of a Companies Act company as a way of dealing with the relationship between public and private ownership, have lost the opportunity of trying to achieve an acceptable balance between the public and private sector. I am responding only to what I have heard in the debate and what appears to be the motivation of Conservative Members. It seems that their approach is to sell as big a proportion as possible to get the Government out of the situation. That seems a great pity in what could have been an interesting experiment in relation to public ownership and the private sector.
      The notion of Companies Act companies and the public share of individual companies varying over time bears some consideration. One of the reasons for introducing some of the new clauses is to express concern about companies moving in and out of public ownership, as conventionally described in terms of 51 per cent. ownership, without any legislation or even endorsement by the House. Following the Bill, as hon. Members will appreciate, it will be open to any Government of the day, not only in respect of British Airways, to nationalise or denationalise without ever coming to the House. It would be done simply by buying or selling a proportion of the shares. One of the reasons for these new clauses is to make sure that the House considers it right that companies should be brought into or pass out of ultimately the ownership of the public sector, conventionally defined as 51 per cent.
      I hope that the argument for the new clauses will not only be answered constructively but pondered upon by the Government. I hope that the Government will accept that the House should properly consider whether and why any particular company should be denationalised and whether the 51 per cent. ownership is a bar to commercial independence and judgment, which Ministers, I understand, accept is not the case.
      Mr. Bill Walker: I shall be brief. I am opposed to new clause 6. According to my reading, it means that we shall be writing into a statute something that would require another statute to be changed. The whole idea of selling these shares to the public, however it is done, is that the best possible price should be
      1164
      obtained at the best possible time. I do not know when that time will be. I do not know what is likely to be the best possible price. Circumstances change and market conditions change. I believe that competition—this is true in the buying and selling of shares as with anything else—forces companies to become more aggressive in their marketing and more competitive in their pricing policies.
      A splendid example is the achievement of Laker Airways on the North Atlantic route. People like myself can now take their families on holiday to North America. That could not have been contemplated a few years ago. It was out of the question because of the cost. We are looking to see whether the consumer interest is being served by competition. I remind hon. Members that there are consumers who buy shares. They are looking to get into things where they expect that there will be profits in the future and where they will get a return for their investment.
      One reason why there should be a degree of flexibility is that this will affect the pricing and the marketing of the shares. If we write into a statute things that are inflexible, this is bound to be reflected in the value of the shares.
      I remind Opposition Members that the Minister made it clear in Committee that the Government were thinking of between nil and 49 per cent. Those were the shares that the Government were considering selling off. The hon. Member for Batley and Morley (Mr. Woolmer) said that he felt the situation could become like a game of ping-pong. To write in this clause would not change the ping-pong ball aspect. Some people would still feel that retaining 51 per cent. provided the opportunity to renationalise. They would see it as the springboard to renationalisation. So the ping-pong ball effect is still there. In my judgment, if it it written into the statute it could affect the value of the shares as they were marketed. That would not be in the best interests of the British taxpayer and the consumer. In my view, that is a very good reason why the clause should be opposed.
      Mr. Tebbit: Again I have to say that I do not think that we have explored any ground which is new to that which we

      1165
      explored in Committee. That is not surprising, and I say it in no criticism of those hon. Members who have contributed to the debate.
      The hon. Member for Hackney, Central (Mr. Davis) was very anxious to know what were the factors which would cause the Government to reduce their shareholding from the level which was reached immediately after the initial launch or, indeed, below 50 per cent. In reply to the hon. Gentleman, I put forward two suggestions.
      First, the company might choose to make a rights issue and the Government might choose not to take up 51 per cent. of that rights issue. If we put in a requirement that the Government's holding should be maintained at 51 per cent., and if 51 per cent. was reached on the first launch, we would be writing into the statute a requirement that every time British Airways made a further issue of capital the Government would have to take up at least 51 per cent. of it. It would be unwise of us to bind our successors in that manner. The Government of the day might think that it was a good investment. They might think that it was a bad investment. They might think that they would prefer to do other things with the money than be forced by statute to spend it on acquiring further shares in the company. That is a clear and cogent reason why we should not write in such a requirement. That is how it might come about that the Government's shareholding fell below 51 per cent.—even without any decision taken by the Secretary of State of the day deliberately to sell the shares for any other reason.
      Secondly, I am not sure that I know fully the considerations which moved the Labour Government to dilute their holding in British Petroleum without, I might mention, any form of parliamentary approval by more than one-third, or about 25 per cent. if we include the Burmah Oil shares held by the Bank of England. At no time did right hon. and hon. Gentlemen then in Government and now in Opposition feel it necessary to come to the House to seek statutory approval of their plan to sell a very substantial holding of BP shares. I remind the House of how substantial it was, because some hon. Members may have forgotten and others may wish to forget.
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      At that time the BP company had a nominal capital issued of £386½ million, of which £186 million was held by the Government, with a further £78 million represented by the Burmah Oil shares held by the Bank of England—a total of £264 million of Government investment. They sold £66½ million of that investment—about one-third of that which was indisputably theirs, as opposed to the Burmah shares—without seeking statutory approval. Yet, when it comes to discussing what might happen to British Airways shares, suddenly right hon. and hon. Gentlemen find that there is a requirement for parliamentary approval.
      7.45 pm.
      Why? What is the difference? The Labour Government left themselves only £119¼ million of undisputed shares—exeluding the Burmah shares—in their ownership out of £386½ million issued. This makes their protestations about a 51 per cent. limit and the need for parliamentary approval look pretty thin and shabby. As so often happens, they want us to follow procedures which in their time they found were not proper or suitable for the Government to follow.
      The hon. Member for Huddersfield, East (Mr. Sheerman) tried to find common ground with the rest of us on a number of issues. Where I can find common ground with the Opposition, I do. I admit freely that it was the arguments put forward by the Opposition around this matter which convinced me of the desirability of providing that the Secretary of State could buy back shares if he wished to regain the level reached at the launch stage if, after that initial launch, the Government's holding was reduced below the figure which was then reached.
      That is another difference between this Bill and the British Aerospace Bill, and I am unashamed to mention it. I do not think that it matters that there are differences between the two and that in this respect it is considerably more advantageous, if that is the word, to the views of the Opposition than the British Aerospace Bill. I am unashamed about it. What does it matter that in dealing with different industries in a different context we come to different conclusions?
      As I say, I try to find common ground where I can. However, I assure the hon.

      1167
      Member for Huddersfield, East that I shall not experience any sudden conversion on the road to Damascus. As a matter of interest, I happen to have driven along that road more often than I care to remember. I can assure the hon. Gentleman that if he drives over the hills from Beirut to Damascus, as one used to be able to do, with a local taxi driver, he may come close to conversion. However, it is conversion to a very religious view, because one feels very near to death at times. I am not likely to experience any other form of conversion, however.
      The hon. Member talked about speculators and sharp operators who would come in and buy shares in British Airways. Obviously he regards them as despicable people. However, they are precisely the same speculators and sharp operators who bought an investment in British Caledonian. Recently British Caledonian seems to have been one of the pet creatures of the Opposition. Right hon. and hon. Members are very concerned about the fate of the speculators and sharp operators who bought shares in British Caledonian. They use no pejorative expressions about them. I do not believe that we can take the hon. Member for Huddersfield, East very seriously.
      My hon. Friend the Member for Newbury (Mr. McNair-Wilson) was right to point out that BA has a record of which there is a great deal to be proud. It even had the proud privilege at one time of having me as one of its employers. However, its record might have been better had it not suffered from Government interference from time to time. I might add that it would have been better if it had had to compete for its capital investment with other commercial enterprises in the private sector rather than with other Government expenditure totally unrelated to commercial purposes.
      The hon. Member for Batley and Morley (Mr. Woolmer) asked one or two questions, and I shall answer them as best I can. He asked what a flag carrier was. It is an expression now which has no concise meaning in the way that it used to. I should define British Caledonian as one of Britain's flag carriers. Similarly, I should describe Pan American, TWA, Delta and many others as American flag
      1168
      carriers. There is no doubt that British Airways will be the prime British flag carrier, merely because of its size and capability, for as far ahead as I can see in the future.
      The hon. Gentleman asked about the private investor who would want to know about the Government's intentions in respect of the final amount of capital in British Airways to be disposed of. The private investor must make up his own mind about these things. If that was the worst of the hon. Gentleman's worries, as opposed to worrying about the Government's intentions he should be worrying about some of the sillier things by people like the hon. Member for Nuneaton (Mr. Huckfield) and the Member for Bristol wherever it is, the odd ball one.
      We have been asked why we should sell. There is always the desirability of raising cash. Let me assure hon. Members that the effect of the cash that would come from the sale of shares is relatively small compared with the effect on the PSBR of no longer having a Government guarantee on future loans for capital investment.
      I have dealt to some extent with the question of the 51 per cent. shareholding already by pointing out that we do not necessarily wish to bind ourselves to take up 51 per cent. of every rights issue. As for ping-pong and the way in which industries may be nationalised or denationalised, there are several ways of getting around that. One is to make sure that we do not have another Labour Government. That will resolve the situation in the best possible way. The second way, since I wish to see common ground, is the method I have already mentioned of allowing a future Secretary of State, if he wishes, to purchase back shares without any need of further legislation or any need to change the structure of British Airways Limited. He would have the right, if he wished to avail himself of it, to appoint some or all of the directors.
      That makes the position plain. The only thing I would add is that there still seems to be a misunderstanding among Opposition Members in the way they refer to the Government retaining majority control in the initial stages after the launch. I must say that even if the Government maintain the majority of the

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      shares that does not mean that they seek to maintain control of the airline.
      I do not think that I can help the House further except to say that I find, on the grounds I have given, that all three new clause are unacceptable, each for slightly different reasons.
      Mr. Woolmer: I should like to ask, briefly, in view of the Minister's concluding remarks, what he meant by his statement at column 306 of the Official Report for 31 January when he said:
      "What I have said is that we intend to maintain a controlling interest."
      Mr. Tebbit: I was then speaking of the short to medium term. I also said:
      "The point I am seeking to make is that we wish to maintain a position of flexibility in these areas."
      Earlier I had said:
      "we are not committed to selling any particular percentage. What I have said is that we intend to maintain a controlling interest."
      The hon. Member for Batley and Morley (Mr. Woolmer) interrupted me at that point, and I said:
      "That to some extent would frustrate the exercise in which we are engaged."—[Official Report, Standing Committee B, 31 January 1980; c. 306.]
      The point I am seeking to make is that we wish to maintain a position of flexibility. At column 956 of the Official Report and in other places, I made it plain that we did not bind ourselves in the long term to maintain that position, not least because of the consideration that it would force us always to take up the majority of shares which were issued in a rights issue. For those reasons, I ask the House to reject all three new clauses.
      Question put and negatived.

    New Clause 7

      NOMINATION OF SUCCESSOR COMPANY
      The Secretary of State shall not nominate for the purposes of this Act a successor company unless the memorandum and articles of association of that company shall have been
      The Secretary of State shall not nominate Parliament—[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.
      I do not propose to take very long in moving this clause, but we feel that the way in which the Government have gone
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      about the Bill represents what I was going to call a constitutional outrage. However, if I were to use such language I know that the hon. Gentleman would feel that I was introducing an unnecessary note of controversy. We feel that it is a questionable way of going about the business when the Government have declared that they will—at least in the foreseeable future—take the majority of the shares.
      That being the case, the Minister has said, rightly, that this is a new design. It has not been tried before and we feel in that case that the memorandum and articles of association which govern the constitution of this company should, initially at least, be subject to parliamentary surveillance. The taxpayer will have a continuing interest in this company for some years ahead. While it is true that the memorandum and articles can be changed only by a special resolution of the company, which would require a 75 per cent. majority, if the Government are indefinite about the way in which they go about their duties and about their task of dealing and mobilising their shareholding, there is a real risk, as we see it, that they will decide not to intervene if the memorandum and articles were to be changed.
      I should like to know from the Minister what undertakings he is prepared to give about the possibility of altering the memorandum and articles when those alterations are material. The Minister has been kind enough to let us have a copy of the draft memorandum and articles of association. He laid great stress on what he called the transparency provisions in what I concede are very well drafted memorandum and articles.
      To some extent they deal with some of the anxieties that we expressed about foreign ownership. I am not convinced that they prescribe a sufficient way of dealing with the possibility of undesirable foreign ownership. The Minister has gone a long way to meet us on this. I concede that. The trouble is that if it were decided by some of the shareholders to seek an alteration in the memorandum and articles of association and the Government were to remain inert in the face of that challenge as far as this issue is concerned, I think that the Minister would concede that that would represent a thoroughly undesirable state of affairs.

      1171
      What I am inviting the Minister to say is that, if the situation arose, the Government would not hesitate to mobilise their power in order to protect the best interests of this country as far as its national flag carrier was concerned. That does not wholly dissolve my anxieties, because the fact remains that it is possible for the memorandum and articles of association that we have seen to be changed before the successor company is nominated.
      I seek another undertaking from the Minister that as far as the transparency provisions are concerned there will be no change. I seek an undertaking that there will be no fundamental change in the document that has been put before us and which I am inviting the House to look at, though we may not debate its detailed provisions. That is quite absurd, though I mean no reflection upon you, Mr. Deputy Speaker. It is a strange state of affairs that when we embark on this novel enterprise we are not permitted to debate the memorandum and articles of association except in general terms.
      Parliament should exercise a more positive role. For that reason, we have tabled the new clause. I suspect that the Minister will respond positively to the invitation. That will avoid a vote on the issue. In Committee the Minister gave some indication of how he felt. However, he must place on record precisely how the Government will respond when faced with the proposition that I have described. We must know whether the substance of the draft memorandum and articles of association will prevail.
      8 pm
      Mr. Neubert: I shall speak on the new clause because of my interest in the articles of association and the character of the company which is to be created by the Bill. Complete denationalisation is not involved. A company will be created which will be part public and part private, although that definition might be too simple and be challenged. Under the articles of association is it intended to exclude any activities, or is the new company to be one of which there are many, engaged in speculative activity the articles of which allow any activity, bt it beekeeping, roof thatching or sheep shearing?
      1172
      I hope that the Minister will not think that I am gunning for him alone, because a point of principle is involved in connection with other Government policies. For example, British Rail proposes to invite private participation in some of its subsidiary activities. To judge from Sir William Barlow's statement, the Post Office is planning to set itself up in opposition to retail travel agencies by using Post Office branches for the sale of travel services.
      I hope that the Minister will forgive me for raising this matter for a second time this evening. He replied in an earlier debate, but I should like to pursue some matters which are related to the new clause. The Minister said that the financial support which I claim will be given through the character of the company to its private activities will not be provided by the public purse. He chose to interpret that as meaning that in future the company's activities will have to look to private sources for future funding. I presume that that is written into the articles. However, the British taxpayer has created the assets of the company which is to be sold in part. The justification for creating the company is that an airline of such magnitude must have a monopoly. After all, a Conservative Government nationalised Imperial Airways and created the national airline. It became the flag carrier and needed public support on a par with other national airlines.
      Another argument is that the airline will provide services to low-traffic, provincial destinations to give a regional social service rather than a commercial enterprise operating at a profit, as it will under the new constitution which I hope will come before Parliament for approval. It is significant that one of the first acts of British Airways after the Bill was introduced was to announce that it intended to abandon its less profitable provincial routes, thereby knocking away one of the justifications for its monopoly.
      The Minister says that from the enactment of the Bill the new company under its new articles will in all respects, in relation to monopolies legislation, be the same as other airlines. He cited Laker and British Caledonian as illustrations. The new company will be substantially larger than either of those two airlines. I have only to cite the proportion of

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      domestic operation which British Airways has to make that point. The Government are launching a monopoly on the market. For that reason, it is necessary to restrict its activities and not to allow the wide-ranging possibilities, either under the articles introduced at the outset or as amended later.
      I am not sure about the United States. My impression is that there are restrictions on airlines, if not as to hotel keeping at least about engaging in retail travel and tour operating. I thank the Minister for his offer to write to me about that.
      The new company will not be controlled effectively by monopolies legislation. It is inconceivable that a company with a 51 per cent. or more shareholding by the Government should be investigated. That is like asking us to believe that Buckingham Palace would be investigated for having a monopoly of royalty. An investigation is unlikely. My reasons are exemplified by the latest decision on the Hong Kong licence.
      Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. The hon. Member is aware that we are dealing with new clause No. 7 which deals with the parliamentary control of the memorandum and articles.
      Mr. Neubert: I am aware of that. I was seeking to advance reasons why the memorandum and articles of association should come before Parliament because of the monopoly domination of the market by British Airways Limited when it is constituted. I am almost at the end of my remarks, and I hope that I shall not incur your displeasure in the next few minutes, Mr. Deputy Speaker.
      As a result of a decision to open up competition to four airlines, the present company has come forward with a fare of £99 to Hong Kong. That is substantially less than the fare suggested by Laker Airways which the Minister used as an example. Is that because British Airways—or the newly constituted company—is more efficient because it gives a more attentive service, because it has the lowest number of staff per air miles flown or because it can get a cheaper price for aviation fuel? It is not. It is because of its domination in the market. I hope that the articles of association will be subject to parliamentary approval. I
      1174
      hope that they will not be open to amendment without Parliament having control.
      British Airways is running into declining profitability. The ultimate test for the Government is whether they are prepared to see British Airways go bankrupt. All the talk of articles of association and about its being a private sector company like any other is not reality. An effective public monopoly will remain.
      Mr. Tebbit: I find it hard to relate what my hon. Friend said on the claim that an effective public monopoly will remain, given what has just happened on the Hong Kong routes hearing where an effective public monopoly—that of British Airways—has been effectively broken.
      In referring to the domestic routes and the possibility of cross subsidy between the various activities of British Airways Limited, it must be accepted that the Civil Aviation Authority has a duty to ensure that the operators of those domestic routes do not take money from those profits to operate other activities. If they did so it would be fairly clear that other efficient operators could operate those routes at a lower fare or could offer a better service.
      My hon. Friend must accept, therefore, that if this company is to be launched—and we concluded on Second Reading and in Committee that it should be—it must be launched as a private sector company. It would be totally incompatible with the whole thrust of the legislation for us to ask Parliament to assume responsibility for approving the memorandum and articles of association of the company. This is not the place for the articles of association of a company to be debated and possibly to be amended. Least of all does that apply when the Government may not at some time have a majority shareholding in that company and when the Government have quite clearly said that they will not seek to manage the company.
      The objects of the company are set out in the memorandum, a draft of which is in the Library. It is perfectly open to the company to seek to amend those articles in the future. It would do so as would any other company, but since it is primarily in the airline business, and since that is what the investors will put their money into, it would be extraordinary if

      1175
      it deviated into unrelated activities or if it chose to throw away shareholders' profits so that it lost money in other areas. I do not think that my hon. Friend has voiced a reasonable fear.
      The hon. Member for Hackney, Central raised a point to which I can respond to some extent. I have made it plain that the Government would be willing at any time to marshal their shareholding against any moves which were clearly against the interests of the company. That undertaking has been given and it remains.
      The hon. Member asked also for an undertaking that the final article of the company would be in accordance with the draft that has been placed in the Library. The best assurance I can give is that the thrust and purpose of the final articles will be in accord with the draft. We would not seek to deviate from that draft in any material form.
      Question put and negatived.

  ROYAL ASSENT
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): I have to notify the the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:

  1. Port of London (Financial Assistance) Act 1980.

  2. Licensed Premises (Exclusion of Certain Persons) Act 1980.

  3. Industry Act 1980.

  4. Transport Act 1980.

  5. Sea Fish Industry Act 1980.

  6. New Towns Act 1980.

  7. Gas Act 1980.

  8. British Railways (Castlefield) Act 1980.

  9. Bangor Market Act 1980.

  10. Wesley's Chapel, City Road, Act 1980.

  And to the following Measure, passed under the provisions of the Church of England Assembly (Powers) Act 1919:
  Diocese in Europe Measure 1980.

  CIVIL AVIATION BILL
  As amended (in the Standing Committee), again considered.
  CIVIL AVIATION BILL
    Clause 2

      VESTING OF PROPERTY, ETC., OF BRITISH AIRWAYS BOARD IN A COMPANY NOMINATED BY THE SECRETARY OF STATE
      8.15 pm
      Mr. Tebbit: I beg to move amendment No. 1, in page 2, line 19, after first "section" insert
      "and section 4(1) of this Act".
      Mr. Deputy Speaker: With this we may also take Government amendments Nos. 8 to 10.
      Mr. Tebbit: I do not think that this group of amendments needs to detain the House for too long. The amendments are of a technical nature. They involve no change of policy. The amendment to clause 3, line 33 is designed to cater for the particular procedure for the issue of shares to and the sale by the Government. The other amendments are purely consequential to it.
      If the House would like me to explain the details of the workings of renounceable letters of allotment I should be happy to do so, but I feel that that is not necessarily the wish of the House.
      Amendment agreed to.
      Mr. Clinton Davis: I beg to move amendment No. 5, in page 2, line 29, leave out "thing" and insert "act".
      This is a matter of great significance. It arises from the inelegance of the drafting of subsection (3)—
      "Any agreement made, transaction effected or other thing done by"
      The Minister should have done better between Committee stage and Report. From having consulted the Oxford English Dictionary, my understanding is that "thing" in an obsolete legal term. Perhaps it is right that in that context it should be included in the Bill. I also understand, having further consulted the same dictionary, that Plato said
      "Theft is a mean and robbery a shameless thing."
      1178
      That is another very good reason for having used the word.
      This is a most undignified way of drafting legislation. I should have thought that the Minister would seize the opportunity, particularly since in the past he complained about the inelegance and falsity of the language and the way in which statutes are drafted, to make some advance here. So perhaps he will tell us that between now and consideration of the matter by their Lordships something will happen to change drastically the feeble language of the statute. Of course, it is a feeble piece of legislation, but even so I think that the Under-Secretary could do better.
      Mr. Tebbit: I recollect that in Committee I agreed to consider an alternative—
      "a more elegant phrase which would keep the draftsmen and lawyers happy".—[Official Report, Standing Committee B, 31 January 1980; c. 257.]
      I seized the opportunity, but then I dropped it because I could find no phrase that would keep the lawyers and draftsmen happy. Unfortunately the word "act" does not represent any improvement over "thing". It could be construed in a narrower sense, and so, as much as I wanted to be helpful, I could not accept the amendment.
      To be perfectly serious about the matter, I should explain that a breach of duty by the board giving rise to a liability, or a breach of contract by a person obligated to the board may arise through a failure to act. The word "act" would not cover such a case whereas "thing" would.
      We have not been idle on the matter, but we have been unable to improve on the word "thing" which brings across the meaning we require—
      Mr. Clinton Davis: Has it been to Cabinet?
      Mr. Tebbit: I must confess that it has not been to Cabinet. The Cabinet seems to have had other matters on its mind in recent times.
      Although we criticise lawyers for using abstruse and difficult language, in this case we can find nothing more simple and ordinary than the good old Anglo Saxon word "thing"—before anyone thinks of anything else.

      1179
      In the circumstances, I hope that the Opposition will not press the amendment. If any of their Lordships, with all the erudition for which they are famous, could find a better word I should still be willing for the matter to be considered in another place.
      Mr. Clinton Davis: I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Mr. John Smith: I beg to move amendment No. 6, in page 2, line 31, after 'day', insert:
      '(including without prejudice to the generality of the foregoing, any obligation founded on legislation which is specifically repealed by this Act)'.
      Mr. Deputy Speaker: With this we may also take the following amendments:
      No. 7, in page 2, line 31, after 'day', insert:
      'including, without prejudice to the generality of the foregoing, any pension right or contract of employment.'
      No. 54, in schedule 3, page 25, line 14, column 3, leave out 'section 15'.
      Mr. Smith: These amendments give us an opportunity to raise the question of pensions of employees of British Airways as it is presently constituted. We discussed the matter in Committee. The Under-Secretary will recollect that Opposition Members expressed concern about what will happen to the agreements made between British Airways as presently constituted and the relevant trade unions and professional associations about pensions.
      It is fair to say that a good pension arrangement exists—of which the Under-Secretary is a beneficiary—for employees and former employees of British Airways. The change from a public corporation to a private sector company raises the question of what will be said when the shares are launched about the obligations of the company towards its employees, and the likely effect upon employees of such a change. If the change had not been proposed, they would know where they stand. As I understand the position, the pensions are index-linked. They are much the same as the pensions paid to employees in the public service.
      1180
      We pressed the Under-Secretary about this matter in Committee because it is a matter of legitimate concern for the many employees of British Airways. Their pensions are a material part of their wages and conditions of service. The Under-Secretary said that pensions would be a matter for the new board of the successor company. He could not say what would be the attitude of the board towards the obligations that it inherited.
      One reason why we tabled the amendment in this part of the Bill is that in this part of the Bill a legal technique has been used to change the nature of the corporation, providing that all previous obligations of British Airways will become the obligations of the new company. Just as the new company will have the right to the benefit of all the contracts and the advantages of British Airways, it will be subject to all their liabilities and obligations. It will be in the same legal position on rights and obligations, and we feel that the pension obligations should be included in that. The pension obligation of British Airways should be transferred lock, stock and barrel to the new company. It is not unreasonable to say that if the legal ownership of a company changes, especially when supervised by a Government who give similar pensions to their employees in the public sector—I remind the House that index-linking was introduced by a Conservative Government in 1971—it is unusual for them to put at risk the pensions of employees of a public corporation.
      The problem could be solved easily if the Government said "We shall guarantee that, whatever happens, your pension rights will be secured". That is one of the things that any intelligent person acquiring a company in the private sector should wish to do. I know that, regrettably, that does not always happen. Surely what we expect of someone acquiring a company is that that person should say to the employees "I shall guarantee the same conditions of employment as you have at present, especially your pensions. I assure you that you will be no worse off. You may be no better off, but you will not be worse off under my control". It is an analogous position. Where the Government superintend the handover of the assets to the new creature, the successor company, it is entirely legitimate for the employees of British Airways—some

      1181
      of whom have spent a long time in their service in the expectation that they would have certain pension rights at the end of that service—to say that that was a factor that they took into account when deciding either to join British Airways or to remain in their previous employment.
      We are entitled to ask the question that I know trade unions and professional associations have been asking about the matter. If they were not asking questions, they would not be carrying out their proper obligations to their members. I hope that tonight the Under-Secretary will deal with the matter as clearly as it should be dealt with. He should say that the Government will take steps to ensure that the pension rights will be in no way diminished or affected adversely by the Bill's proposals. When we tackled him in Committee we received a bland, turn-away answer. He said "Do not bother me about this because it is a matter for the successor company, and who am I to know what will be its position?"
      However, investors will want to know the Government's attitude when they announce the prospectus. There is a considerable obligation towards the company's employees to maintain pensions on an index-linked basis. It is not common practice throughout the industry but, by and large, it is common practice throughout the public sector. In those circumstances the House would be failing in its duty if it let the legislation reach the statute book without a better answer to this highly pertinent and important point than that which we have so far been able to extract from the Under-Secretary in Committee. We touched on the matter in Committee, and it is proper to raise it again on Report because it is a matter with which the whole House should be concerned. It is almost a matter of honour in the way in which we deal with employees of companies.
      If political parties are elected to power, and carry out changes—I am not saying that everybody should be protected from those changes, as that would be impossible in the modern world—the Government should set an example to other employers in elementary matters such as conditions of employment. Many employers take the trouble to reassure their employees when they are faced with a take-over. Some, unfortunately, do not
      1182
      do that. It is a compelling argument from the point of view of employees.
      The other matter that relates to this group of amendments deals with the repeal of section 15 of the Civil Aviation Act 1949, which relates to comparability being introduced into wage negotiations for British Airways employees. I am not sure why the Government wish to make that change, or why they are so averse to this provision, which has been on the statute book for about 31 years. I wonder why it was swept in among the repeal provisions in the Bill. It is an important point, because I know that the trade unions thought it a valuable and important piece of statutory assistance in the pursuit of better wages and conditions for their members in the airline industry.
      My first point about pensions is important. I ask all hon. Members to give careful consideration to the matter, especially as the Government have other pieces of legislation of this character. If the pension rights that employees are entitled to expect to be preserved are put at risk by the political activities of the Government, it is a matter that should be thrashed out in this place where we have the responsibility of deciding whether the Government should be permitted to change the law. The matter should engage the attention of all hon. Members in all quarters of the House. I put it forward not in any partisan spirit but because I am genuinely worried about the effects of the provision. I hope that the Under-Secretary will be able to reassure us better than he has done so far.
      Mr. Tebbit: I am perhaps mildly hurt that the right hon. Gentleman should feel that I did not give sufficient assurance in Committee. I thought that I went as far as I could about this matter. Amendment No. 6 would be undersirable in several ways, for technical reasons with which I need not bother the House, because the right hon. Gentleman and I have never tried to base our arguments on technical points. I accept what he said in the spirit of his argument rather than in the detail of the amendments as drafted.
      The right hon. Gentleman will find, at columns 259 and 260 of the Official Report of the Standing Committee, the points which I have to make again this evening, although I might use slightly different words on this occasion, since

      1183
      it would seem to be rather boring to read from the Official Report what I said on that occasion.
      As I explained to the Committee, the successor company, both before or after any flotation of the shares, is to have precisely the same relationship with the airways pension scheme as the present board does, and the company will be subject to the same rules.
      I am advised—indeed, I know perfectly well because I am a member of the pension scheme, as the right hon. Gentleman has mentioned—that there are safeguards within the scheme which would effectively prevent a worsening of the terms of benefit under the scheme. As I told the Committee, there is a 50–50 arrangement for representation on the board which manages the scheme. So, clearly, there will be some reference to the pension scheme in the prospectus for the sale of the shares, because it is an important factor to be taken into consideration by those who choose to invest in the airline.
      We have to take into account the common base self-interest of the company. For a company which has inherited under the Bill all the obligations of its predecessor corporation—and they include all the obligations in the pension scheme—to try to change those or to evade them would hardly be a way in which to run a company successfully and profitably. It would cause grave difficulties.
      8.30 p.m.
      Mr. John Smith: I take the point that one might expect the company to behave decently for all sorts of reasons of self-interest, as well as for reasons of principle, which is the point that the Under-Secretary is making. But surely we could put the matter beyond doubt—in circumstances in which the Government will, at least for the reasonably foreseeable future, be the majority shareholder—by the Minister saying that he will take steps, using the Government's majority shareholding position, to give an assurance that the new pension scheme will not put people in a worse position than they are in at the moment. That is not a great deal to ask and it is within the Government's power.
      Mr. Tebbit Mr. Tebbit rose—
      Mr. Blackburn: Will the hon. Gentleman give way?
      Mr. Tebbitt: Certainly.
      Mr. Blackburn: My hon. Friend will be well aware that I raised this point in Committee. I feel very strongly about it. I pointed out that
      "at 31 March 1979 the assets of the pension fund stood at £500 million".—[Official Report, Standing Committee B, 31 January 1980; c. 265.]
      That was a bold statement of fact. I qualified it by saying that it did not mean a thing whether it was £500 million or £750 million, and that we were trying to determine whether the pension fund was in a sound and viable state.
      It hinges, I suggest, on the earlier question in regard to clause 2, when we spent time discussing when the shares will be put on the market and at what price.
      Before we reach that stage, we want to know what liabilities the new company will inherit. It may well be—as we tragically found in the matter of the Post Office—that the pension scheme is grossly under-funded. I hope that my hon. Friend will be able to help the House in this matter, because there is common ground on each side. Although we have had a debate in the desert of democracy, we have now reached the oasis of civilisation, because we are talking about men's pensionable rights, which we all want to safeguard.
      Mr. Tebbit: I entirely accept my hon. Friend's point. At a later stage in Committee I referred to the progress that was due to be made in the review of the trustees to ensure that the assets were adequate, because they are under a statutory obligation to make sure that the fund is able to cope with its obligations.
      Nothing in this world is absolutely certain, except death, and to say that a pension fund is soundly based is to say that it is soundly based so far as one can see; but in the event of war, in the event of absolutely disastrous economic circumstances, or a number of things of that sort, no pension fund can stand up. A pension fund which may well have seemed adequate to people in Germany just after the First World War would have looked very odd after the economic problems which hit that country.

      1185
      There is no possibility of giving absolute guarantees. What I can give is an undertaking that there is nothing in this legislation which of itself affects the relationship between the corporation or its successor company, on the one hand, and the pension scheme, on the other hand. Any future changes in that pension scheme would be a matter between the employees and the company, as indeed at present any changes are a matter between the employees and the corporation—or, to be more accurate, the trustees of the fund, I think, because they represent also the existing pensioners as well as the employees. So nothing in that sense changes unless the parties conclude that it should change.
      There are the two problems which I have outlined: first, the obvious implications, on the one hand, for industrial relations and other matters, and, on the other hand, the "no worsening" clause and the 50:50 representation on the trustees committee. I think that that is the best guarantee that one can give.
      The Goverment's position as a shareholder will have to be maintained as I have outlined it—that the shareholding would not be used to interfere in the management of the company except in circumstances in which it was clear that something which was being done or was proposed to be done was gravely against the interest of the company. When I say "the company", one has to accept that the company includes the whole of the business, and if something was being done which would disrupt that business, clearly the Government's shareholding might be called upon. But I do not believe that I can go further than that in that respect. I hope that the right hon. Gentleman will feel that that is a reasonable position.
      From an entirely personal point of view, as one of the beneficiaries of the fund, I am satisfied that it is a reasonable position to take. I have had no representation from the trustees of the fund to the contrary. I think that that is significant, because I am sure that they are aware of these matters and have had our debates drawn to their attention.
      Mr. Sheerman: Have there been any representations from the trade unions whose members are employed in British Airways about the pension fund? Will
      1186
      the Minister confirm that it is the Government's priority that this should be a company which pursues profitability first and the welfare of its employees second?
      Mr. Tebbit: The welfare of employees cannot be divorced from the profitability of a company. An unprofitable company cannot care for the welfare of its employees. It does not have any money to do so. We have learnt all too often that it is all very well to have mouth about the welfare of employees, but unless that mouth is backed by a wallet which is filled from profits the words are worth absolutely nothing.
      I have to say, as I said in Committee, that I have made it perfectly obvious to the trade unions that I am willing to discuss with them any matter which they wished to discuss with me about the Bill, and that the door of my office, as I have said on many occasions, was open. I still await a substantive reply to a certain letter which I wrote to one leading trade union leader on these matters, generally speaking. The answer is that I have received no representations. I regret that I have not received representations from the trade unions about the Bill, because I might have been able to assist them in understanding its purpose and the way in which it was constructed.
      Mr. John Smith: I think that I can summarise succinctly the Minister's response to the concern expressed in this debate. He said that there is nothing in this change which will positively harm the pension scheme and nothing in the Bill which can be said to depress rights in any way. That is true; there is not. The hon. Gentleman says also that he cannot guarantee people's pensions for ever. That is right; everyone accepts that British Airways cannot guarantee pensions any more than a successor company can.
      However, the crucial point is that people should be no worse off as a result of the change in the ownership of the company. The Minister referred to the trustees of the pension fund—50 per cent. from the staff side, I understand, and 50 per cent. from the management side, which is a common arrangement in these matters. But the 50 per cent. on the management side might be following different instructions from the board of the successor company to the instructions at present emanating from British Airways. It is

      1187
      because we seek to prevent any change of policy from that quarter that we seek these assurances.
      It does not seem much to ask that the Government should say that, one way or another, they will ensure that people are no worse off. I do not believe that there is any difficulty in the Government ensuring that their views are carried out. If a Minister said that it would be wrong for the successor company in any way to change the policy towards the pension fund, that would carry great weight with the successor company.
      I hope that the Minister will ponder the matter. The Secretary of State is listening to the debate; I hope that he will consider this matter as well. The Government will, after all, remain, at least for a period while this matter is discussed, the 51 per cent. shareholder and they will have effective power. I am not asking the hon. Gentleman to commit other people to doing what he wants to do. The Government will be the beneficial owner for legal purposes of the successor company for that material period. I am asking for nothing that is unreasonable.
      The Minister says that the amendments are technically deficient, so I shall not press them to a Division, but it would be well for hon. Members to consider the issues raised. I hope that the Minister will undertake to consider the arguments which have been advanced, as well as, if that is desired, any further representations from employees.
      I understand that it may be a little while before the Bill is considered in the other place. Perhaps, between now and then, the Government can reconsider the matter. I am not asking them to give spot commitments now, but if the Minister will look at the matter again, he will go some way to assuaging the genuine concern which is felt.
      Mr. Tebbit: Perhaps we can count that as an intervention in my speech, so that I can continue without asking the leave of the House to speak again. I am grateful to the right hon. Gentleman for the way in which he has put the matter. I am under an obligation to respond in a like manner.
      Of course I am willing to look again at the matter to see whether I can give
      1188
      any more positive assurance. In the circumstances, that is probably not possible, but I shall certainly look at the matter again. If representations are made to me, I shall listen to them with care. If it were possible for anything more to be said in another place, I should certainly want that to be done.
      The other matter involved in these amendments is the repeal of section 15 of the Civil Aviation Act 1949, which provided that terms and conditions of employment on any independent air transport undertaking should not be less favourable than those of the British Airways Board. That has been honoured, some times, more in the breach than in the observance, with the knowledge of the unions concerned, which have seen some of the difficulties that the independent companies went through from time to time and have been co-operative in seeing that those companies survived.
      When British Airways becomes a Companies Act private sector company, it would not be appropriate if the wages and conditions of other companies were set by reference to it. That is not the way in which we conduct business in most other sectors of industry—that by negotiating with one company the wages and conditions are set for all the others. While we are making this change, therefore, it is appropriate to repeal section 15.
      8.45 pm
      Mr. John Smith: In view of the Minister's undertaking to reconsider the major point, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

    Clause 3

      INITIAL GOVERNMENT SHAREHOLDING IN THE SUCCESSOR COMPANY
      Amendments made: No. 8, in page 3, line 33, leave out 'On' and insert 'As a consequence of'.
      No. 9, in page 3, line 42 at end add:
      '(1A) Shares required to be issued in pursuance of this section shall be issued or allotted at such time or times and on such terms (as to allotment) as the Secretary of State may direct.'.—[Mr. Tebbit.]

    Clause 4

      FINANCIAL STRUCTURE OF THE SUCCESSOR COMPANY AND ITS SUBSIDIARIES
      Amendment made: No. 10, in page 4, line 28, leave out subsection (1) and insert:
      '(1) Subject to paragraph 2 of Schedule 2 to this Act, any entitlement of the Secretary of State and any liability of the Board in respect of the public dividend capital of the Board shall be extinguished immediately before the appointed day; and the aggregate nominal value of the shares in the successor company issued in pursuance of section 3 of this Act shall be equal to the amount of the public dividend capital immediately before that day.'. —[Mr. Tebbit.]

    Clause 5

      GOVERNMENT INVESTMENT IN SHARES AND SECURITIES OF THE SUCCESSOR COMPANY
      Mr. Tebbit: I beg to move amendment No. 11, in page 5, line 29, after 'into', insert:
      'or carry rights to subscribe for'.
      Mr. Deputy Speaker (Mr. Richard Crawshaw): With this we may take Government amendments Nos. 12 to 19 inclusive.
      Mr. Tebbit: Once again, I have to say that these amendments are technical and drafting and do not represent any change in policy.
      The purpose of clause 5 is to give the Secretary of State the power, if he chooses to exercise it, to acquire ordinary voting shares in the successor company. In the Bill as originally drafted the Secretary of State's powers were limited to acquiring further shares only in the form of rights issues, that is, new shares which may be offered by the company to existing shareholders. However, during the Committee stage the Government tabled an amendment providing powers for the Secretary of State to acquire further ordinary voting shares other than in the context of rights issues, for example by purchase on the open market. Clause 5(1), as at present drafted, allows the Secretary of State to acquire ordinary voting shares or securities convertible into ordinary voting shares subject only to a maximum target investment limit defined by clause 6.
      1190
      However, after looking more closely at this subsection, we find that it requires some expansion. Although it already covers ordinary voting shares and securities convertible into ordinary voting shares, it does not cover rights to subscribe for ordinary voting shares or securities which carry rights to subscribe for such shares. Both of these are types of investment which the successor company might choose to offer and it is consistent with the Government's policy to enable the Secretary of State to subscribe, should he see fit. This is achieved by amendments Nos. 11 and 12. Amendment No. 13 is consequential on the first two.
      The definition of "ordinary voting shares" in clause 5(2) was rather too narrowly drawn. Amendment No. 14 modifies this definition so that it does not impose an unduly onerous restriction on the ability of the Secretary of State to acquire or subscribe for new shares.
      Unless hon. Members press me, I shall not go into the close detail of this, but to some extent it will make it easier for the Secretary of State to acquire a wider range of securities provided only that they also come with the right to convert to, or acquire in some way, voting right shares.
      Amendment agreed to.
      Amendments made: No 12, in page 5, line 29 at end add—
      '(bb) acquire rights to subscribe for any such shares; or'.
      No. 13, in page 5, line 32, leave out from '(a)'to 'so' in line 33 and insert—
      '(b) or (bb) above in relation to such shares, securities or rights'.
      No. 14, in page 5, line 39 at end insert—
      '(but the right to participate in distributions need not extend to a dividend declared out of profits earned during any period falling wholly or partly before the date of acquisition of the shares).'.
      No. 15, in page 5, line 41 after 'securities', insert or 'rights'.
      No. 16, in page 6, line 1 leave out 'or securities' and insert 'securities or rights'.
      No. 17, in page 6, line 4 leave out 'or securities' and insert 'securities or rights'.
      No. 18, in page 6, line 6 leave out 'or securities' and insert 'securities or rights'.
      No. 19, in page 6, line 7 leave out 'or securities' and insert 'securities or rights'.—[Mr. Tebbit.]
      Mr. Soley: I beg to move amendment No. 20, in page 6, line 9 at end insert—
      '(6) The Secretary of State may not dispose of any shares or securities acquired by virtue of this Act to any other airline company in such a way that any individual shareholding exceeds 5 per cent. of the total of the ordinary shares and the total of all shareholding by other airlines shall be restricted to 20 per cent. of the ordinary shares.'
      The effect of this amendment is to limit the involvement of other airlines in British Airways to 5 per cent. of the total ordinary shares in the case of any one airline or a maximum of 20 per cent. of ordinary shares for any group of airlines.
      The aim behind the amendment is important. I do not think that there is any difference between the two sides of the House in wanting to make a success of British Airways, be it in the present form or in the new form that the Government want. The difference is that on the Opposition side of the House we claim that the Government are careless about the way in which they have put British Airways into competition with other airlines. There is a feeling that somehow or other British Airways will be able to stand on its own two feet without certain basic protections which are available to other airlines.
      I cannot help but put this in the context of the Government's general economic philosophy when they argue that by taking away State aid, support or protection, they will enable British companies to compete equally abroad. There is no evidence to support that. We have had a recent example of unfair competition in the steel industry. In my constituency the director of a company came to see me. He told me that he had voted for the Prime Minister and the Government's policies, which he understood meant fair competition. He now felt that he was up against unfair competition from overseas.
      Most national airlines have considerable Government involvement in their shareholding and directorship. In Committee, and earlier, the Minister made much of the different situation in the United States. In the United States the Federal Aviation Act prevents other airlines from
      1192
      investing in American-registered airlines without the permission of the CAB. In addition, the CAB makes it abundantly clear that it will not permit foreign investment in an American airline.
      The Minister may say that there is no danger of foreign investment, because the articles of association limit the right of foreign investors. However, they are affected by the EEC. The definition of "foreigner" is:
      "an individual who is neither a citizen of the United Kingdom and Colonies, nor a national of another member State of the European Economic Community who, by virtue of Section 2(1) of the European Communities Act 1972, is entitled for the purposes of participation in the capital of the Company to be treated no less favourably than a citizen of the United Kingdom and Colonies".
      There is, therefore, the possibility of other airlines being able to buy into British Airways either from bases in Europe or the colonies, which effectively means Hong Kong, as our colonies are few and far between, and not many have the facilities to establish a national airline. The amendment is designed to protect British Airways. It will do no more than put it on an equal footing with the European airlines or the North American airlines with which it will be competing and which are protected by similar legislation. The Minister has never given sufficient assurance that British Airways will be able to compete on an equal basis with foreign airlines.
      The Minister often accuses me of being full of doom and gloom, but I am full of doom and gloom only when he gives me cause. I should not feel that way if he occasionally gave me some encouragement that we were in agreement. There is cause for concern over the future of British Airways. We should ensure that they get off to a good start in their new form. I should prefer that they are not interfered with in the way that the Government propose, but that is their policy. However, there is no excuse for not providing British Airways with adequate protection in their competition with overseas airlines.
      I do not want to continue our exchange of examples and hypothetical conditions, but if that protection is not afforded another airline from the EEC or our colonies could buy in to British Airways with the object of scoring competitive advantage. That could come about by an interest

      1193
      in the route structure or a particular route or because one airline is doing especially well and another not so well. Another airline may be interested in acquiring the profitable helicopter or hotel side of the business. British Airways, undergoing a capital reinvestment programme in a difficult economic climate, could be forced to sell off its highly profitable hotel chain to another European airline to obtain essential capital. By buying in as allowed by the Bill, that airline could bring about such a condition much more easily.
      The amendment would offer protection to British Airways. It is eminently reasonable and such a provision is apparent in other national legislation. If the Minister persists in refusing to accept our proproposal, the onus will be on him to explain why other countries provide protection and to demonstrate that British Airways will be able to compete on equal terms and will not be placed at a disadvantage compared with other national airlines.
      Mr. McCrindle: I join the hon. Member for Hammersmith, North (Mr. Soley) in wishing British Airways success in its new form. Unlike him, I am anxious to move towards a situation in which there is a minority involvement by public subscription in British Airways Limited.
      I am sorry that my hon. Friend the Member for Newbury (Mr. McNair-Wilson) is not in the Chamber. I forbore to intervene in his speech, but I do not believe that we should get British Airways Limited off to the best start if we seriously contemplated separating it again into BEA and BOAC, as my hon. Friend described.
      For good or ill, British Airways became an entity in 1974 and it is possible to trace considerable progress since then. In its most recent report, British Airways reveals an optimism in estimates of traffic which has not been fulfilled and shows a lack of management capability in that it seriously underestimated the increase in the price of aviation fuel which contributed so much to the reduction of profits.
      However, it would not be wise to conclude that the creation of two airlines, with all the problems faced by British Airways, in place of the one that we have at present, would necessarily be a move in
      1194
      a more profitable direction. I do not subscribe to the ideas of my hon. Friend the Member for Newbury. I also do not accept my hon. Friend's claim that the management of British Airways is lacking in commercial judgment. My experience of the management is that it is well aware of the commercial factors surrounding the atmosphere in which the airline operates. I wished to place those matters on record before turning to the amendment.
      I support the Government's policy of selling part of British Airways and I believe that we should place as few obstructions as possible in the way of a successful sale. Still fewer should be prescribed by statute and I am, therefore, not anxious to see the amendment added to the Bill. I have been tempted from time to time to support additions to the Bill, but I have been constant in my belief that we should accept the objective set by the Government and do all that we can to achieve that objective.
      9 pm
      If we are to resist the amendment—and I presume that the Minister will think that he should—the Government need to make their position clear on three points. First, my hon. Friend's reply should be that the Government see British Airways, in private or public ownership, continuing to be our principal flag-carrying airline. I was in the House when we had a short debate on what "flag-carrying airline" meant in the new situation. My hon. Friend will understand when I say that, no matter what the Government's relationship is with British Airways in the future, there is a need to emphasise that while it remains at its present size, while it bestraddles the world with a mass of routes, British Airways must continue to be seen by this Government, and any future Government, as our principal flag-carrying airline.
      Secondly, for reasons of prestige—the Government's prestige and the country's prestige—and because we must take note of the possibility of a national emergency requiring the Government of the day to requisition a part or all of the fleet of British Airways, which is provided for in a later clause, the Government should exercise the powers of their shareholding to prevent ownership from passing into foreign control.

      1195
      Thirdly, the House expects my hon. Friend to say that the Government will not willingly see more than a comparatively small shareholding taken up by competitor airlines. However, there is a positive case for encouraging an injection of other airline expertise into British Airways. Where this has happened elsewhere in the world it has seldom been to the detriment of the airline, provided that the percentage of such a shareholding is minimal.
      I go further. Apart from there being a case for a minority shareholding by a competitor airline, there is a powerful case for a shareholding being taken up by, for example, travel agencies or groups of travel agencies. After all, if the future management is anxious to know what the customer thinks about British Airways services, there are few in a better position to tell it than the representatives of the travel agencies.
      Therefore, I hope that we shall in no way discourage the movement towards a minority shareholding by a competitor airline, and even an involvement by a group of travel agencies. There are good reasons for a minority shareholding. If any hon. Member is in doubt, I remind him that there is already a minority holding by British Airways in competitor airlines, and an airline that is about to become a competitor, in the shape of Cathay Pacific.
      Mr. Soley: I take it that the hon. Gentleman does not disagree that my amendment allows minority participation. Indeed, it would allow travel agents to be involved, if that were the wish. It is not against that.
      Mr. McCrindle: I accept that. What I am saying is that, whilst I understand the hon. Gentleman's sentiments and. I suppose, could be said to be endorsing some of them, I do not accept that it is necessary to truss up the future British Airways Limited with unnecessary amendments. I hope that the hon. Gentleman's ideas and those that I have just added, such as the minority shareholding by a group of travel agencies, will be accepted by my hon. Friend in general principle. Equally, the Government are entitled to say that it is not necessary to go to the extent of tying up every last
      1196
      area of possible shareholding involvement by accepting the amendment.
      I hope that the hon. Gentleman appreciates that I am going considerably along the way to accepting his sentiments. My hon. Friend the Under-Secretary would be right in broadly accepting the sentiments that both the hon. Gentleman and I have expressed but in resisting the need to add an amendment such as this.
      Mr. Tebbit: As hon. Members have said, we have already debated a similar amendment in Committee. I repeat that, as a matter of broad principle, the Government see no reason why other airlines should not be allowed to invest in British Airways if they wish. That is the point that my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) makes. As my hon. Friend said, it is not unusual for major international airlines to have a proportion of shareholders from other airlines. British Airways has trade investments in other airways including Cyprus Airways. Air Mauritius and most notably, perhaps, some 15 per cent. of Cathay Pacific Airways.
      It would be a most unusual private sector company that had a statutory restriction on the holding of its shares by other companies. Looking at the terms of the amendment and bearing in mind the size of British Airways, I do not think that it can be held that other airlines would come in to buy the equity of British Airways Limited in order to damage it. If it was a foreign investment from outside the European Community, it could easily be prohibited by the provisions in the articles of the company and our law. I do not believe that there is lurking somewhere within the Community an airline such as Alitalia or Air France determined to buy into British Airways to damage it. Indeed, if that was overdone and British Airways ceased to be an airline under clear British control, one would run into the problem that British Airways would lose its route rights under sections 22 and 23 of the Civil Aviation Act 1971.
      As I said in Committee, I am not sure how this fear of the damage that would be done by modest shareholdings by other airlines and, indeed, foreigners, in our airline arises. If it had been good for Cathay Pacific to have 15 per cent. of its

      1197
      shares held by British Airways, would it be bad for British Airways if it had 5, 10 or 15 per cent. of its shares held by Cathay Pacific? It would be difficult to argue that this was harmful. We must not allow ourselves to slide into nightmarish dreams about foreign interests seeking to disrupt British Airways.
      The point was made about British Airways as a flag-carrier. I can only say, as I have stated before, that British Airways is such a large company, with such a wide network, that it must inevitably be regarded, for as far ahead as I can see, as Britain's prime flag-carrier across the world generally, except in those areas where British Caledonian has established itself, such as South America and the west coast of Africa, as the prime British flag-carrier. The Bill will make no difference to that situation. If it makes British Airways that bit more competitive as I hope it will, it should establish British Airways even more strongly as the great British flag-carrier.
      Mr. Soley: I shall be brief, but I fear that I shall have to press this matter to a vote. The Minister has not convinced me that he has given adequate thought to the dangers confronting British Airways. If we stand by and say, at a time when we are watching the de-industrialisation of Britain, that British Airways will be able to manage and that it will be backed as has happened with the steel industry or any other industry, we may be in the grim position—perhaps a nightmare that comes true—of seeing British Airways, in a year or two, in the same position as British Steel. That is the problem.
      It is not sufficient to say that British Airways will be protected by the Government's general interest in its welfare. It is natural that the Government should want British Airways to be the primary flag-carrier. Yet, at the same time, the Government are saying that routes should be opened to far more competition and prices brought down. No one is against bringing down prices and making air travel easier for the travelling public.
      The problem is that, at the moment, British Airways has to carry routes that are not profitable. Even if those routes are dropped—that is not expected to happen—British Airways will have to compete on routes such as Hong Kong
      1198
      for which one has already seen cheap flights advertised. Someone will lose out. Not all the airlines will win all the time on that basis. Presumably the Minister assumes that the number of travelling passengers will increase and therefore lead to profitability on those routes for those companies. However, that assumes that the world economic climate will support that sort of air travel, and that is open to question.
      We may find that the position of British Airways as the major flag-carrier is whittled away. It is not a case of another airline buying in with some malicious intention to damage. It is the case of a foreign airline buying in with the intention of picking up bits because it has an interest in surviving and building up its own empire. If such a company is in a stronger position at a time when, for example, British Airways is re-equipping and going through an economically difficult time, it is in the interests of that foreign airline to buy in and pick up any bits that are available to it, not with the intention of destroying British Airways, but in the normal process of competition. That is the danger facing British Airways.
      I do not want to be unduly gloomy about it. However, if we do not take these matters as seriously as I suggest, we may find in a few years that British Airways are in the same position as British Steel Corporation.
      Mr. Tebbit: The hon. Gentleman seems to forget that the British Steel Corporation is a nationalised corporation which has got into this mess. It has landed in the mess that it is in primarily because of a combination of the misdeeds of the Government, management and trade unions. What I am doing is to get British Airways away from the risk of being maladministered by the Government and away from Government interference. The point about the British Steel Corporation is that the responsibility for most of the jobs which have been lost, and which are to be lost in the next year or so, is to be put at the door of Lord Beswick and the Goverment's failure to carry out the proper management of the corporation. I am taking British Airways away from the risk of interference of the kind that the British Steel Corporation suffered from the last Government and which has led to the disaster which it is now experiencing.
      Mr. Soley: I find it difficult to believe that anyone with the Minister's experience can be so politically naive as to talk about the maladministration of a nationalised industry at a time when bankruptcies among private companies are rocketing. Is the Minister suggesting that they are due to maladministration? Are private companies badly administered? Is that why they are going bankrupt? If it is maladministration, it means that maladministration can affect nationalised industries and private enterprise, too. However, there are economic causes over and above maladministration, and they affect both nationalised and private industries. It is this careless attitude of the Government towards the welfare of British industry in terms of unfair competition about which we complain. Directors of companies in my constituency, most of them Conservative supporters, tell me that they did not realise that they would be competing on unequal terms with firms in Europe and elsewhere. That is where they are feeling the draught. If I say to them, as the Minister says, that their difficulties are due to maladministration and that they had better pack their bags and go, they will not be too happy.
      The Government fail to understand the economic problems facing British industry. I do not claim to be an expert in economics or industry, but I know the problems faced in both private and public industries. I chose the example of the British Steel Corporation. It is fair to say that it has experienced problems
      in the past. However, we know that every other major steel-producing country gives far greater support to its steel industry than Britain ever has. That is why the British Steel Corporation is in trouble.
      Let us have no more talk of maladministration. Private industries can be just as bureaucratic and just as inefficient as publicly-owned industries. I have worked for both kinds, and I know that at times it is difficult to choose between them, although it must be said that nationalised industries usually look after their work force and often their customers a bit better than do private industries do—[Interruption.] The Minister may well laugh, but I could produce evidence for that.
      I do not wish to keep the House any longer. Two things are clear. One is that the overall philosophy of the Government is doing serious damage to the British economy. The second is that, in the case of British Airways, the Government are launching something which we all want to be successful, but they are launching it in such a way as to limit the possibility of success in the face of unfair competition. I therefore call for a vote on the amendment.
      Question put, That the amendment be made:—
      The House divided: Ayes 235, Noes 293.

      Division No. 3791

      AYES

      [9.15 pm

      Abse, Leo

      Carmichael, Neil

      Douglas, Dick

      Adams, Allen

      Carter-Jones, Lewis

      Douglas-Mann, Bruce

      Allaun, Frank

      Cartwright, John

      Dubs, Alfred

      Anderson, Donald

      Clark, Dr David (South Shields)

      Duffy, A. E. P.

      Archer, Rt Hon Peter

      Cocks, Rt Hon Michael (Bristol S)

      Dunnett, Jack

      Armstrong, Rt Hon Ernest

      Cohen, Stanley

      Dunwoody, Mrs Gwyneth

      Ashley, Rt Hon Jack

      Coleman, Donald

      Eadie, Alex

      Ashton, Joe

      Concannon, Rt Hon J. D.

      Eastham, Ken

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

      Conian, Bernard

      Ellis, Raymond (NE Derbyshire)

      Bagier, Gordon A. T.

      Cowans, Harry

      English, Michael

      Barnett, Guy (Greenwich)

      Craigen, J. M. (Glasgow, Maryhill)

      Ennals, Rt Hon David

      Barnett, Rt Hon Joel (Heywood)

      Crowther, J. S.

      Evans, loan (Aberdare)

      Bennett, Andrew (Stockport N)

      Cryer, Bob

      Evans, John (Newton)

      Bidwell, Sydney

      Cunliffe, Lawrence

      Ewing, Harry

      Booth, Rt Hon Albert

      Cunningham, George (Islington S)

      Faulds, Andrew

      Boothroyd, Miss Betty

      Cunningham, Dr John (Whitehaven)

      Field, Frank

      Bottomley, Rt Hon Arthur (M'brough)

      Dalyell, Tam

      Fitch, Alan

      Bradley, Tom

      Davidson, Arthur

      Flannery, Martin

      Bray, Dr Jeremy

      Davies, Rt Hon Denzil (Llanelli)

      Fletcher, Ted (Darlington)

      Brown, Hugh D. (Provan)

      Davies, Ifor (Gower)

      Foot, Rt Hon Michael

      Brown, Robert C. (Newcastle W)

      Davis, Clinton (Hackney Central)

      Ford, Ben

      Brown, Ron (Edinburgh, Leith)

      Deakins, Eric

      Forrester, John

      Buchan, Norman

      Dean, Joseph (Leeds West)

      Foster, Derek

      Callaghan, Jim (Middleton & P)

      Dempsey, James

      Fraser, John (Lambeth, Norwood)

      Campbell, Ian

      Dewar, Donald

      Freeson, Rt Hon Reginald

      Campbell-Savours, Dale

      Dixon, Donald

      Garrett, John (Norwich S)

      Canavan, Dennis

      Dobson, Frank

      Gilbert, Rt Hon Dr John

      Cant, R. B.

      Dormand, Jack

      Ginsburg, David

      Golding, John

      Mackenzie, Rt Hon Gregor

      Sandelson, Neville

      Gourlay, Harry

      Maclennan, Robert

      Sever, John

      Graham, Ted

      McNally, Thomas

      Sheerman, Barry

      Grant, George (Morpeth)

      McWilliam, John

      Sheldon, Rt Hon Robert (A'ton-u-L)

      Grant, John (Islington C)

      Magee, Bryan

      Shore, Rt Hon Peter (Step and Pop)

      Hamilton, James (Bothwell)

      Marks, Kenneth

      Short, Mrs Renée

      Hamilton, W. W. (Central Fife)

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

      Silverman, Julius

      Harrison, Rt Hon Walter

      Marshall, Jim (Leicester South)

      Skinner, Dennis

      Hart, Rt Hon Dame Judith

      Martin, Michael (Gl'gow, Springb'rn)

      Smith, Rt Hon J. (North Lanarkshire)

      Hattersley, Rt Hon Roy

      Mason, Rt Hon Roy

      Soley, Clive

      Haynes, Frank

      Maxton, John

      Spearing, Nigel

      Healey, Rt Hon Denis

      Maynard, Miss Joan

      Spriggs, Leslie

      Heffer, Eric S.

      Meacher, Michael

      Stallard, A. W.

      Home Robertson, John

      Mellish, Rt Hon Robert

      Stewart, John (East Renfrewshire)

      Homewood, William

      Mikardo, Ian

      Stoddart, David

      Hooley, Frank

      Millan, Rt Hon Bruce

      Stott, Roger

      Horam, John

      Mitchell, R. C. (Soton, Itchen)

      Strang, Gavin

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

      Morris, Rt Hon Alfred (Wythenshawe)

      Straw, Jack

      Huckfield, Les

      Morris, Rt Hon Charles (Openshaw)

      Summerskill, Hon Dr Shirley

      Hudson Davies, Gwilym Ednyfed

      Morris, Rt Hon John (Aberavon)

      Taylor, Mrs Ann (Bolton West)

      Hughes, Mark (Durham)

      Morton, George

      Thomas, Dafydd (Merioneth)

      Hughes, Roy (Newport)

      Moyle, Rt Hon Roland

      Thomas, Jeffrey (Abertillery)

      Janner, Hon Greville

      Newens, Stanley

      Thomas, Mike (Newcastle East)

      Jay, Rt Hon Douglas

      Oakes, Rt Hon Gordon

      Thomas, Dr Roger (Carmarthen)

      John, Brynmor

      Ogden, Eric

      Thorne, Stan (Preston South)

      Johnson, James (Hull West)

      O'Halloran, Michael

      Tilley, John

      Johnson, Walter (Derby South)

      O'Neill, Martin

      Tinn, James

      Jones, Rt Hon Alec (Rhondda)

      Orme, Rt Hon Stanley

      Torney, Tom

      Jones, Barry (East Flint)

      Owen, Rt Hon Dr David

      Varley, Rt Hon Eric G.

      Jones, Dan (Burnley)

      Palmer, Arthur

      Wainwright, Edwin (Dearne Valley)

      Kaufman, Rt Hon Gerald

      Park, George

      Walker, Rt Hon Harold (Doncaster)

      Kerr, Russell

      Parker, John

      Watkins, David

      Kilroy-Silk, Robert

      Parry, Robert

      Weetch, Ken

      Kinnock, Neil

      Pendry, Tom

      Wellbeloved, James

      Lambie, David

      Powell, Raymond (Ogmore)

      Welsh, Michael

      Lamborn, Harry

      Prescott, John

      White, Frank R. (Bury & Radcliffe)

      Lamond, James

      Price, Christopher (Lewisham West)

      White, James (Glasgow, Pollok)

      Leadbitter, Ted

      Race, Reg

      Whitlock, William

      Leighton, Ronald

      Radice, Giles

      Willey, Rt Hon Frederick

      Lestor, Miss Joan (Eton & Slough)

      Rees, Rt Hon Merlyn (Leeds South)

      Williams, Rt Hon Alan (Swansea W)

      Lewis, Arthur (Newham North West)

      Richardson, Jo

      Wilson, William (Coventry SE)

      Lewis, Ron (Carlisle)

      Roberts, Albert (Normanton)

      Winnick, David

      Litherland, Robert

      Roberts, Allan (Bootle)

      Woodall, Alec

      Lofthouse, Geoffrey

      Roberts, Gwilym (Cannock)

      Woolmer, Kenneth

      Lyon, Alexander (York)

      Robertson, George

      Wrigglesworth, Ian

      Lyons, Edward (Bradford West)

      Robinson, Geoffrey (Coventry NW)

      Wright, Sheila

      Mabon, Rt Hon Dr J. Dickson

      Rodgers, Rt Hon William

      Young, David (Bolton East)

      McCartney, Hugh

      Rooker, J. W.

      McDonald, Dr Oonagh

      Roper, John

      TELLERS FOR THE AYES:

      McElhone, Frank

      Ross, Ernest (Dundee West)

      Mr. Austin Mitchell and Mr. Terry Davis.

      McKay, Allen (Penistone)

      Rowlands, Ted

      McKelvey, William

      Ryman, John

      NOES

      Adley, Robert

      Brittan, Leon

      Critchley, Julian

      Aitken, Jonathan

      Brocklebank-Fowler, Christopher

      Crouch, David

      Alexander, Richard

      Brooke, Hon Peter

      Dean, Paul (North Somerset)

      Ancram, Michael

      Brotherton, Michael

      Dickens, Geoffrey

      Arnold, Tom

      Brown, Michael (Brigg & Sc'thorpe)

      Dorrell, Stephen

      Aspinwall, Jack

      Bruce-Gardyne, John

      Douglas-Hamilton, Lord James

      Atkins, Rt Hon H. (Spelthorne)

      Bryan, Sir Paul

      Dover, Denshore

      Atkins, Robert (Preston North)

      Buchanan-Smith, Hon Alick

      du Cann, Rt Hon Edward

      Baker, Kenneth (St. Marylebone)

      Buck, Antony

      Dunn, Robert (Dartford)

      Baker, Nicholas (North Dorset)

      Budgen, Nick

      Durant, Tony

      Beaumont-Dark, Anthony

      Bulmer, Esmond

      Eden, Rt Hon Sir John

      Bell, Sir Ronald

      Burden, F. A.

      Edwards, Rt Hon N. (Pembroke)

      Bendall, Vivian

      Butcher, John

      Eggar, Timothy

      Benyon, Thomas (Abingdon)

      Butler, Hon Adam

      Emery, Peter

      Benyon, W. (Buckingham)

      Carlisle, Kenneth (Lincoln)

      Eyre, Reginald

      Best, Keith

      Chalker, Mrs Lynda

      Fairgrieve, Russell

      Bevan, David Gilroy

      Channon, Paul

      Faith, Mrs Sheila

      Biffen, Rt Hon John

      Chapman, Sydney

      Farr, John

      Biggs-Davison, John

      Churchill, W. S.

      Fell, Anthony

      Blackburn, John

      Clark, Hon Alan (Plymouth, Sutton)

      Fenner, Mrs Peggy

      Blaker, Peter

      Clark, Sir William (Croydon south)

      Finsberg, Geoffrey

      Body, Richard

      Clarke, Kenneth (Rushcliffe)

      Fisher, Sir Nigel

      Bonsor, Sir Nicholas

      Clegg, Sir Walter

      Fletcher, Alexander (Edinburgh N)

      Boscawen, Hon Robert

      Cockeram, Eric

      Fletcher-Cooke, Charles

      Bottomley, Peter (Woolwich West)

      Colvin, Michael

      Fookes, Miss Janet

      Bowden, Andrew

      Cope, John

      Forman, Nigel

      Boyson, Dr Rhodes

      Cormack, Patrick

      Fowler, Rt Hon Norman

      Braine, Sir Bernard

      Corrie, John

      Fraser, Peter (South Angus)

      Bright, Graham

      Costain, A. P.

      Fry, Peter

      Brinton, Tim

      Cranborne, Viscount

      Galbraith, Hon T. G. D.

      1202

      1203

      Gardiner, George (Reigate)

      McNair-Wilson, Michael (Newbury)

      Roberts, Wyn (Conway)

      Gardner, Edward (South Fylde)

      McNair-Wilson, Patrick (New Forest)

      Rost, Peter

      Garel-Jones, Tristan

      McQuarrie, Albert

      Sainsbury, Hon Timothy

      Glyn, Dr Alan

      Madel, David

      St. John-Stevas, Rt Hon Norman

      Goodhew, Victor

      Major, John

      Scott, Nicholas

      Goodlad, Alastair

      Marland, Paul

      Shaw, Michael (Scarborough)

      Gorst, John

      Marlow, Tony

      Shelton, William (Streatham)

      Gow, Ian

      Marshall, Michael (Arundel)

      Shepherd, Colin (Hereford)

      Gower, Sir Raymond

      Marten, Neil (Banbury)

      Shepherd, Richard(Aldridge-Br'hills)

      Gray, Hamish

      Mates, Michael

      Shersby, Michael

      Greenway, Harry

      Mather, Carol

      Silvester, Fred

      Griffiths, Eldon (Bury St Edmunds)

      Maude, Rt Hon Angus

      Sims, Roger

      Griffiths, Peter (Portsmouth N)

      Mawby, Ray

      Skeet, T. H. H.

      Grist, Ian

      Mawhinney, Dr Brian

      Speed, Keith

      Gryils, Michael

      Maxwell-Hyslop, Robin

      Speller, Tony

      Gummer, John Selwyn

      Mayhew, Patrick

      Spence, John

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

      Mellor, David

      Spicer, Jim (West Dorset)

      Hamilton, Michael (Salisbury)

      Meyer, Sir Anthony

      Spicer, Michael (S Worcestershire)

      Hampson, Dr Keith

      Miller, Hal (Bromsgrove & Redditch)

      Sproat, Iain

      Hannam, John

      Mills, Iain (Meriden)

      Squire, Robin

      Haselhurst, Alan

      Mills, Peter (West Devon)

      Stanbrook, Ivor

      Havers, Rt Hon Sir Michael

      Miscampbell, Norman

      Stanley, John

      Hawksley, Warren

      Mitchell, David (Basingstoke)

      Steen, Anthony

      Hayhoe, Barney

      Moate, Roger

      Stevens, Martin

      Heath, Rt Hon Edward

      Molyneaux, James

      Stewart, Ian (Hitchin)

      Heddle, John

      Monro, Hector

      Stewart, John (East Renfrewshire)

      Henderson, Barry

      Montgomery, Fergus

      Stokes, John

      Heseltine, Rt Hon Michael

      Moore, John

      Stradling Thomas, J.

      Hicks, Robert

      Morgan, Geraint

      Tapsell, Peter

      Higgins, Rt Hon Terence L.

      Morris, Michael (Northampton, Sth)

      Taylor, Robert (Croydon NW)

      Hill, James

      Morrison, Hon Charles (Devizes)

      Tebbit, Norman

      Hogg, Hon Douglas (Grantham)

      Morrison, Hon Peter (City of Chester)

      Temple-Morris, Peter

      Holland, Philip (Carlton)

      Mudd, David

      Thomas, Rt Hon Peter (Hendon S)

      Hooson, Tom

      Murphy, Christopher

      Thompson, Donald

      Hordern, Peter

      Myles, David

      Thorne, Neil (Ilford South)

      Howell, Rt Hon David (Guildford)

      Neale, Gerrard

      Thornton, Malcolm

      Howell, Ralph (North Norfolk)

      Needham, Richard

      Townend, John (Bridlington)

      Howells, Geraint

      Nelson, Anthony

      Townsend, Cyril D. (Bexleyheath)

      Hunt, David (Wirral)

      Neubert, Michael

      Trippier, David

      Hunt, John (Ravensbourne)

      Newton, Tony

      Trotter, Neville

      Irving, Charles (Cheltenham)

      Nott, Rt Hon John

      van Straubenzee, W. R.

      Jenkin, Rt Hon Patrick

      Onslow, Cranley

      Vaughan, Dr Gerard

      Johnson Smith, Geoffrey

      Oppenhelm, Rt Hon Mrs Sally

      Viggers, Peter

      Jopling, Rt Hon Michael

      Page, Rt Hon Sir R. Graham

      Waddington, David

      Kaberry, Sir Donald

      Page, Richard (SW Hertfordshire)

      Wakeham, John

      Kellett-Bowman, Mrs Elaine

      Parkinson, Cecil

      Waldegrave, Hon William

      Kimball, Marcus

      Parris, Matthew

      Walker, Bill (Perth & E Perthshire)

      Kitson, Sir Timothy

      Patten, Christopher (Bath)

      Walker-Smith, Rt Hon Sir Derek

      Knox, David

      Patten, John (Oxford)

      Wall, Patrick

      Lamont, Norman

      Pattie, Geoffrey

      Waller, Gary

      Lang, Ian

      Pawsey, James

      Walters, Dennis

      Langford-Holt, Sir John

      Penhaligon, David

      Ward, John

      Latham, Michael

      Percival, Sir Ian

      Warren, Kenneth

      Lawrence, Ivan

      Pollock, Alexander

      Watson, John

      Lawson, Nigel

      Porter, George

      Wells, John (Maidstone)

      Lee, John

      Price, David (Eastleigh)

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

      Lennox-Boyd, Hon Mark

      Prior, Rt Hon James

      Wheeler, John

      Lester, Jim (Beeston)

      Proctor, K. Harvey

      Whitelaw, Rt Hon William

      Lewis, Kenneth (Rutland)

      Raison, Timothy

      Whitney, Raymond

      Lloyd, Ian (Havant & Waterloo)

      Rathbone, Tim

      Wickenden, Keith

      Lloyd, Peter (Fareham)

      Rees, Peter (Dover and Deal)

      Wiggin, Jerry

      Loveridge, John

      Rees-Davies, W. R.

      Williams, Delwyn (Montgomery)

      Luce, Richard

      Renton, Tim

      Winterton, Nicholas

      Lyell, Nicholas

      Rhodes James, Robert

      Wolfson, Mark

      McCrindle, Robert

      Rhys Williams, Sir Brandon

      Young, Sir George (Acton)

      Macfarlane, Neil

      Ridley, Hon Nicholas

      MacGregor, John

      Ridsdale, Julian

      TELLERS FOR THE NOES:

      MacKay, John (Argyll)

      Rifkind, Malcolm

      Mr. Spencer Le Marchant and Mr. Anthony Berry.

      Macmillan, Rt Hon M. (Famham)

      Roberts, Michael (Cardiff NW)

      Question accordingly negatived.

    Clause 6

      TARGET INVESTMENT LIMIT FOR GOVERNMENT SHAREHOLDING UNDER SECTIONS 3 AND 5
      Mr. Tebbit: I beg to move amendment No. 22, in page 6, line 32, after 'may', insert '(a)'.
      Mr. Deputy Speaker: With this we may also take Government amendment No. 23.
      Mr. Tebbit: These amendments are partly a consequence of Government amendments Nos. 11 and 12 to clause 5(1) dealing with the type of security that the Government will be able to acquire under the Bill, and partly to extend the circumstances in which clause 6(4), as originally drafted, was applicable.

      1205
      Clause 6 provides for an upper limit to be set on the size of the Government shareholding in the successor company, and subsection (3) imposes a duty on the Secretary of State to exercise his powers so as to ensure that that limit is not exceeded. The intention of subsection (4) is to provide a derogation from that duty to cover circumstances where it is necessary for the Government to take action if they wish to be sure of retaining a given shareholding but where it is possible, because of the unforeseeable behaviour of other people, that the action will result in the Government shareholding being increased. If that happens the Government are required to comply with the limit—that is, in practice to sell the excess shares as soon as is reasonably practicable.
      The most obvious case where this might occur is in a rights issue where the Government subscribe to the full extent of their existing shareholding but where other existing shareholders decide not to do so. That is the only case covered by the subsection as presently drafted. However, a similar problem could arise where the Government held securities, other than as a member, which were convertible into or carried the right to subscribe for ordinary shares in the successor company.
      For example, the terms of convertible stock might provide for conversion on a certain day or within a certain period. If the Government wished to be sure of retaining their existing proportionate shareholding they would have to convert all their stock in the expectation that all other shareholders would convert their stock. Some might decide not to exercise their conversion rights, with the result that the Government shareholding would be increased so that, inadvertently, the target investment limit was exceeded. The amendment is designed to deal with that eventuality.
      9.30 pm
      Clause 5, as reported from the Committee, provided for the Secretary of State to acquire convertible securities of the successor company. The Government amendment to clause 5 also provides for the acquisition of rights to subscribe to ordinary shares, and securities that carry rights to subscribe for ordinary shares, of the successor company. It would be
      1206
      wrong for the Secretary of State to be inhibited from exercising the right conferred by the securities for fear of exceeding the target investment limit. The amendments will ensure that he can exercise such rights without restriction, or direct his nominees to do so, provided that any excess shares above the target investment limit acquired as a result are disposed of in accordance with the provision of clause 6(4). The provisions will be generally regarded as helpful, and I commend them to the House.
      Amendment agreed to.
      Amendment made: No. 23, in page 6, line 33, leave out
      'a member of the successor company' and insert 'an existing holder of shares in or securities of the successor company or as an existing holder of a right to subscribe for any such shares;

      (b) exercise or direct any nominee of his to exercise any right to subscribe for such shares;'.—[Mr. Tebbit.]

    Clause 9

      INTERPRETATION OF PART I
      Mr. Clinton Davis: I beg to move amendment No. 29, in page 9, line 9, leave out 'and the Treasury' and insert
      'the Treasury and the trade unions which are recognised as representing their employees by the Board.'
      The position envisaged in the Bill with regard to consultation about the appointed day is that the Government will be under a statutory obligation to consult the board and the Treasury. The Minister is on record as saying that consultation with the board is tantamount to consultation with the work force, because he presumes that the board will consult the work force about matters that are the subject of consultation. That is a somewhat illusory way of considering the matter. In this instance, we wish to know to what extent the consultations that the Minister would have pursuant to clause 9 would have an aura of confidentiality about them. If that were the position, the board would necessarily feel, and might be obliged to be, constrained about consulting with the work force. That would be a thoroughly deplorable state of affairs.
      Even if the board was free from such constraints, what effect would such consultations have on Government thinking?

      1207
      I am bound to say, as I have said before, that I am extremely disappointed about the way in which the Minister has failed to carry out the task of consultation about the principle of the Bill. It is common ground that there was no consultation before the Minister announced or published in the House the principle underlying the Bill. Why the Government chose to deal with the matter in that way I find utterly bewildering.
      At least as a matter of common courtesy, the Minister should have had the management and the trade unions in to discuss so important a proposal. There was no question of the matter requiring such speed that consultation was rendered unnecessary or impossible. In the event, we know that, although it was announced that last July that the Government were embarking on this policy, it took a considerable time before the Bill went into Committee, and there has been a considerable delay between the end of the Committee stage and the beginning of the Report stage. Time, therefore, was not of the essence.
      I cannot begin to understand why, in the interests of the fulfilment of their own policy, the Government did not engage in a wider form of consultation. After all, the Government might have been able to persuade those who have a vested interest in the industry that the Government's proposals ought to be supported. On the other hand, they might not have succeeded. One recognises that, if one seeks to introduce controversial policies, one will not please everybody. The Minister realises that he has not pleased me up to now. But when such a radical change is sought it is incumbent upon a Government to introduce into their thinking the people who will be involved. The Government failed to do that.
      There is a lot of damage to be repaired, so that, pragmatically speaking, there is a necessity for the Government to broaden the possibilities of consultation. The Minister may say that his door is constantly open to receive the trade unions. He does not appear to realise the bitterness that has been provoked by initiating these policies without discussion. It is no good the Minister simply saying "My door is constantly open to the trade unions." It is his job positively to invite
      1208
      them to discuss matters and to try to repair the damage—perhaps even to go to see them. After all, in industry we should be trying to achieve the breaking down of the suspicion that exists.
      If the Minister feels that he is innocent of the charge that I have laid, so be it. But he knows—I think that he realises this because he is sensitive to what is happening—that his duty is to try to defuse the position that I can assure him has arisen.
      Mr. Onslow: I am sure that the hon. Gentleman is speaking in good faith, but in my most recent contacts with members of British Airways' trade unions I have not detected the signs of the bitterness of which he speaks. Perhaps he would explain a little more specifically the nature of the bitterness that he is talking about.
      Mr. Davis: I assure the hon. Member that I have had numerous discussions with the trade unions involved in the industry. I am not trying to make a party point or to mislead the House. I am putting quite categorically on the record—and it can be confirmed—that there was a great deal of bitterness about the way in which the Minister failed to consult or talk to the unions at the material time, which was before he announced his policies.
      Perhaps in the past the management and trade unions had been led by me or by various Secretaries of State to think that they would be brought into such discussions before changes of policy were announced. Perhaps in the case of the Minister they were not entitled to hold such expectations.
      I make two points. First, it is my belief that the Minister and the Secretary of State were wrong to go about the announcement in the way they did. Secondly, I believe that even if they feel that they have been acquitted of that charge—I cannot see how they can feel that—they have a duty to go out of their way now to make sure that other voices are heard.
      We shall discuss later the matter relating to the British Airports Authority. That is something about which the Government might have consulted earlier, before the Bill was introduced. It pays a Government to listen to other people from time to time. That is why I am urging

      1209
      the Government—I am not making a great song and dance about it—in the interests of better industrial relations, that this is what they should do. After all, when we talk about clause 9 and the appointed day, we are talking about a situation in which the Minister has stated that he does not intend to arrive at a position in which there is in effect a vacuum between the creation of the successor company and the sale of the shares. It follows, therefore, that the decision to activate this part of the Bill is of monumental importance to those whose livelihood depends on the successful operation of British Airways.
      It is true—it has been argued not only in this House but in The Times as recently as 12 May—that
      "Given the contortions which appear to be necessary for a flotation and the financial problems it would create for the airline, it is difficult at this stage to see any convincing justification for going ahead."
      In spite of those warnings from a number of people who have no axe to grind politically, perhaps, and who are certainly not enunciating the Labour Party's point of view, if the Government go ahead and a substantial number of people think that it is not a very propitious thing for them to do, that there is anxiety about their jobs and their livelihood, bearing in mind that timing is of the essence, as the Minister has conceded, and that bad timing or a bad launch could have disastrous effects not only on the economic prospects of the airline but also on the morale of staff and management, is it not right that the Government should be under a very clear duty to consult directly those representing the work force?
      I believe that, because of the way in which this has been handled by the Government in the past, it is necessary to import a statutory duty to consult. If the record had been better, and if the Minister had been able to discharge that responsibility properly, one would have been able to say "All right. We understand that Ministers consult." But the anxiety that is going through the minds of a number of trade unionists—and leading trade unionists in this field have proved over the years to be very responsible people—is that the Minister may have his door open and we may go to him but that he will not be prepared to listen to what we have to say. After a
      1210
      meeting of that kind, it is no use the Minister saying "Thank you very much. I shall, of course, take note of what you have said." They want to believe that any views that they express to him will be listened to and that, if they are able to convince the Minister by a reasonable dialogue, he will act on their suggestions.
      For the life of me, I cannot see that that is an outrageous proposition to put to the Minister. It is my experience—I believe that it is the Minister's, too, because he is a former employee of British Airways—that the work force in British Airways care about the success of the airline. I believe that they have a good deal of which to be proud. I think that it is a good airline. There is plenty of room for improvement, and they would concede that as well as anyone else. But they want to be listened to when they make representations. They want to have access through their representatives in the trade unions to the Minister. They want to feel that their voice counts. I believe that they have a right to know what will happen to their jobs, pensions and contractual rights.
      As I have said, unless there is a statutory requirement, there is a strong feeling that the present Minister will care nothing for their views. I do not believe that I have overstated the case, despite the intervention of the hon. Member for Woking (Mr. Onslow) who took the trouble to have discussions with some of the unions concerned. That is a good thing. The fact that the Conservative aviation group went to that trouble is something of which its members can feel properly proud.
      9.45 pm
      However, notwithstanding the hon. Gentleman's feeling about that meeting, the united voice of those with whom I have spoken, including those who attended the meeting that the hon. Gentleman attended, is that they are very suspicious about the value of consulting. It is therefore incumbent upon the Minister to show that that is a misplaced feeling and that consultation is something that he values, will want to encourage and sees as a way of stimulating better industrial relations and better relations between his Department and the unions.
      Mr. Tebbit: It seems that the heart of this matter is the fact that the hon. Member for Hackney, Central (Mr. Davis) is still upset because the Secretary of State chose to tell Parliament of the Government's decision before he told the unions. There can be no other way of putting it. [Interruption.] If the hon. Member for Huddersfield, East (Mr. Sheerman) wants to make a contribution, I shall be glad to give way to him, but if he shouts things from a sedentary position, he adds neither to his reputation nor to the debate.
      There was no way in which the Secretary of State could discuss this proposition in principle with the unions before he made the announcement to the House. It just would not have been right or proper.
      We have had most of these discussions already in Committee. I do not see what benefit it would be to the employees of British Airways to have a formal requirement that the Government should consult the unions before setting the appointed day. We shall choose an appointed day as near as we can to the time at which we envisage that the shares will be offered for sale. Then we must act quickly and without complications which would reduce the price that we would get for the shares.
      That will involve judgment. We shall appoint the day after consultation with our professional advisers and with the board of British Airways. Therefore, the decision will be taken after we have received the views and advice of those with a legitimate and appropriate interest in the matter. The employees of BA of course have a legitimate interest, which I am sure will be adequately served by the consultation with the BA board. The board is, after all, the employer and, in every thing but perhaps the technical, legal sense, its members are themselves employees as well.
      From the moment that the policy was announced, the Secretary of State and I made it plain that we were willing to consult the unions at their pleasure on all matters in the Bill. We could not undertake to discuss with them the essential policy at the heart of the matter, because that is a matter to be decided by Parliament and not outside. However, the Secretary of State extended an invitation to the relevant unions for this purpose im-
      1212
      mediately after his statement of 20 July and a meeting was held the following week.
      Naturally enough, the trade union representatives said that they needed more time to gather their comprehensive view, and my right hon. Friend invited them to a further meeting before publication of the Bill. Unfortunately, they expressed the view at that meeting that they were not prepared to discuss any details of our proposals for British Airways on the grounds that they were fundamentally opposed to the policy and would be directing their efforts accordingly. Therefore, our efforts to consult about all these matters were frustrated, not by our obstinacy but by the fact that the trade unions maintained that they did not wish to enter into consultations.
      Mr. Sheerman: Is it not the case that the Government had no mandate in their manifesto to make a change in the ownership of British Airways? They then made an announcement that they would make a change, and after that they announced that there were to be consultations with the trade unions. But they had already made up their minds. Would it not have been better to enter into consultations with the trade unions about the proposals before they actually became proposals?
      Mr. Tebbit: Would it not be right to consult Parliament first by saying what we have in mind, rather than telling the trade unions? Surely that is the right way to go about it.
      Mr. Clinton Davis: Was there any consultation with the chairman or other members of the board of British Airways or anyone else involved in the aviation industry before the publication of the Bill?
      Mr. Tebbit: Of course there was a great deal of consultation before the publication of the Bill. I have just made it perfectly plain that the trade unions were offered consultation before publication.
      Mr. Davis: I asked whether there was any consultation before the announcement was made in Parliament—that is, prior to the publication of the Bill. That is the material date. Was there any discussion with the chairman, management or

      1213
      chief executive of British Airways or any members of the board or anyone else involved in the airline business?
      Mr. Tebbit: I repeat what I said. There was extensive consultation with the board of British Airways before the publication of the Bill. Secondly, the trade unions were told that it was open to them to engage in consultations before the publication of the Bill. That is the question that the hon. Member asked and that is the question to which I have replied. He may wish to ask another question and I am perfectly willing to reply to anything else, but I must repeat that I have answered that question.
      Mr. Davis: The question that I seek to address to the Minister is this: before any announcement was made in the House about Government policy, did the Secretary of State or the Minister engage in any discussions of any kind—consultations or otherwise—with members of the British Airways board or anyone else in the airline industry? The Minister has confirmed that prior to publication of the Bill it would have been improper to hold consultations with the trade unions before he came to Parliament. I want to know whether he held any discussions with anyone else before he came to Parliament.
      Mr. Tebbit: The British Airways board was informed of my right hon. Friend's statement before it was made. There was a problem here. I would have informed the trade union side through the medium of the chairman of the National Joint Council. Unfortunately, a message which should have been transmitted to him was not so transmitted. That was not the fault of my Department or of the chairman. I intended that he should know before the statement was made, in the same way as the chairman of the British Airways board knew. But we did not engage in consultations with the chairman of the board. We informed Parliament.
      Mr. Davis: Why did not the hon. Gentleman satisfy himself that such a communication would reach the ears of all interested parties—the Trades Union Joint Negotiating Council as well as the board of British Airways? Surely the hon. Gentleman's Department has the wherewithal to do that.
      Mr. Tebbit: The hon. Gentleman must know that what infuriates hon.
      1214
      Members more than anything is to read in the newspapers information that is to be given to the House later in the day or even the following day by the Secretary of State. The measures taken were designed to ensure that the statement would remain confidential until it was made. That was the first consideration. I do not know who the hon. Gentleman believes that he was responsible to as a Minister, but I am not responsible to the trade union movement or to the CBI. I am responsible to this place.
      From that moment on it was made clear to the trade unions that we wanted to consult them. The door was open, No one came in. We should have been glad to have listened to the trade unions' worries about these matters. They chose not to see us. I expected the trade unions to be far more interested in the constitution of a company that is intended to be their employer than in the appointed day. I therefore took the trouble to send them a copy of the draft memorandum and articles of association last March. I asked for their comments. They asked for more copies so that they could give the matter proper consideration. I sent them. I have still not heard their views. I do not complain of that. It is up to the trade unions whether they want to talk to me about these matters, but it is utterly unjust for the hon. Gentleman to accuse me of a lack of willingness to consult them, when the letters that I write are not even answered and they do not tell me what they feel about the matter on which they say that they wish to consult. Am I supposed to kick in the door of the trade union office, grab an official, hold him up against the wall and insist that he tells me what he thinks or politely wait for a letter? I chose to wait politely, but letter came there none. The lack of consultation has been on the part of the trade unions.
      Mr. Sheerman: The backdrop to the Bill is a Government who came to power adamantly ignoring trade unions at every level—
      Mr. Bowen Wells: Nonsense.
      Mr. Sheerman: —and a Prime Minister who showed in every act and gesture a contempt for trade unionists. It is therefore not surprising that the Bill was born

      1215
      in an atmosphere of dislike and contempt, and that the Minister received no answer. That is what the Government deserve. I do not blame the Minister. The fault lies with what his Government did to turn industrial relations into warfare instead of co-operation.
      Mr. Bowen Wells: Nonsense.
      Mr. Tebbit: The fact that the hon. Gentleman refers to this Government turning industrial relations into warfare shows that he does not remember what happened between Christmas 1978 and March 1979. That was warfare—the dead left unburied, hospitals closed and the sick left to sit in the snowdrifts waiting for an ambulance. What was that if it was not industrial warfare conducted by the Labour Government and the trade unions? Since I have held my present post, I have made the offer time and again to trade unions that they can discuss these matters with me. It is not me indulging in warfare if they do not choose to come.
      I repeat that I am not responsible to the TUC or the CBI—
      It being Ten o'clock, the debate stood adjourned.
      Ordered,
      That, at this day's Sitting, the Civil Aviation Bill may be poceeded with, though opposed, until any hour.—[Mr. Newton.]
      Question again proposed, That the amendment be made.
      Mr. Tebbit: I am responsible to the House. It comes first. I consult this place before I consult the TUC or the CBI. That is the essence of the matter.
      I took the trouble to send the draft memorandum and articles of association to the trade unions in March and they took the trouble to ask me for more copies so that they could consult their members and, I had hoped, so that they could let me know whether they felt that there were matters in those documents that ought to be changed. I have not heard a word from them. Is that warfare on my part? Where is the hostility? Where is the unwillingness to consult? It is not in my office.
      Mr. Clinton Davis: The Minister will recall that he had to be virtually dragged kicking and screaming into the produc-
      1216
      tion of the memorandum and the articles of association. Initially, he refused to disclose them and only later did he change his mind.
      The Government were embarking on a radical change of policy. A new concept was being developed. Why was it not possible for the hon. Gentleman to produce a Green Paper or a White Paper so that positive discussions could take place? Was speed so much an essence of the matter?
      Mr. Tebbit: The essence of the matter is that the Government were elected on a clear understanding with the electorate.
      Mr. Sheerman: No.
      Mr. Tebbit: If the hon. Gentleman will wait until I have finished the sentence, he may know whether he agrees or disagrees with it. If he insists on behaving like a Pavlovian dog we shall not get far.
      Mr. Sheerman: Like a latter-day Norman Tebbit perhaps?
      Mr. Tebbit: The hon. Gentleman can choose his own expressions. The Government were elected on a clear understanding with the electorate that our programme would be to reduce the size of the public sector. The Bill is part of that operation. It can come as no surprise to anyone that we are taking measures to reduce the size of the public sector and that British Airways is one of the prime areas where we can do that. There was no call for a White Paper, a Green Paper, a brown, blue or striped paper. My right hon. Friend the Secretary of State told the House the Government's intentions. From that moment on, we were willing to discuss their implementation with those concerned.
      Mr. Woolmer: If, within two months or so of the general election, the proposal to denationalise British Airways was no surprise, why had the Government not done the electorate the courtesy of putting it in their manifesto? If it was so clear to the hon. Gentleman and his colleagues that they intended to denationalise British Airways, why did they not spell that out in the manifesto?
      Mr. Tebbit: We thought that a reference to a reduction in the size of the public sector made plain that we would go in for denationalisation. Whatever the

      1217
      hon. Gentleman thought, it came as no surprise to the rest of the electorate that British Airways was included in our plans. I hope that before long we shall be able to produce some more ideas to please the hon. Gentleman, even if they were not specifically mentioned in our election manifesto.
      I do not want to prolong the debate at this time of night. I have made plain that, for me, consultation about all matters concerning the Bill is the order of the day. It was all the way through.
      The hon. Member for Hackney, Central said that he had had to drag the memorandum and articles of association out of me. The only point about which we had any great difference was whether they should be subject to debate in the Committee and whether I could produce them before the Committee had finished its proceedings. I gave the undertaking that I would do my best, and I lived up to that undertaking. I think that that is a reasonable source of satisfaction to the hon. Gentleman.
      The memorandum and articles were made available to the trade unions in March, and we are now virtually into July. There was ample time for them to respond if the unions wanted to consult me about them. I can only conclude that, for reasons that satisfy them, and are nothing to do with me, the unions have decided that they do not wish to indulge in the consultation that the hon. Gentleman is pressing upon me.
      Mr. Clinton Davis: It is a travesty of an accurate record of what happened in the Committee for the Minister to give the impression that he was initially amenable to the idea of the memorandum and articles being provided. The record is absolutely plain, and the hon. Gentleman can consult it. He will see, and other members of the Committee will be able to vouchsafe, that initially he was opposed to the idea and gradually responded to the force of the argument. That is what he said. As a consequence, we were privileged to be provided with the draft memorandum and articles.
      For the most part tonight the Minister has been very fair. I do not think that he has been very fair on this matter, but we should be warned by Proverbs that
      "When he speaketh fair, believe him not: for there are seven abominations in his heart."
      1218
      It is the Secretary of State who must take the real responsibility, not the Under-Secretary. The right hon. Gentleman failed in his duty, when he was embarking upon a fundamental change of policy, to engage in consultations. Some of the propositions that the Minister has advanced tonight have been utterly absurd. He went so far as to say that the public must have realised, because of the Conservatives' statement that they would reduce the public sector borrowing requirement, that they were going about this policy of privatisation of British Airways. That is absolute rubbish. On that basis, why did the Conservatives in their election manifesto mention anything at all about denationalisation, or privatisation, as they did?
      Mr. Tebbit: I said nothing about what we are doing being part of reducing the public sector borrowing requirement. I said that it was made plain that we would reduce the size of the public sector. Therefore, the fact that not everything was included in the manifesto did not exclude it.
      Mr. Davis: But the Conservatives were absolutely specific about a number of industries. They were not at all specific about British Airways. They were not mentioned. Yet a matter of four, five or six weeks later—the Government must have known about the policy even before then, I suppose—they chose to announce it in the way that they did. It was an affront to the way in which they should be conducting the job of trying to imbue some confidence in an industry that is going through a very anxious time.
      The Government's constitutional reasons did not appear with regard to the Companies Bill or a large number of other matters, matters concerned with the hon. Gentleman's own Department, where the Government consulted before introducing radical changes. The Minister's argument is totally bogus—as Sam Goldwyn said, genuinely bogus. If that was the obstacle, all they needed to have done was to introduce a White Paper. There could have been a Green Paper. If, however, the Government had wanted to state their policy, a White Paper would have enabled people to discuss matters gainfully with them before the Bill was introduced.
      Mr. Tebbit: What would have been the difference between publishing a White Paper and making a statement, as the Secretary of State did, on 20 July? I do not see that it would have made a difference. If we had published a White Paper, the hon. Gentleman would have said that we should have consulted everyone before writing it.
      Mr. Davis: It would have been possible for the trade unions to have brought to bear on the Government, before they were totally committed to the Bill, their feelings about where they thought the Government were going wrong. The trade unions believe that the Government have gone wrong. We have already had a number of debates that make clear that events will indicate that the Government have misjudged the situation. The atmosphere in which the Government initially published their proposals has changed. The airlines are going through a difficult time. It is difficult to see how the Government can genuinely pursue this policy over the next two or three years unless they intend to sell off public assets at an appalling loss.
      The Minister has said not one word of contrition for his behaviour. That is a pity. The Minister could have been bigger and said "I think, on reflection, that the trade unions might have been wrong and might have misjudged the situation." It is not good enough to react by saying that he sent the unions the memorandum and the articles of association. The memorandum and the articles of association have been expertly drawn. The solicitors who undertook the job have justified their fee. I hope that the Minister will not challenge the matter before the Law Society. The solicitors have done a good job. That is not the answer.
      The Minister should not simply be saying to the trade unions that his door is open and that he will receive the unions if they care to call. The hon. Gentleman should be saying "I want to discuss matters of policy not only with the trade unions but with other people concerned in the aviation business". I do not consider that the situation that prevails today, in terms of accessibility to the Minister in the belief that the Minister will listen, is remotely like that which existed during the five years in which I held office under a number of Secetaries of State.
      Mr. Patrick Cormack: Very modest.
      Mr. Davis: I do not accept responsibility, because the direction is given by the Secretary of State. I am not claiming responsibility, but it was a better atmosphere. If a Government indicate that they are prepared to listen, they will gain respect from everyone in the industry. I do not believe that the present Government have gone out to get that respect. I do not believe that they have earned it.
      Question put and negatived.

    Schedule 1

      EFFECT OF SECTION 2 IN CERTAIN CASES
      Mr. Tebbit: I beg to move amendment No. 53, in page 23, line 34, leave out 'by virtue of section 2 of this Act'.
      Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 62.
      Mr. Tebbit: I think that we now come into calmer waters. This amendment relates to matters concerning pensions and contracts of employment. One has to consider with care what one is doing. I assure the House that there is nothing Machiavellian in the amendments before the House. I am not sure whether that assurance helps or damages my case. I assure the House that there is no change of policy and no worsening of the interests of employees regarding contracts of employment or pensions. The effect is to extend the application of paragraph 2 of schedule 1 to reflect fully the circumstances in which there are pension rights.
      The amendments are necessary because we found a discrepancy between paragraph 2(3)(a) and paragraph 2(3)(b) which deal respectively with reckonable service for pension purposes in the case of employees of the British Airways Board and employees of the board's wholly owned subsidiaries. We found that paragraph 2(3)(a) as drafted was drawn too narrowly.
      10.15 p.m.
      The intention is that previous service with the British Airways Board, including that with its predecessors, BOAC and BEA, and with its wholly owned subsidiaries, should be treated for the purposes of any relevant pension arrangements as employment by the successor

      1221
      company or a wholly owned subsidiary of the successor company. This includes both continuous employment and where a person is re-employed after a break of employment.
      The intention is achieved satisfactorily for present and past employees of the wholly owned subsidiaries by paragraph 2(3)(b). But, as drafted, paragraph 2(3)(a), which deals with employees of the mainstream organisation, would only have the desired effects for those employees of the British Airways Board who became employees of the successor company on the appointed day by virtue of clause 2. In other words, it would apply only to those with continuity of employment between the board and the successor company and not to those who left the employment of the board before the appointed day and were re-employed by the successor company after the appointed day. We do not intend that there should be different treatment in this respect.
      The amendment to delete
      "by virtue of section 2 of this Act"
      rectifies the situation by bringing paragraph 2(3)(a) into line with paragraph 2(3)(b) and treating previous periods of employment with BOAC, BEA or the British Airways Board as reckonable whether or not the employment was continuous.
      I should perhaps add that the provisions of paragraph 3 are declaratory for the avoidance of doubt and, as amended, will properly reflect the relevant provisions of the airways pension scheme.

      (1) The powers of the British Airports Authority under section 2 of the Airports Authority Act 1975 (which sets out the Authority's functions) shall include power (whether alone or in association with other persons)—

      5

      (a) to provide or assume the management of any aerodrome outside Great Britain; and

      (b) to provide services or facilities which are in the Authority's opinion necessary or desirable for the operation of aerodromes outside Great Britain; but its duty under subsection (8) of that section shall not apply in relation to the management and administration of any aerodrome outside Great Britain.

      10

      (2) The Authority shall not, by virtue of subsection (1) above, exercise any power to provide or assume the management of any aerodrome or to provide services or facilities except—

      (a) with the consent in writing of the Secretary of State; and

      15

      (b) if the exercise of that power involves capital expenditure by the Authority, or the guaranteeing by the Authority of any liability, with the consent of the Secretary of State given with the approval of the Treasury.

      This subsection does not affect the power of the Authority to provide services by virtue of subsection (5) of section 2 (provision of technical advice or assistance, including research services, as respects any matter in which the Authority has skill

      20

      or experience), notwithstanding that the services also fall within subsection (1)(b) above.

      (3) It is hereby declared that—

      25

      (a) the power of the Authority under subsection (5) of section 2 includes power to provide the advice or assistance there mentioned for any person outside Great Britain; and

      Once this amendment has been made, subparagraph (4) becomes redundant, if that is not an inappropriate word in this context. If it were not deleted it would contradict the wider interpretation of subparagraph (3). So the second of this pair of amendments is consequential.
      I repeat that neither of the amendments adversely affects in any way the pension arrangements or contracts of employment of employees of the British Airways Board or its wholly owned subsidiaries. Those obligations will be vested in the successor company and its wholly owned subsidiaries by virtue of clause 2. The only change will be with the name of the employer.
      I think that these amendments will clear up some posible problems which might have arisen had they not been made.
      Amendment agreed to.
      Amendment made: No. 62, in page 23, leave out lines 41 to 46.—[Mr. Tebbit.]
      Mr. Tebbit: I beg to move.
      That consideration of new clauses 3, 4, 15 and 18 be postponed until after the consideration of new clauses 2 and 1.
      I understand that this will be for the convenience of the House.
      Question put and agreed to.

    New Clause 8

      EXTENSION OF POWERS OF BRITISH AIR PORTS AUTHORITY
      30

      (b) the Authority may exercise any of its powers under that section in relation to aerodromes or persons outside Great Britain through a body corporate in which it has a direct or indirect financial interest; and accordingly references in subsection (2)(b) above to the Authority include references to any such body.

      (4) Any consent under this section may be given subject to such conditions as the Secretary of State thinks fit.

      (5) References in the Airports Authority Act 1975 to aerodromes owned or managed by the Authority shall not apply to aerodromes outside Great Britain.'.—[Mr. Tebbit.]

      Brought up and read the First time.
      Mr. Tebbit: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker: With this it will be convenient to consider the following amendments to the proposed new clause.
      (a), in line 10, leave out subsection (2).
      (c), leave out line 13.
      (d), in line 15, after 'liability', insert
      'in excess of limits which shall be prescribed by order made by statutory instrument'.
      (e), in line 16, at end insert—
      '(c) the statutory instrument referred to in paraghaph (b) of this subsection shall prescribe limits in respect of capital expenditure and the guaranteeing of liability respectively by the Authority which shall be consistent with the Authority's commercial requirements; and such statutory instrument shall be subject to annulment in pursuance of a resolution of either House of Parliament;
      (d) The Secretary of State shall at least annually, and more frequently if necessary, review the limits referred to in paragraph (c) of this subsection and if he deems this to be necessary he may vary the same by order made by statutory instrument which shall be subject to annulment as aforesaid.'.
      (b), in line 31, leave out subsection (4).
      Mr. Tebbit: The clause gives the British Airports Authority greater powers to engage in work overseas. It clarifies its existing powers to operate overseas in certain other respects. The authority's primary function is, of course, to run airports in Great Britain and what is now proposed will in no way prejudice this duty.
      It is the Government's policy that nationalised industries generally should support export efforts in their specialised fields. The authority already has power to provide technical advice or assistance to any person, which enabled it to act as a consultant in the export market. However, it is generally believed that the authority's considerable world-wide reputation in the planning, development and operation of airports could be developed more effectively in a way that would sup-
      1224
      port United Kingdom private sector firms if the authority had somewhat wider powers. It has often been suggested that overseas demand over the next five years could amount to contracts worth as much as £3,000 million for the construction of new airports.
      First, therefore, it is proposed in subsection (1)(a) that the authority should be able to provide any aerodrome outside Great Britain or to assume the management of any already established aerodrome. With respect to the provision of an aerodrome, it is common practice, when major airport development projects arise, for consortia to be formed which bring together all the necessary skills. The authority may already provide these consortia with technical advice and assistance but it may not, at present, join them as a full member. The sums of money involved in airport projects are often very large and the developments usually have a high prestige value.
      As a result clients—invariably Governments or public authorities—often look for some sign of Government backing of consortia bidding for their contracts. The BAA as a nationalised industry is not, of course, part of Government but it is considered that its involvement as a main contract signatory would provide clients with a sufficient indication of official support. This could make the difference between losing and winning extremely valuable contracts, and this is one of the reasons that the new power is proposed.
      With respect to the authority assuming the management of an aerodrome outside Great Britain, subsection (1)(a) will enable the authority to pursue alone or with other bodies development contracts in countries which do not have the experienced manpower resources to run major airports. This kind of support can sometimes be made available under the authority's existing powers to provide advice and assistance, but as a result of this amendment a United Kingdom consortium will now be able to offer package deals including all stages of

      1225
      planning, design, construction, the provision of equipment and the management of airports once completed.
      I turn now to subsection (1)(b). This will enable the authority to provide services which are necessary or desirable for the operation of airports overseas. The authority's existing powers do not permit it to do this. Here again I cite the importance of the authority being able to join consortia as a full member and the need to allow our nationalised industries profitably to market their specialised capabilities.
      In general I should like to add that the authority will not undertake major airport construction or the provision of equipment itself. Rather it will normally make its skills and experience available within consortia. Where clients require a particularly high level of official commitment, the authority may, through a wholly owned subsidiary, act as a main contractor, sub-contracting specific tasks as appropriate. However, such cases are likely to be rare; normally the authority will act as a co-signatory to the main contract. It will also be possible for the authority to use its new powers to manage airports and to compete for contracts confined to that function.
      The operation by the authority of its new powers will be subject to the consent of the Secretary of State. The authority may occasionally wish to sign small contracts and, in order to ensure that the authority can react quickly to these commercial opportunities, in addition to any specific consents which may be given a general consent will be given by the Secretary of State to permit the authority to take on contracts up to agreed amounts without specific reference to the Secretary of State.
      The amounts concerned have been agreed with the authority, but the precise legal form of consent has still to be finalised. There will be a number of safeguards. It is our intention that the authority should report annually to the Secretary of State giving an account and the overall results of its overseas activities. A summary of this report should be published by the authority as part of its annual report and accounts and an overall limit should be set to the unsecured financial liabilities which the authority may assume in exercising its new powers.
      Mr. Onslow: I understand that the limits involve formal guidelines. Do the Government intend to put a copy of the guidelines in the Library or to make them available to the House in some other convenient way?
      Mr. Tebbit: Yes. I should have liked to make the guidelines available to the House by putting them in the Library this evening. However, the final difficulty of tidying up has to be resolved. We found that the expression "guidelines" does not accord with legislation, which refers to "consent". Such legal matters cause difficulties. I prefer not to put anything in the Library until everything has been firmly and properly tied up.
      The Government have been guided by the recommendations of the Overseas Projects Board, which felt that the extension of the authority's powers would strengthen the United Kingdom's export capability in the airports sector. The view of the trade organisations with a major interest in airports—the Export Group for the Constructional Industries, the Society of British Aerospace Companies Limited and the British Consultants Bureau—have been sought. It is clear that there is a general view in industry that the measures are desirable.
      There is a strong feeling that the authority should not use its new powers to impinge upon the interests of the private sector. I stress that the intention is that the authority will seek to arrange its overseas business under the new powers to increase the amount of such work obtained by firms in the private sector by more than would be the case without the authority's participation. The clause will enable the authority to act in support of the private sector so as to increase the share of important export projects that might go to British firms.
      The hon. Member for Hackney, Central (Mr. Davis) thought of introducing a similar clause in past legislation. With the then Government's precarious majority, the Minister was not willing to introduce a clause which might be controversial. At that time my right hon. Friends and I were not able to give a positive assurance that we could give such a clause a fair wind. We have considered the matter carefully and we have decided that it is right, with the

      1227
      safeguards that I have mentioned, to proceed in this way. That marks a non-doctrinal attitude by the Government.
      Mr. Clinton Davis: The House will be grateful to the Minister for spelling out the purpose of the new clause. He acknowledges that our intention was to introduce a similar provision in 1978. He acknowledges that the Opposition thought that such a clause could be controversial and did not want it to be introduced. We were considering a non-contentious Bill and the Government felt obliged not to proceed with it.
      Mr. Tebbit: The problem was that curiously, as on this occasion, the proposal came up rather late and left us with too little time to consult the relevant interests before making a decision.
      Mr. Davis: That is a fair point. There was also a feeling that the public sector was acquiring an excessive amount of power. However, that is history.
      In broad terms, we welcome the new clause. It recognises the prize that is to be won in exports by the British Airports Authority. The figure of £3,500 million over the next five years is one which makes the clause obviously necessary.
      10.30 pm
      The Minister has also recognised the enterprise and ability of the BAA, which is an outstandingly good example of public ownership, and its enterprise in being able to enter into consortia and win prizes such as those that he and I have described. The BAA entered into a venture with a company in which British Airways has the entirety of voting shares—it is called IAL—as long ago as 1977. That joint venture was called British Airports International Limited. It is designed to maximise the airport consultancy capability to which the Minister referred. BAL has been doing well. It operates completely commercially and it has vast potential.
      Our complaint about the provisions that the Minister has introduced is that they are subject to constraints that I do not believe are imposed elsewhere. The Minister will correct me if I am wrong. A number of other nationalised enterprises operate overseas consultancy services—British Rail, the National Coal Board, IAL, to which I referred, and
      1228
      British Steel. As far as I know, there are no similar limitations to those set out in subsection (2) of the new clause affecting the enterprises of those concerns.
      In the Airports Authority Act 1975, section 3(2) states
      "The Authority, in framing and carrying out proposals involving substantial outlay on capital account, shall act on lines settled from time to time with the approval of the Secretary of State."
      Why was it not possible simply to invoke that subsection in this case? The new clause provides that the Minister shall establish some guideline, general consent, guidance or whatever he will call it. Does that have the force of law? Will it satisfy a customer? Does it carry any weight in law?
      Mr. Tebbit: The clause that we are discussing is what carries weight in law. The consent that will be given to the authority is merely framed as guidelines in essence, and sets out the amounts up to which the authority may engage in contracts without reference to the Secretary of State. After reference to the Secretary of State, the consent for a particular contract can be enlarged.
      Mr. Davis: It would have been far better and far clearer if the Minister had chosen to embark on this matter along the lines we have suggested in our amendments. The Minister has, perfectly properly, not dealt with the amendments in advance of their being moved. Initially we thought that it would be better to leave out the necessity for all consent, and then on reflection we felt that amendments (c), (d) and (e) were preferable. These would require the Secretary of State to prescribe limits within which the BAA, acting jointly or separately, might operate without such consents as are prescribed. That would require some degree of parliamentary accountability. In the circumstances, it is not unreasonable that Parliament should see what the limits are. I am prepared to invite my hon. Friends not to divide on the issue if the Under-Secretary can satisfy us that the protections that we have introduced in our amendments are the wrong route to follow.
      We are deeply concerned that, as drawn, the subsection would appear to provide—if the Minister had not intervened—that the authority could not exercise any powers or engage in any

      1229
      expenses without the authority of the Minister. That would be a thoroughly impossible position for it to act under, bearing in mind the urgency of dealing with a number of the contracts. That is why we tabled the amendments. It might be better if I sat down and gave the Minister an opportunity to respond. I hope that he will be able to respond favourably.
      Mr. McCrindle: Before the Minister replies, I should like to support the new clause. It relates to extending the powers of the British Airports Authority, especially in future overseas activities. I heartily approve of that extension. I approve of any move to encourage the BAA towards a greater degree of commercialism. So far, so good. But there are two points to which I wish to draw my hon. Friend's attention. I give an advance warning that I am looking beyond this new clause to the way airports are organised in future.
      The Minister said that the new clause allows the BAA to move into areas overseas in support of the private sector. He will not need me to remind him that we are discussing a Bill that introduces an element of private capital into British Airways. I wonder whether, like me, he feels that that leads him to question whether there is a case either for introducing an element of private capital into the BAA at some time in the not too distant future, or even for demerging the BAA altogether. The authors of a recent report looked to the time when a demerging of the BAA might take place, and when private companies might be floated under the names of Heathrow Limited or Gatwick Limited. That may seem a flight of fancy to some hon. Members—I do not expect my hon. Friend to reply to that point in detail—but the House would have to agree that, properly run, Heathdow and Gatwick could become extremely profitable enterprises.
      I hope that by agreeing to the new clause, extending as we should the power and authority of the BAA to engage in overseas enterprises, we shall not close the door to the possible future flotation of companies to run our principal airports. That would have the effect of moving the BAA out of the public sector borrowing requirement, which must appeal to my hon. Friend and other Ministers. There is no inherent reason
      1230
      why our principal airports should be in public ownership. The possibility of moving them out of public ownership should be attractive to the Government. That would not necessarily mean that we would open our leading airports only to private capital involvement. Local authorities could bid for some of the airports presently under the control of the BAA. I do not need to remind the House that there are some municipal airports which are extremely well run and extremely profitable. Luton, Manchester and Southend are examples of ways in which the local authorities may choose to bid.
      Before any of that can happen, we shall have to move towards introducing an element of demerging the BAA. If that were to be the case, I would respectfully suggest that a much greater involvement by British Airways in Heathrow Limited and of British Caledonian in Gatwick Limited might lead to the running of those airports being more inclined to take into account the feelings of the principal users, in the shape of the airlines.
      Mr. Alan Clark: Does my hon. Friend think that the changes he is suggesting would lead to the airports being better policed?
      Mr. McCrindle: I should have thought that it would be up to Heathrow Limited and Gatwick Limited to make their own security arrangements. If there were to be public pressure for a greater degree of policing—I think that that is what my hon. Friend is implying—they would be more likely to be receptive than the British Airports Authority would be.
      I am happy to see the British Airports Authority expertise developed abroad. I am happy at the prospect of British Airports Authority profitability being improved. But I hope the Minister will at the very least reassure me that by agreeing to the new clause we shall not eliminate another solution later to the airports problem along the lines that I have suggested tonight.
      Mr. Onslow: Since what my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) has just said was apparently in order, Mr. Deputy Speaker, may I say that it gives me considerable pleasure to agree with him? It is about

      1231
      time we had another look at the financial structure of the British Airports Authority and considered enabling it to go to different places for its finance.
      The right hon. Member for Lanarkshire, North (Mr. Smith), who is getting short tempered, will surely know how much general anger there is about the way in which at the moment the British Airports Authority is obliged to fund the building of new airports by charging existing passengers. I am sure that the House, and I believe the Minister, would welcome a great deal of change in this area which would make it possible to raise capital in a more proper way rather than loading it on revenue.
      I was grateful to my hon. Friend the Under-Secretary for what he said about the consultations or discussions which had taken place with the British Consultants Bureau and others. I know that they welcome the exchange of views that they have been able to have with his officials, and which are reflected in the latest draft of what I would call the guidelines, because I do not know what else to call them.
      I have in particular been advised by one person who has taken part in some of those discussions that the British Consultants Bureau is happier with the wording which now applies to the object of the extended powers, which is to gain an improvement in the total facilities which consultants, contractors and suppliers in the private and public sectors together are able to offer for overseas project work.
      It is that collaboration which should be emphasised, and I hope that the Minister will stress that there is no intention here of giving the British Airports Authority an open, general licence to divert its energies from its priority task, which is to make a good job of running airports in this country by engaging in ambitious foreign ventures which are a diversion of its resources and its attention.
      The Minister should be able to assure us that when he comes to consider an application for exemption from the limits set out he will consult not merely the British Airports Authority but others who might be affected—the consultants, contractors, suppliers and so on—if the
      1232
      exemption were granted. I should like to have his assurance that that is not ruled out.
      It is slightly unusual to see in legislation the words
      "It is hereby declared that"
      which appear in subsection (3). I have a suspicion that those words are generally used in order to legitimise something that has been of very suspect legitimacy hitherto. I believe that in this case the purpose of the words is to legitimise the activities of British Airports International, for which there may be a somewhat doubtful foundation in law as it stands at the moment. I am all in favour of legitimising even the offspring of nationalised industries, but I should like to be certain that the motives for so doing are as legitimate as the organisation itself.
      My hon. Friend will know that there is more than one view about the activity of British Airports International. The hon. Member for Hackney, Central (Mr. Davis) praised it for its being competitive in its marketing activities. I believe that some consultants who are active in this field regard it as aggressive and think that some of the methods that it uses are not wholly fair, particularly in the way in which it has been thought to suggest that it has some special cachet which is denied to private consultants.
      It is true that British Airports International draws on staff whose primary function is to do other work. Neither IAL nor the BAA, presumably, employs staff in order to be constantly available for consultancy work overseas. So, to an extent, if they find themselves engaged in that, they do not have a total commitment to it nor necessarily total experience in the field concerned.
      So long as the Minister can tell us that he sees British Airports International as having a supporting role and not a role to try to beat competition from the private sector as its primary objective, I can go along with what is sought in the subsection. But if it is to divert the efforts of people whose primary functions are to serve the airport industry in this country into overseas endeavours, I am less than happy that the amendment should be passed.
      10.45 pm
      Mr. Tebbit: First, I say to my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) that this clause would not preclude any introduction of private sector finance to the BAA, although finding a way in which that could be conveniently done bristles with problems.
      To my hon. Friend the Member for Woking (Mr. Onslow) I say that this is not an open general licence. It has specifically been drawn to avoid that. Its purpose is not to enlarge the activities of the BAA overseas. It is not to compete with the private sector, to undermine it, or anything other than to support the activities of what one would broadly call Great Britain Limited in securing more of this type of contract. There is no doubt that in many parts of the world it is an advantage to the British industry if this particular part of the public sector is able to go in as a full partner. That is what we intend to do.
      Of course, it is possible to lose money just as well as to make money in these activities. One can lose a great deal of money particularly if one is a member of a consortium in which the possible liabilities are to be held on a joint and several basis, and being a public sector animal one is the only member of the consortium that cannot go into liquidation if things get really nasty. Therefore, it is entirely appropriate that the Secretary of State should have some degree of control over the extent to which liabilities could arise from which the authority would be unable to escape through the medium of going into liquidation whilst others could escape from them.
      My hon. Friend is also right in what he says about subsection (3)(a). Its purpose is to place beyond doubt the existing power to provide advice or assistance overseas. At present this rests on section 2(5) of the Airports Authority Act 1975, which allows the advice or assistance to be provided to "any person", the latter words being taken to include any persons overseas. This is just a provision to remove doubt.
      I should like to deal with the point raised by the hon. Member for Hackney, Central (Mr. Davis). I detect that the House would not want me to deal with it at great length at this time of night.
      1234
      The reason why I would not recommend the House to accept his amendments is that in general they would remove any effective control by the Secretary of State in these areas. Perhaps it would help the hon. Gentleman if I said that what we had in mind was that there should be immediately consent on a general basis for the authority to assume the management of any overseas aerodrome in cases in which the scope of the services to be provided is such that the management fees payable to the authority do not exceed £1 million a year or £3 million over the duration of the contract.
      A specific consent would be required for any new contract which will cause the total management fees payable to the authority to exceed £5 million at any time. It is proposed to give consent for the authority to provide services and facilities in connection with the operation of overseas aerodromes so long as the total unsecured liabilities of the authority under any one contract do not exceed £5 million. A specific consent would be required for any contract which would cause the total amount of the authority's unsecured liabilities under such contracts to exceed £15 million.
      The consents will not authorise capital expenditure or the giving of guarantees or the provision by the authority of funds to any person or body other than for day-to-day provision of the services in question. Anything of that kind would require a specific consent.
      In general, the requirements would be for the authority to seek to earn a reasonable rate of return on any of the activities; to secure so far as possible any liabilities likely to be incurred; to notify the Secretary of State should the total unsecured liabilities on overseas activities seem likely to exceed £100 million, which would be the overall limit for activities of this kind; to provide these services only through British Airports International Limited, or some other company established or acquired for the purpose, in which the authority owns not less than 50 per cent. of the ordinary share capital; to make an annual report on the activities and publish a summary of that in the authority's annual report, to be laid before Parliament; to keep the Secretary of State informed generally of developments in the field during the year; and to notify the Secretary of State if

      1235
      any contract seems likely to result in a loss.
      That is an outline of the main conditions and the full conditions will be set out in the formal document giving the Secretary of State's consent. I should say that all parties, including the British Airports Authority, seem to be quite happy that this will give the required powers within the overall legislation for it to act effectively in this field.
      Mr. Clinton Davis: We believe that the constraints that are imposed are unrea-
      sonable in the circumstances. The Minister has not dealt with subsection (2)(a). We shall therefore press our amendment to a Division.
      Question put and agreed to.
      Clause read a Second time.
      Amendment (c) proposed to the proposed clause, leave out line 13.—[Mr. John Smith.]
      Question put, That the Amendment be made to the proposed clause:—
      The House divided: Ayes 232, Noes 296.

      Division No. 380]

      AYES

      [10.52 pm

      Abse, Leo

      Eadie, Alex

      Lewis, Ron (Carlisle)

      Adams, Allen

      Eastham, Ken

      Litherland, Robert

      Allaun, Frank

      Ellis, Raymond (NE Derbyshire)

      Lofthouse, Geoffrey

      Anderson, Donald

      English, Michael

      Lyon, Alexander (York)

      Archer, Rt Hon Peter

      Ennals, Rt Hon David

      Lyons, Edward (Bradford West)

      Armstrong, Rt Hon Ernest

      Evans, loan (Aberdare)

      McCartney, Hugh

      Ashley, Rt Hon Jack

      Evans, John (Newton)

      McDonald, Dr Oonagh

      Ashton, Joe

      Ewing, Harry

      McElhone, Frank

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

      Faulds, Andrew

      McKay, Allen (Penistone)

      Bagier, Gordon A. T.

      Field, Frank

      McKelvey, William

      Barnett, Guy (Greenwich)

      Fitch, Alan

      MacKenzie, Rt Hon Gregor

      Barnett, Rt Hon Joel (Heywood)

      Flannery, Martin

      Maclennan, Robert

      Bennett, Andrew (Stockport N)

      Fletcher, Ted (Darlington)

      McNally, Thomas

      Bidwell, Sydney

      Foot, Rt Hon Michael

      McWilliam, John

      Booth, Rt Hon Albert

      Ford, Ben

      Magee, Bryan

      Boothroyd, Miss Betty

      Forrester, John

      Marks, Kenneth

      Bradley, Tom

      Foster, Derek

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

      Bray, Dr Jeremy

      Fraser, John (Lambeth, Norwood)

      Marshall, Jim (Leicester South)

      Brown, Hugh D. (Provan)

      Freeson, Rt Hon Reginald

      Martin, Michael (Gl'gow, Springb'rn)

      Brown, Robert C. (Newcastle W)

      Garrett, John (Norwich S)

      Mason, Rt Hon Roy

      Brown, Ron (Edinburgh, Leith)

      George, Bruce

      Maxton, John

      Buchan, Norman

      Gilbert, Rt Hon Dr John

      Maynard, Miss Joan

      Callaghan, Jim (Middleton & P)

      Ginsburg, David

      Meacher, Michael

      Campbell, Ian

      Gourlay, Harry

      Mellish, Rt Hon Robert

      Campbell-Savours, Dale

      Graham, Ted

      Mikardo, Ian

      Canavan, Dennis

      Grant, George (Morpeth)

      Millan, Rt Hon Bruce

      Cant, R. B.

      Grant, John (Islington C)

      Mitchell, Austin (Grimsby)

      Carmichael, Neil

      Hamilton, W. W. (Central Fife)

      Mitchell, R. C. (Soton, Itcnen)

      Carter-Jones, Lewis

      Harrison, Rt Hon Walter

      Morris, Rt Hon Alfred (Wythenshawe)

      Cartwright, John

      Hattersley, Rt Hon Roy

      Morris, Rt Hon Charles (Openshaw)

      Clark, Dr David (South Shields)

      Haynes, Frank

      Morris, Rt Hon John (Aberavon)

      Cocks, Rt Hon Michael (Bristol S)

      Healey, Rt Hon Denis

      Moyle, Rt Hon Roland

      Cohen, Stanley

      Heffer, Eric S.

      Newens, Stanley

      Coleman, Donald

      Home Robertson, John

      Oakes, Rt Hon Gordon

      Concannon, Rt Hon J. D.

      Homewood, William

      Ogden, Eric

      Conlan, Bernard

      Hooley, Frank

      O'Halloran, Michael

      Cowans, Harry

      Horam, John

      O'Neill, Martin

      Craigen, J. M. (Glasgow, Maryhill)

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

      Orme, Rt Hon Stanley

      Crowther, J. S.

      Huckfield, Les

      Owen, Rt Hon Dr David

      Cryer, Bob

      Hudson Davies, Gwilym Ednyfed

      Palmer, Arthur

      Cunliffe, Lawrence

      Hughes, Mark (Durham)

      Park, George

      Cunningham, George (Islington S)

      Hughes, Roy (Newport)

      Parker, John

      Cunningham, Dr John (Whitehaven)

      Janner, Hon Greville

      Parry, Robert

      Davidson, Arthur

      Jay, Rt Hon Douglas

      Pendry, Tom

      Davies, Rt Hon Denzil (Llanelll)

      John, Brynmor

      Powell, Raymond (Ogmore)

      Davies, Ifor (Gower)

      Johnson, James (Huli West)

      Prescott, John

      Davis, Clinton (Hackney Central)

      Johnson, Walter (Derby South)

      Price, Christopher (Lewisham West)

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

      Jones, Rt Hon Alec (Rhondda)

      Race, Reg

      Deakins, Eric

      Jones, Barry (East Flint)

      Radice, Giles

      Dean, Joseph (Leeds West)

      Jones, Dan (Burnley)

      Rees, Rt Hon Merlyn (Leeds South)

      Dempsey, James

      Kaufman, Rt Hon Gerald

      Richardson, Jo

      Dewar, Donald

      Kerr, Russell

      Roberts, Albert (Normanton)

      Dixon, Donald

      Kilroy-Silk, Robert

      Roberts, Allan (Bootle)

      Dobson, Frank

      Kinnock, Neil

      Roberts, Gwilym (Cannock)

      Dormand, Jack

      Lambie, David

      Robertson, George

      Douglas, Dick

      Lamborn, Harry

      Robinson, Geoffrey (Coventry NW)

      Douglas-Mann, Bruce

      Lamond, James

      Rodgers, Rt Hon William

      Dubs, Alfred

      Leadbitter, Ted

      Rooker, J. W.

      Duffy, A. E. P.

      Leighton, Ronald

      Roper, John

      Dunnett, Jack

      Lestor, Miss Joan (Eton & Slough)

      Ross, Ernest (Dundee West)

      Dunwoody, Mrs Gwyneth

      Lewis, Arthur (Newham North West)

      Rowlands, Ted

      Ryman, John

      Straw, Jack

      White, Frank R. (Bury & Radcliffe)

      Sandelson, Neville

      Summerskill, Hon Dr Shirley

      White, James (Glasgow, Pollok)

      Sever, John

      Taylor, Mrs Ann (Bolton West)

      Whitehead, Phillip

      Shearman, Barry

      Thomas, Dafydd (Merioneth)

      Whitlock, William

      Sheldon, Rt Hon Robert (A'ton-u-L)

      Thomas, Jeffrey (Abertillery)

      Willey, Rt Hon Frederick

      Shore, Rt Hon Peter (Step and Pop)

      Thomas, Mike (Newcastle East)

      Williams, Rt Hon Alan (Swansea W)

      Short, Mrs Renée

      Thomas, Dr Roger (Carmarthen)

      Wilson, William (Coventry SE)

      Silkin, Rt Hon John (Deptford)

      Thorne, Stan (Preston South)

      Winnick, David

      Silverman, Julius

      Tilley, John

      Woodall, Alec

      Skinner, Dennis

      Tinn, James

      Woolmer, Kenneth

      Smith, Rt Hon J. (North Lanarkshire)

      Torney, Tom

      Wrigglesworth, Ian

      Soley, Clive

      Varley, Rt Hon Eric G.

      Wright, Sheila

      Spearing, Nigel

      Wainwright, Edwin (Dearne Valley)

      Young, David (Bolton East)

      Spriggs, Leslie

      Walker, Rt Hon Harold (Doncaster)

      Stallard, A. W.

      Walkins, David

      TELLERS FOR THE AYES:

      Stoddart, David

      Weetch, Ken

      Mr, James Hamiton and Mr. George Morton.

      Stott, Roger

      Wellbeloved, James

      Strang, Gavin

      Welsh, Michael

      NOES

      Adley, Robert

      Dickens, Geoffrey

      Howell, Ralph (North Norfolk)

      Aitken, Jonathan

      Dorrell, Stephen

      Howells, Geraint

      Alexander, Richard

      Dover, Denshore

      Hunt, David (Wirral)

      Ancram, Michael

      du Cann, Rt Hon Edward

      Hunt, John (Ravensbourne)

      Arnold, Tom

      Dunn, Robert (Dartford)

      Irving, Charles (Cheltenham)

      Aspinwall, Jack

      Durant, Tony

      Jenkin, Rt Hon Patrick

      Atkins, Rt Hon H. (Spelthorne)

      Dykes, Hugh

      Johnson Smith, Geoffrey

      Atkins, Robert (Preston North)

      Eden, Rt Hon Sir John

      Jopling, Rt Hon Michael

      Baker, Kenneth (St. Marylebone)

      Edwards, Rt Hon N. (Pembroke)

      Kaberry, Sir Donald

      Baker, Nicholas (North Dorset)

      Eggar, Timothy

      Kellett-Bowman, Mrs Elaine

      Beaumont-Dark, Anthony

      Emery, Peter

      Kimball, Marcus

      Bell, Sir Ronald

      Eyre, Reginald

      Kitson, Sir Timothy

      Bendall, Vivian

      Fairgrieve, Russell

      Knox, David

      Benyon, Thomas (Abingdon)

      Faith, Mrs Sheila

      Lamont, Norman

      Benyon, W. (Buckingham)

      Farr, John

      Lang, Ian

      Berry, Hon Anthony

      Fell, Anthony

      Langford-Holt, Sir John

      Best, Keith

      Fenner, Mrs Peggy

      Latham, Michael

      Bevan, David Gilroy

      Finsberg, Geoffrey

      Lawrence, Ivan

      Biffen, Rt Hon John

      Fisher, Sir Nigel

      Lawson, Nigel

      Biggs-Davison, John

      Fletcher, Alexander (Edinburgh N)

      Lee, John

      Blackburn, John

      Fletcher-Cooke, Charles

      Le Marchant, Spencer

      Blaker, Peter

      Fookes, Miss Janet

      Lennox-Boyd, Hon Mark

      Body, Richard

      Forman, Nigel

      Lester, Jim (Beeston)

      Bonsor, Sir Nicholas

      Fowler, Rt Hon Norman

      Lewis, Kenneth (Rutland)

      Boscawen, Hon Robert

      Fox, Marcus

      Lloyd, Ian (Havant & Waterloo)

      Bottomley, Peter (Woolwich West)

      Fraser, Rt Hon H. (Stafford & St)

      Lloyd, Peter (Fareham)

      Bowden, Andrew

      Fraser, Peter (South Angus)

      Loveridge, John

      Boyson, Dr Rhodes

      Galbraith, Hon T. G. D.

      Luce, Richard

      Braine, Sir Bernard

      Gardiner, George (Reigate)

      Lyell, Nicholas

      Bright, Graham

      Gardner, Edward (South Fylde)

      McCrindle, Robert

      Brinton, Tim

      Garel-Jones, Tristan

      Macfarlane, Neil

      Brittan, Leon

      Glyn, Dr Alan

      MacGregor, John

      Brocklebank-Fowler, Christopher

      Goodhart, Philip

      MacKay, John (Argyll)

      Brooke, Hon Peter

      Goodhew, Victor

      Macmillan, Rt Hon M. (Farnham)

      Brotherton, Michael

      Goodlad, Alastair

      McNair-Wilson, Michael (Newbury)

      Brown, Michael (Brigg & Sc'thorpe)

      Gorst, John

      McNair-Wilson, Patrick (New Forest)

      Browne, John (Winchester)

      Gow, Ian

      McQuarrie, Albert

      Bruce-Gardyne, John

      Gower, Sir Raymond

      Madel, David

      Bryan, Sir Paul

      Gray, Hamish

      Major, John

      Buchanan-Smith, Hon Alick

      Greenway, Harry

      Marland, Paul

      Buck, Antony

      Griffiths, Eldon (Bury St Edmunds)

      Marlow, Tony

      Budgen, Nick

      Griffiths, Peter (Portsmouth N)

      Marshall, Michael (Arundel)

      Bulmer, Esmond

      Grist, Ian

      Marten, Neil (Banbury)

      Burden, F. A.

      Grylls, Michael

      Mates, Michael

      Butcher, John

      Gummer, John Selwyn

      Mather, Carol

      Butler, Hon Adam

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

      Maude, Rt Hon Angus

      Cadbury, Jocelyn

      Hamilton, Michael (Salisbury)

      Mawby, Ray

      Carlisle, Kenneth (Lincoln)

      Hampson, Dr Keith

      Mawhinney, Dr Brian

      Chaiker, Mrs Lynda

      Hannam, John

      Maxwell-Hyslop, Robin

      Channon, Paul

      Haselhurst, Alan

      Mayhew, Patrick

      Chapman, Sydney

      Havers, Rt Hon Sir Michael

      Mellor, David

      Churchill, W. S.

      Hawksley, Warren

      Meyer, Sir Anthony

      Clark, Hon Alan (Plymouth, Sutton)

      Hayhoe, Barney

      Miller, Hal (Bromsgrove & Redditch)

      Clark, Sir William (Croydon South)

      Heddle, John

      Mills, Iain (Meriden)

      Clarke, Kenneth (Rushcliffe)

      Henderson, Barry

      Mills, Peter (West Devon)

      Clegg, Sir Walter

      Heseltine, Rt Hon Michael

      Miscampbell, Norman

      Cockeram, Eric

      Hicks, Robert

      Mitchell, David (Basingstoke)

      Cormack, Patrick

      Higgins, Rt Hon Terence L.

      Moate, Roger

      Corrie, John

      Hill, James

      Monro, Hector

      Costain, A. P.

      Hogg, Hon Douglas (Grantham)

      Montgomery, Fergus

      Cranborne, Viscount

      Holland, Philip (Carlton)

      Moore, John

      Critchley, Julian

      Hooson, Tom

      Morgan, Geraint

      Crouch, David

      Hordern, Peter

      Morris, Michael (Northampton, Sth)

      Dean, Paul (North Somerset)

      Howell, Rt Hon David (Guildford)

      Morrison, Hon Charles (Devizes)

      1238

      1239

      Morrison, Hon Peter (City of Chester)

      Roberts, Michael (Cardiff NW)

      Thompson, Donald

      Mudd, David

      Roberts, Wyn (Conway)

      Thorne, Neil (Ilford South)

      Murphy, Christopher

      Rost, Peter

      Thornton, Malcolm

      Myles, David

      Royle, Sir Anthony

      Townend, John (Bridlington)

      Neale, Gerrard

      Sainsbury, Hon Timothy

      Townsend, Cyril D. (Bexleyheath)

      Needham, Richard

      St. John-Stevas, Rt Hon Norman

      Trippier, David

      Nelson, Anthony

      Scott, Nicholas

      Trotter, Neville

      Neubert, Michael

      Shaw, Michael (Scarborough)

      van Straubenzee, W. R.

      Newton, Tony

      Shelton, William (Streatham)

      Vaughan, Dr Gerard

      Nott, Rt Hon John

      Shepherd, Colin (Hereford)

      Viggers, Peter

      Onslow, Cranley

      Shepherd, Richard(Aldridge-Bt'hills)

      Waddington, David

      Oppenheim, Rt Hon Mrs Sally

      Shersby, Michael

      Wakeham, John

      Page, Rt Hon Sir R. Graham

      Silvester, Fred

      Waldegrave, Hon William

      Page, Richard (SW Hertfordshire)

      Sims, Roger

      Walker, Bill (Perth & E Perthshire)

      Parkinson, Cecil

      Skeet, T. H. H.

      Walker-Smith, Rt Hon Sir Derek

      Parris, Matthew

      Speed, Keith

      Wall, Patrick

      Patten, Christopher (Bath)

      Speller, Tony

      Waller, Gary

      Patten, John (Oxford)

      Spence, John

      Walters, Dennis

      Pattie, Geoffrey

      Spicer, Jim (West Dorset)

      Ward, John

      Pawsey, James

      Spicer, Michael (S Worcestershire)

      Warren, Kenneth

      Penhaligon, David

      Sproat, Iain

      Watson, John

      Percival, Sir Ian

      Squire, Robin

      Wells, John (Maidstone)

      Pollock, Alexander

      Stanbrook, Ivor

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

      Porter, George

      Stanley, John

      Wheeler, John

      Price, David (Eastleigh)

      Steen, Anthony

      Whitelaw, Rt Hon William

      Proctor, K. Harvey

      Stevens, Martin

      Whitney, Raymond

      Raison, Timothy

      Stewart, Ian (Hitchin)

      Wickenden, Keith

      Rathbone, Tim

      Stewart, John (East Renfrewshire)

      Wiggin, Jerry

      Rees, Peter (Dover and Deal)

      Stokes, John

      Williams, Delwyn (Montgomery)

      Rees-Davies, W. R.

      Stradling Thomas, J.

      Winterton, Nicholas

      Ronton, Tim

      Tapsell, Peter

      Wolfson, Mark

      Rhodes James, Robert

      Taylor, Robert (Croydon NW)

      Young, Sir George (Acton)

      Rhys Williams, Sir Brandon

      Taylor, Teddy (Southend East)

      Ridley, Hon Nicholas

      Tebbit, Norman

      TELLERS FOR THE NOES:

      Ridsdale, Julian

      Temple-Morris, Peter

      Lord James Douglas-Hamilton and Mr. John Cope.

      Rifkind, Malcolm

      Thomas, Rt Hon Peter (Hendon S)

      Question accordingly negatived.
      Clause added to the Bill.

    New Clause 1

      ACQUISITION OF LAND BY AGREEMENT BY BRITISH AIRPORTS AUTHORITY
      "In section 17 of the Airports Authority Act 1975 (which deals with the acquisition by the British Airports Authority of land and rights over land), the following subsection shall be inserted after subsection (1)—
      "(1A) Without prejudice to the power of the authority by virtue of section 2(3) of this Act to acquire by agreement any land required for any purpose connected with the discharge of its duties under this Act, the Authority may acquire by agreement any land which in the opinion of the Authority may be required for any such purpose notwithstanding that it is not immediately so required".'."—[Mr. Tebbit.]
      Brought up, and read the First time.
      Mr. Tebbit: I beg to move, That the clause be read a Second time.
      When the Government announced on 17 December their decision to invite the British Airports Authority to bring forward proposals for the development of Stansted airport my right hon. Friend the Secretary of State said that our aim would be that the owners of residential and agricultural property in the wider area which may in future be required for further development should have the opportunity of staying on or of selling their properties
      1240
      at an unblighted value to the BAA. The proposed clause will make that possible by giving the authority the necessary discretionary powers to acquire land from owners who wish to sell their property.
      At present the authority's powers to purchase land are fairly limited. Under section 2(3) of the Airports Authority Act 1975 it has the power to do anything which is calculated to facilitate the discharge of its duties, which has been held to mean, in effect, that it can purchase property on a discretionary basis when it needs to do so for some specific purpose arising from its current airport operations.
      The authority also has the power to acquire compulsorily property that is the subject of a compulsory purchase order confirmed by the Secretary of State. It is also possible for it to buy the same property by agreement before the time at which the compulsory purchase has to take place. In either case the owner-occupier receives the full unblighted value of his property in accordance with the statutory blight provisions. That would be the situation at Stansted in respect of the 1,500 acres or so for which a planning application and a compulsory purchase order are to be submitted and which would be required if planning permission is given for the construction of

      1241
      a new terminal operating at the airport. The statutory blight provisions will be triggered off as soon as the notice of compulsory purchase is published and owner-occupiers will therefore have an immediate remedy if they cannot sell their property at a reasonable price.
      However, the BAA has also been invited to define and apply for the safeguarding of an additional area of 2,500 acres, sufficient to provide for a possible second runway and further terminal capacity should that be needed in the more distant future. This will not be the subject at this stage of a planning application or of compulsory purchase orders and will not therefore benefit from the blight provisions. The effect of the new clause will be to enable the BAA to provide relief by acquiring such land by agreement with the owners in advance of requirements. It will not extend the authority's existing compulsory purchase powers.
      In essence, it means that for those living in the 2,500 acres, who might not otherwise be able to sell their property, because prospective buyers would have in mind that there could at some time be a further extension of the airport, there will be a relief under which the BAA will be empowered to buy the property from them, if they wish to sell.
      Mr. Clinton Davis: Am I right in thinking that no consent by the Minister will be required for the undertaking of what is considerable public expenditure? Does not that contrast with the consents that he is required to give in relation to the previous new clause, which probably involves far less expenditure by the authority at any given time?
      Mr. Tebbit: No, I would not say so. I think that the amounts involved would not be enormous compared with the possible contingent liabilities in which the authority might land itself in the event of a commercial venture overseas going wrong.
      After all, 2,500 acres, even at £1,000 an acre, cost £2·5 million—if at this time of night I can manage to get the decimals in the right place. The amounts are not extraordinary. Moreover, it is very unlikely that anything like all the property owners in the area will ask the authority to acquire their property under this provision.
      1242
      The clause will bring the authority's powers into line with those of other public authorities. It closely follows the wording of section 48 of the Town and Country Planning Act 1959, which contains a similar provision in relation to the acquisition by the Minister of Transport of land for highways. Comparable powers are also available to principal local councils under section 120(2) of the Local Government Act 1972, to water authorities under the Water Resources Act 1963, and to the British Railways Board under section 14(1)(c) of the Transport Act 1962.
      This will be a general power available at all the authority's airports in the United Kingdom. It will be for the authority itself to decide whether any purchases that it is contemplating at the request of, or with the agreement of, the owners concerned are within the terms of the new powers.
      I commend the clause to the House. Its purpose is to mitigate the effect of the inevitable uncertainty about possible further development of Stansted airport if demand continues to grow in the more distant future. It will enable the BAA to purchase property that owners wish to sell in that wider area around the airport in the event that they find difficulty in selling to buyers other than the authority.
      Mr. Stanley Newens: The purpose of the clause is essentially to enable the British Airports Authority to acquire land for the expansion of Stansted airport. I accept that it is entirely right that when property is blighted by proposals for such a huge expansion as is envisaged by those proposing the extension of Stansted those who live in and own property within the area should be enabled to sell it at a fair price.
      That means that the developer must have the powers to acquire such properties, which would not be readily saleable at the normal market price to other would-be purchasers. I entirely accept that it would be grossly unfair to those living under the shadow of development at Stansted for a number of years to be deprived of the possibility of obtaining fair market value for their property for an indefinite period.
      However, the powers granted by the clause are sweeping. They appear to suggest, to some people who are concerned,

      1243
      that the outcome of the public inquiry is virtually a fait accompli. The Minister shakes his head. I am anxious to give him the opportunity to make it clear that that is not so, and to assure the House on the matter. Can he tell us that in no way does the clause indicate any presumption of approval of the BAA's plans for the expansion of the airport, as suggested by the Government?
      Mr. Tebbit: I am happy to give the hon. Gentleman that assurance. I give it to him in two parts. First, the making of the compulsory purchase order on the 1,500 acres does not presume the result of the public inquiry. Most certainly, the giving of power to acquire by agreement within the wider area does not assume anything about the basic public inquiry into the 1,500 acre proposition or to any further safeguarding for the future.
      11.15 pm
      Mr. Newens: I am grateful to the Minister for that clear statement. Many people in that area regard it as a travesty of democracy that, having gone through a long and involved fight ever a number of years a decade ago, they should again be required to take up the cudgels on this issue. It would make a mockery of the public inquiry if, as some people have been inclined to suggest, the decision had already been taken. For this reason, I welcome very much the Minister's statement.
      Certain other questions arise. I should like the Minister to address his mind to them. If the British Airports Authority acquires land, who will meet any loss incurred if the proposal to expand Stansted is eventually rejected? If permission for the expansion is not regarded as a foregone conclusion, I would be grateful if the Minister could explain the situation should the expansion not go ahead.
      I understand fully what the Minister says about the safeguard for people living in the area of the 1,500 acres. Will the Minister say whether the people living in the area of the further 2,500 acres, who find their property blighted, will be able to claim full market value for their property as would be the case, I understand, if the British Airports Authority sought planning permission for the area, as originally envisaged in the Secretary of State's statement on 17 December?
      1244
      Some of us understood that the British Airports Authority would apply for outline planning permission for the 2,500 acres in addition to the 1,500 acres. It would be helpful if the Minister could explain what has happened on the issue. If the people living in the area of the 2,500 acres feel that they will not receive full market value for their property, this area could suffer from some other effects of blight.
      Many farmers and residents who experienced difficulty getting full market value for their land might also take the view that it was not desirable to invest in their property because they would not get back in full the money so invested. A state of affairs might develop in which the whole area declined and became dilapidated in a number of respects.
      I must say frankly that the new clause has added considerably both to the disquiet and resentment felt in the area. As the Minister is no doubt aware, the NFU has already contacted a number of people, expressing concern. The whole sequence of events in Stansted gives rise to a great deal of cynicism on the part of many people living in the area. I should therefore, be grateful if the Minister would address himself, as he has already done to one of my questions, to the other points. His replies will be studied carefully by all those living in West Essex who are concerned about this important problem.
      Mr. Alan Haselhurst: I apologise for detaining the House at this hour, but it is not my fault that business has been so arranged that this extremely important item for my constituency—and indeed the nation—has come up as the last item in the business this evening and not the first item of business in a week's time. No hon. Member is more nearly affected by these particular proposals than myself and they are of great importance to my constituency.
      The new clause was forecast in an answer given by my hon. Friend the Under-Secretary on 31 March to a question I put down. I was grateful for the fact that the Government acknowledged that there was a case for helping those people whose properties lay in the extra 2,500-acre area which was being reserved for possible future airport development at Stansted should the first proposals pass the test of a public inquiry.

      1245
      I suppose that one should be careful about being over-grateful for statements that come from Front Benches. I do not mean to be unkind to my hon. Friend, but when one looks at the proposal before us it is perhaps rather different from that which many of us expected.
      My right hon. Friend the Secretary of State for Trade said in the House on 17 December that the Government's aim would be that
      "the owners of residential and agricultural property in this wider area should have the opportunity either of continuing to live or farm there, pending any possible requirement for this additional land, or of selling their property at an unblighted value to the BAA"."—[Official Report, 17 December 1979; Vol. 976, c. 38.]
      That raised certain expectations which might not have been completely explicit were it not for the fact that my right hon. Friend, in a letter to the president of the National Farmers Union, who happens to be a distinguished constituent of mine, said that he could only repeat that it remained his intention
      "that this area should be safeguarded from incompatible development and that those with property within its boundary should have recourse to the remedy of the statutory blight provisions as soon as is practicable."
      But when my hon. Friend the Under-Secretary, who is to reply to the debate tonight, answered my question on 31 March he was slightly less specific than that. It then became apparent that the powers which would be conferred on the BAA when a proposal was brought before the House would only be
      "to acquire by agreement land which may be required for airport development in future, but which is not immediately required for that purpose."—[Official Report, 31 March 1980; Vol. 982, c. 21.]
      We did not feel immediately alarmed that there was any deviation from the intention that had been more expressly stated by my right hon. Friend on those previous occasions. But it is now clear that the new clause leaves something to be desired, at least in relation to people's fears about how the BAA will employ its powers. It would be helpful if my hon. Friend could give some reassurance on that tonight.
      The new clause goes very wide. Everything seems to be left to the good will of the BAA. It is for its decision whether one house as opposed to another is to be purchased. A case has already been re-
      1246
      ferred to me concerning contiguous properties where the BAA is prepared, apparently, to buy one but is not prepared to buy the other although the other lies a mere 85 yards outside the boundary of the designated 2,500 acres and in full view of the airport. One is worried about how the BAA will approach this matter.
      Disturbing stories are coming through to me. I am getting first hand accounts, though, obviously, one allows for a degree of exaggeration because the people who are telling these stories are directly concerned with the imminent loss of their property. They face the loss of homes which are of great emotional and sentimental value to them and in the case of farmers they are people whose livelihood has depended upon the possession of the property.
      Different stories are told, but they cast a worrying light on how the BAA will behave. One hears that the BAA offers tempting sums with the implication, not always too well hidden, that unless the property owner settles now it will be worse later if he has to take a chance when statutory blight provisions may apply. That is a threat. Other stories tell of the BAA offering a less than adequate sum and saying "If you do not accept the price suggested, you must take your chance in the future." If that is the way in which the BAA is behaving in respect of the inner 1,500 acres it is legitimate to have doubts about how it will handle the issue when it is given powers over the 2,500 acres areas.
      Mr. Clinton Davis: Has the hon. Gentleman challenged the British Airports Authority? Is he relying on rumour or guesswork?
      Mr. Haselhurst: I appreciate the question. I am in the process of checking some of the allegations with the chairman of the BAA. I have referred other cases to the Secretary of State. I have had direct, first hand accounts from constituents which I am investigating. I qualified my remarks by saying that I allowed for people who are emotionally involved exaggerating. I accept the word of my constituents, some of whom I know well. They are not the type of people who would mislead me about such an issue.
      Mr. Clinton Davis: Would not it have been better to have checked today with

      1247
      the BAA before raising the matter in the House?
      Mr. Haselhurst: I have not had replies from inquiries which I instigated several days ago with my right hon. Friend and the chairman of the BAA. Tonight we are conferring powers on the BAA and I am entitled to air the worries of my constituents on the Floor of the House. It would be deplorable if I were to be in any way curtailed in so doing. I have tried to do it in the most moderate way possible, allowing for the possibility of an element of exaggeration.
      People are entitled to know what the future will hold. There appears to be no recourse for someone who disagrees with the BAA on an assessment of value. If, in 1983–84, unblighted values have to be assessed, the wisdom of Solomon will be needed to achieve a fair deal.
      People in my constituency are asking what the BAA is up to, requiring 2,500 acres extra for possible airport development when an airport such as Heathrow is contained within much narrower confines. When they learn that the BAA's intention is to develop sites for car parks and hotels, by taking land now at a not yet determined value, and re-letting that land at a higher price to the people who will build the hotels and car parks, they raise pertinent questions about the confiscation value of their land. That is fair and justified.
      We must know more about the level of compensation before we confer powers on the BAA. There should be a requirement in legislation to ensure some type of appeal or recourse to arbitration. Part V of the Land Compensation Act 1973, which deals with the extension of classes of blighted land, might be applied to the 2,500 acre provision to give access to the Land Tribunal.
      There is also the Agriculture (Miscellaneous Provisions) Act 1963 which, in section 22, provides allowances for persons displaced from agricultural land, That would give people the right to full disturbance costs. At present, my constituents do not know whether they have any grounds to contest a value put on their property by the BAA and they do not know whether they can safeguard their interests if they once say "No".
      1248
      11.30 pm
      There seems to be no reasonable compensation held out to them. In the earlier statements of my right hon. Friend I had assumed that there was to be parity of treatment for the people in the second stage development area as compared with the first stage development area. I believe that they should be given some kind of safeguard against arbitrary behaviour by the BAA. It may be difficult for people to understand that the BAA will be regarded as being other than kind and munificent. I am sure I love all of the senior executives I have met like brothers. But there is a long history in my constituency of battling away on the Stansted issue. It goes back 20 years.
      There is a deep suspicion of civil servants, Ministers and now the BAA. There is the feeling that there has been a ganging up against them, that some people somewhere—it is hard to specify—have always intended that Stansted should be the designated site for a third London airport. Against this background of suspicion, can my hon. Friend wonder that people raise their eyebrows and start to peer at this legislation and say that it is not adequate because it does not give safeguards?
      I hope my hon. Friend will understand why the feelings of people are outraged and will not seek to pile insult upon injury, the injury they feel that Stansted has again been chosen despite two previous public inquiries deciding against it. I hope my hon. Friend will do all that he can to ensure that, if people are to be dispossessed of their homes and livelihoods, they are dispossessed on the most honourable, equitable and fully compensated terms.
      Sir Derek Walker-Smith: I shall be brief and I shall be aided in that objective by the fact that many pertinent queries have been raised and relevant points made in the two excellent speeches to which we have just listened. I do not intend to repeat the arguments on the general question of the propriety of making Stansted a third London airport, which I was privileged to deploy in some detail in the debate in this House in February.
      The hon. Member for Harlow (Mr. Newens), in the course of an informed

      1249
      and admirable speech, referred to the disquiet and resentment which this new clause arouses in the area which he and I and my hon. Friend the Member for Saffron Walden (Mr. Haselhurst) represent. For myself, in the classical Churchillian phrase in another context, I find no difficulty in confining my enthusiasm for the new clause within the bounds of decorum. It is certainly a curious clause in its drafting and content. The new clause extends the powers for the acquisition of land conferred by the Airports Authority Act 1975. Those powers are already wide, and include powers of compulsory acquisition.
      There is no objection to such powers if they are for a proper objective, having regard to the fact that the powers of compulsory acquisition are subject to the proper safeguards of the Acquisition of Land (Authorisation Procedure) Act 1946 and the Compulsory Purchase Act 1965. In the case of compulsory acquisition there are statutory procedures concerning proper compensation and the judicial assessment thereof by the Lands Tribunal, to which my hon. Friend referred as not being available in the case of this clause.
      The Minister will correct me if I am wrong, but my recollection is that the reference to the Lands Tribunal is one of the provisions expressly excluded in the 1975 Act to which this new clause is an addition. As to the powers to acquire by agreement, there is nothing to object to in those if the acquisition is for the proper functions of the authority, as statutorily defined. But is it? That is where the doubt and the difficulty come in in respect of the clause. What it does is to empower the authority
      "to acquire by agreement any land…which in the opinion of the Authority"
      —not a good phrase to find in any statute—
      "may be required for any such purpose notwithstanding that it is not immediately required".
      What purpose is there referred to? The purpose is any purpose connected with the discharge of the authority's duties under the Airports Authority Act 1975.
      To see what those duties are one must go to section 2(1) of the 1975 Act. They are defined as:
      "to provide at its aerodromes such services and facilities as are necessary".
      1250
      That is the exent of the duty. Therefore, that is the extent of the power of acquisition. Any attempt to go beyond that might be ultra vires and would be restrained by the courts in their jurisdiction of judicial review.
      I ask my hon. Friend the question: how can such a duty exist when there is no aerodrome and may never be an aerodrome? If he looks at the language of the Act and considers it correctly, I think he will find himself ineluctably, and perhaps unwillingly, impelled to that conclusion. Therefore, I say reluctantly that this new clause is at best a dubious exercise of the draftsman's art and may well come unstuck in the courts if legislative effect is given to it.
      Mr. Tebbit: I always listen most carefully to what my right hon. and learned Friend says, but do I understand him to be making his point in relation to Stansted? To the best of my belief there is one of the British Airports Authority's aerodromes at Stansted.
      Sir D. Walker-Smith: There may be an airport existing there, but the section says
      "to provide at its aerodromes such services and facilities as are … necessary"
      to the aerodromes there existing, not to some putative, hypothetical, visionary airport of the future. That is where the difference lies. My hon. Friend must consider that aspect.
      After all, this curious power—it is a curious power, however one looks at it—is given for a fairly obvious reason—that is, to strengthen the British Airports Authority's hand in presenting Stansted and its land-take requirements res judicata, as a decision already taken in substance if not in form. It is that which arouses the disquiet and resentment which has been exhibited in the speeches which we have been privileged to hear so far. It is to assist the airports authority in getting the citizen to part with the land necessary for a third London airport which may never come into being and, of course, to spread the impression of its inevitability and, by the acquisition of large areas of land, to strengthen the case for the selection of Stansted as the third London airport on the grounds that there is the site all ready and waiting and equipped and that it should not be wasted.
      Mr. Clinton Davis: My understanding was that a number of people who were opposed to Stansted were nevertheless in favour of the provision that the Minister has introduced. Is the right lion and learned Gentleman saying that, since there is to be an inquiry—and it is absurd to say that anyone can pre-empt the result of it—he would rather not have the provision?
      Sir D. Walker-Smith: The hon. Gentleman must grow up, if that is not an infelicitous and disrespectful term to use to so experienced a parliamentarian as himself. Obviously if one is able to tell the inquiry that the whole of the land is already in the ownership and occupation of the BAA that will carry great influence. It would need counsel or a solicitor of much less forensic ability than the hon. Gentleman to make that case, to point to the 1,500 acres and the 2,500 acres and ask "If you turn this down, what will happen to all this? Where are the procedures for the authority to disembarrass itself of all this land if the judgment goes the other way?" There are no such procedures. Obviously, to have the larger part of the site in hand at the time of the inquiry would be an immensely persuasive and pre-emptive factor which ought to be avoided.
      I fear that this new clause will be used by the BAA to smooth-talk my constituents and those of my hon. Friends and the hon. Member for Harlow into parting with their land when there is no real duty or necessity for them to do so because the third London airport project may never come about. If they are wise they will refuse to part with their land until a full and formal permission for the third London airport exists after detailed scrutiny by the salutary processes of public inquiry and cross-examination. That may well not be until the Greek calends—it may be never. Meanwhile, there is this grave apprehension in the locality alike as to the motives behind the clause and to its likely effect. I, too, am grateful for what my hon. Friend has said by way of reassurance, and that, so far as words can go, is helpful. However, I remind my hon. Friend of the old legal principle that a man is presumed to intend the natural consequences of his acts, and if the natural consequence of the new clause is to assist the pre-emption and prejudgment of this decision, it will
      1252
      not have served the purpose that we would have wished.
      Mr. Robert Rhodes James: I intervene briefly to emphasise to the House that my opposition to Stansted began long before I became an East Anglian Member of Parliament. I was the author, in a previous incarnation, of a report of the Estimates Committee in 1962 which led to the establishment of the London Airports Authority. We investigated very carefully the prospect of Stansted and considered that the arguments for it did not justify it as the third London airport. Having been involved in the matter ever since I find that the doubts that we felt in 1962 have only been confirmed. I emphasise that I held these views long before I became an East Anglian Member of Parliament.
      My right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) emphasised the legal aspect of the new clause. The powers that are given to the BAA under the clause, and particularly the words
      "notwithstanding that it is not immediately so required",
      seem to be a regrettable extension of the implication that Stansted will be the third London airport, and that those people who live in the area would be best advised to settle as soon as they can.
      I take a much stronger view on this than does my hon. Friend the Member for Saffron Walden (Mr. Haselhurst). I am implacably opposed to the development of Stansted as the third London airport. I do not even accept the stage 1 proposals. I am strongly opposed to stage 2. Beyond that, the clause gives the authority a degree of power, before we reach the public inquiry, which I regard as regrettable. In those circumstances I propose to vote against the clause.
      11.45 pm
      Mr. Tebbit: I do not often feel hurt as a politician, but if it is not desired that people should have the right and the ability to sell to the BAA when they cannot sell to anybody else because of the proposition to build an airport at any place in the United Kingdom, whether it be Stansted, Severnside or Foulness, and if my hon. Friend the Member for Cambridge (Mr. Rhodes James) is saying that he implacably opposes the ability of the authority to ease the problems of those

      1253
      suffering blight either in its layman terms or in its specific legal term, and that he will oppose their right to sell to the BAA, I could be tempted to seek leave to withdraw the clause. I wonder how happy those who live in the constituency of my hon. Friend the Member for Saffron Walden (Mr. Haselhurst) would be if I sought leave to withdraw the clause, which I have tabled only at their specific request through their Member of Parliament.
      The hon. Member for Harlow (Mr. Newens) asked who would meet any loss on the property were the inquiry to come down against the Stansted proposition and the property was required to be sold back. That question does not arise solely about the 2,500 acres to which the clause relates, but to the 1,500 acres, and to any other compulsory purchase order, whether it be for an airport or for some other purpose. It would be for the authority to decide whether it sold back, how it sold back and when it sold back. On its head would fall the loss, if there were any loss. I would be intrigued to find anybody who had lost money in buying and selling property over a period of years in that part of Essex. I do not think that the BAA or the Treasury need sleep uneasily over the prospect of losses arising. If they did, it would be a matter for the authority.
      Sir Derek Walker-Smith: Would not that point be powerfully deployed by counsel appearing for the authority at the inquiry? Would he not make a powerful submission that, unless the permission were granted, there may be a loss to public funds by reason of the inability to sell back at as high a price as that at which the authority bought?
      Mr. Tebbit: Of course counsel might make the point powerfully, as counsel often do, but I doubt whether anyone would believe him.
      Mr. Clinton Davis: Is it not equally right that counsel taking the other side would tell the inspector that he need not take account of that? Is not the inspector well equipped as a person of independent judgment to make a true assessment of the position?
      Mr. Tebbit: The point that I was making to my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) was not that
      1254
      it would not be said and not that it would not be true that, if there was a loss, it would fall on the BAA, but that nobody would believe that there would be a loss. I am sure that my right hon. and learned Friend will not try to kid me into thinking that people are making massive losses on property that they bought five years ago either in East Hertfordshire or around the area of Stansted or Essex generally. He must be pulling my leg, and any inquiry would assume that any learned counsel, however powerful, who made that case would be pulling its leg.
      Mr. Newens: I entirely accept the hon. Gentleman's point that one is unlikely to make a loss on land of that sort, but the point lying at the back of this—the Minister will recognise it—is that we wish to probe very deeply to find out whether there is a presumption that the British Airports Authority will be able to get its permission granted on that area.
      Does the British Airports Authority intend to purchase merely properties which are offered for sale by people who wish to move out of the area on finding that it is blighted, or does it intend also to go around seeking to acquire as much property as it can and persuading people to go?
      Mr. Tebbit: I assure the hon. Gentleman that with the sort of cash limits under which the BAA is working, it will not go out of its way to try to purchase anything that it does not have to purchase. I also assure him that there is no presumption whatever in this piece of legislation or anywhere else about the result of the inquiry none at all.
      I am very sorry indeed that this has caused concern to people. My sole concern in bringing it forward has been to help residents of the area around Stansted. My life would have been much easier had I not brought this forward. The life of the BAA would be much easier if it did not have the power to purchase these properties and it could merely say to people who complained to it, "Sorry—no powers". It would make life much easier for it. It would make life much easier for me if I did not upset my hon. Friend the Member for Cambridge by trying to assist the constituents of my hon. Friend the Member for Saffron Walden. It really would be much easier and I

      1255
      would not have to be up at this hour of the night.
      Mr. Rhodes James: I am very sorry if I hurt my hon. Friend, but my point relates specifically to the words
      "notwithstanding that it is not immediately so required".
      That is my objection to his proposal, not to the general efforts he has made on behalf of my constituents and those of my hon. Friend. the Member for Saffron Walden (Mr. Haselhurst). Those are the words which worry me, and if the Minister can appease me on that aspect I shall be happy to support him.
      Mr. Tebbit: I should like to appease my hon. Friend, but there is no way of getting round the fact that the area of land in the 2,500 acres is not immediately required. It may never be required. How can I get round the problem of making it possible for the BAA to purchase from people who cannot sell other than by the use of a phrase of this sort?
      My hon. Friend the Member for Saffron Walden was, as always, most proper and reasonable in everything he said about this matter. I can assure him that as soon as practicable the persons concerned within the 1,500 acres will have the protection of the statutory blight provisions.
      As to those within the 2,500 acres, if it becomes practicable to give the protection to them, by all means it will be given. But it would not be practicable to do that at this stage, in advance of the inquiry; to do so would be to presume to too great an extent. It would, for example, require that my right hon. Friend the Secretary of State for the Environment would have to issue a direction, under article 10 of the Town and Country Planning (General Development) Order 1977, restricting the grant of planning permission in the area. That would attract the relevant statutory blight provisions, but the House might have some comment to make if I were to announce this evening that he was doing that in advance of the inquiry. People might suggest that perhaps we were running just a little fast at this stage in the proceedings.
      Mr. Haselhurst: My hon. Friend acknowledges that I have not been challenging the spirit of the new clause. I am looking merely at the level of compensa-
      1256
      tion that is likely to flow from it and at the rights of my constituents in the event of non-agreement. That is not covered by the new clause. Will my hon. Friend say whether either of the statutes I mentioned could apply and might, therefore, help to assure my constituents on the level of compensation?
      Mr. Tebbit: I do not think that I could do that at this stage in relation to the 2,500 acres. In the 1,500 acres, as my hon. Friend knows, once the compulsory purchase orders are made, if there is a difference over the question of compensation the matter might be taken to the Lands Tribunal. But that would not be the position in relation to the 2,500 acres. As the sales would be by agreement, the price would be a matter for negotiation between the parties. I understand that the BAA would expect to pay a price that would be the market value of the property based on its current use and excluding any possible adverse effects of the proposed airport development. But I do not think that it would be possible without presuming too much in other areas to initiate statutory blight provisions at this stage.
      I think that the best thing that my hon. Friend's constituents can hope for—indeed, that we can all hope for—is that the procedures of the inquiry will not be unduly prolonged, and therefore, one way or another, an answer will come which will give them some relief—either the relief of being able to resort to the statutory blight provisions, or, alternatively, the relief of knowing that their land will not be taken for the airport development.
      My hon. Friend was very fair in what he said about the difficulties of which he had heard. He pointed out that some of the stories were of themselves contradictory. They suggested that the authority was either offering high prices to bludgeon people into doing things that they did not want to do or offering low prices to bludgeon people into doing things they did not want to do, and that both stories were unlikely to be correct. I take the view, however—and I think that this is my hon. Friend's view—that it is not surprising that people who see the countryside in which they have lived for a very long time threatened with change, change which might completely obliterate their homes under an airport,

      1257
      are liable to be emotional. It would be very surprising if they were not emotional about these matters. Therefore, they are almost bound to see most moves by the BAA and by the Government, and myself and the Secretary of State in particular, as having some dreadful, devious intent, even when all of us are doing our best to assist.
      There is no proposition from the BAA to acquire more land than is needed. I do not believe that the BAA is in any way attempting to prejudge the results of the inquiry. Certainly the Government are not doing so.
      I turn to the remarks of my right hon. and learned Friend the Member for Hertfordshire, East. As I have said, I am very careful before I tangle with lawyers of his distinction. I am sorry that he does not like the drafting of this clause. I have not checked on the veracity of this, but my advisers tell me that it was modelled upon the Town and Country Planning Act 1959, the Local Government Act 1972, the Water Resources Act 1971 and the Transport Act 1962—all of which, I believe, are the very bread of life to my right hon. and learned Friend; the Town and Country Planning Act being almost literally so. I hope that I have not been wrongly informed.
      Sir Derek Walker-Smith: Any modest competence which I am able to earn in my professional activities derives in no small measure from the imprecision and ambiguity of legislation.
      Mr. Tebbit: My right hon. and learned Friend is right. But we mere laymen who attempt to legislate frame our legislation very carefully on words which are suggested to us and in a form which is suggested to us by lawyers in our Departments.
      I do not know whether there is some unholy alliance between the lawyers in our Departments and those outside who subsequently make their living by disputing the meaning of the words which our lawyers help us to put into legislation. I hope not.
      12 midnight
      It is not true to say that this is being done to strengthen the BAA's hand. The purchase of this land is necessary not for the BAA's purpose but for the purpose of those who are at present unable to sell.
      1258
      My right hon. and learned Friend may take the view that for people to sell their land at this stage to the BAA is collaboration with the enemy. He is free to take that view and to advise people not to sell. But it is right that I and the House should make it possible for people to sell to the BAA should they wish to do so. At present the BAA does not have those powers.
      One criticism is that the powers are widely drawn. They have to be, or they would be useless. Another is that they do not go far enough. If they went any further we should be in danger of being held to prejudge the inquiry. I believe that we have struck the right balance in doing something to assist particularly the constituents of my hon. Friend the Member for Saffron Walden.
      I am sure that there will be disputes because people may rightly feel that they do not want to move; they have a great attachment to their homes. They may feel that its value to them is greater than the price that the authority is willing to offer. That is almost inevitable on occasions of this sort. I hope that the authority will not be mean in its view of the market value of a home. That would not be right. But equally we could not press the BAA to buy properties for more than they were genuinely worth, had the airport not been proposed.
      We know that this provision is not perfect. We know that much pain is involved for those in that area, but there would have been much pain for those involved in the area of a new airport wherever it had been put. We should have had to bring forward something of this sort to deal with that problem for the people of Foulness, Stansted or Severnside. I commend this modest assistance to those people at Stansted and any other site which might ever be selected.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    New Clause 3

      CHARGES PAYABLE TO CIVIL AVIATION AUTHORITY
      '(1) Section 4 of the Civil Aviation (Eurocontrol) Act 1962 (charges for air navigation services) shall be amended in accordance with the following provisions of this section.
      (2) In subsection (1) (power to impose charges for air navigation services) for the words "regulations under this section" there shall be substituted the words "regulations under this subsection".
      (3) The following subsections shall be inserted after subsection (1A):
      "(1B) The Secretary of State may by statutory instrument make regulations:

      (a) providing for the payment of an annual charge, of such amount as may be prescribed by the regulations, to the Authority in respect of any aircraft for which there is in force at the time the charge becomes payable a certificate of airworthiness; and

      (b) requiring the Authority to refund so much of any such payment made in respect of an aircraft by any person as is equal to the amount which that person becomes liable (whether by virtue of regulations under this section or otherwise) to pay to the Organisation in respect of so much of any flight made by that aircraft as is made over the United Kingdom during the period of twelve months commencing with the date on which the payment to the Authority became due.

      (1C) Regulations under subsection (1B) of this section may—

      (a) impose liability for any charges payable by virtue of the regulations upon the operators or owners of the aircraft in respect of which the charge is payable; and

      (b) impose that liability whether or not the aircraft is registered in the United Kingdom and whether or not it is in the United Kingdom during the year in respect of which the charge is payable; and

      (c) include such incidental and supplementary provisions as the Secretary of State considers appropriate for the purposes of the regulations.".

      (4) In Subsection (2) liability for air navigation charges):

      (a) for the words "under this section" there shall be substituted the words "under subsection (1) of this section"; and

      (b) for the words "those services" there shall be substituted the words "the navigation services".

      (5) In subsection (3) (determination of charges):

      (a) for the words "any such regulations as aforesaid" there shall be substituted the words "any regulations under this section"; and

      (b) in paragraph (b), after the words "at such rates" there shall be inserted the word "or of such amounts".'.—[Mr. Tebbit.]

      Brought up, and read the First time.
      Mr. Tebbit: I beg to move, That the clause be read a Second time.
      This new clause need not detain the House long. It is hardly of the same
      1260
      real and emotional content as the one with which we have just dealt.
      The new clause will enable the CAA to establish a simplified scheme for charging for air navigation services which are provided to small general aviation aircraft in United Kingdom airspace. The scheme will apply to aircraft over 1·3 tonnes and under 5·7 tonnes all-up weight. Aircraft under the lower limit will as at present be exempt from any charges and aircraft over the upper limit will continue to pay the normal Eurocontrol rates. Aircraft within the designated band will pay an annual flat rate charge which will entitle them to unlimited use of air traffic services during flights outside regulated air space.
      This scheme has several substantial advantages. First, it will reduce the heavy administrative burden arising from the present system of charging each aircraft according to the number of occasions on which it uses air traffic services. Secondly, in many cases the annual flat rate charge will be significantly less than the total bill incurred by aircraft over the year under the current charging system. But, most important, the new scheme will promote increased safety of navigation. Under the existing regulations flights made under the visual flight rules are exempt from any charges and pilots are consequently subject to the temptation not to use navigational aids in conditions where they should do so, since they would thereby incur a charge. Under the new scheme this temptation will be removed. When I say "should do so", I imply that it is not a legal burden, but good airmanship suggests that they should do so.
      When aircraft in the designated weight band enter regulated air space they will continue to be liable for the usual Eurocontrol charge, but the flat rate charge which they will have paid already will be rebated accordingly. Foreign aircraft entering United Kingdom space will be able to opt for the new scheme as an alternative to paying the Eurocontrol charge.
      This proposal has the support of organisations representing aircraft operators, and I therefore commend it to the House.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    New Clause 4

      BORROWING POWERS OF THE CIVIL AVIATION AUTHORITY
      'For section 8 of the Act of 1971 (borrowing powers) there shall be substituted the following section—
      8.—(1) Subject to the following provisions of this section the Authority shall have power to borrow such sums as it may require for performing its functions.
      (2) The Authority's power to borrow sums in sterling otherwise than by way of temporary loan shall be limited to borrowing from the Secretary of State, or with the consent of the Secretary of State from the Commission of the European Communities or the European Investment Bank, any sums which the Authority may require for capital purposes or for fulfilling a guarantee entered into by the Authority.
      (3) Except as provided by subsection (2) above, the Authority may borrow any sums it has power to borrow under subsection (1) above from the Secretary of State or, with the consent of, or in accordance with a general authorisation given by, the Secretary of State, from any other person (and whether in sterling or in currency other than sterling).
      (4) The Secretary of State shall not give any consent or authorisation for the purposes of subsection (2) or (3) above except with the approval of the Treasury.
      (5) A statement in writing by the Secretary of State to the effect that the approval of the Treasury has been given for any such consent or authorisation shall be conclusive evidence of that fact in any legal proceedings.
      (6) The aggregate amount outstanding in respect of the principal of any money borrowed by the Authority under this section and the initial debt shall not exceed £200 million.'.—[Mr. Tebbit.]
      Brought up, and read the First time.
      Mr. Tebbit: I beg to move, That the clause be read a Second time.
      Again, this is a relatively uncontroversial clause whose purpose is to clarify the borrowing powers conferred on the Civil Aviation Authority by section 8 of the Civil Aviation Act 1971, and to increase the authority's borrowing limit from £125 million to £200 million. This clarification is necessary as a result of an amendment to section 8 of the 1971 Act by the Civil Aviation Act 1978, which did not fully take account of the provisions of the Statutory Corporations (Financial Provisions) Act 1975. The latter removed the restrictions on the CAA as to the source and the terms of its foreign currency borrowings.
      1262
      As presently worded, section 8 of the 1971 Act thus appears more restrictive of the CAA's borrowing powers than is the case. It is highly desirable that potential lenders of funds to the CAA should not be in doubt about the extent of the authority's powers to borrow. Therefore, the proposed clause makes those powers clear. It also simplifies the wording of section 8 of the 1971 Act.
      The new section 8 of the 1971 Act inserted by the new clause does not alter the terms of the CAA's borrowing powers, and it continues to provide that the Secretary of State's consent and Treasury approval of that consent are both required before the CAA may borrow.
      The proposed clause also provides in subsection (5) that a written statement by the Secretary of State to the effect that Treasury approval has been given to his consent to the CAA to borrow shall be conclusive evidence of the existence of Treasury approval. This provision is designed to ensure that lenders of funds to the CAA are not in any doubt about whether Treasury approval has been received. It should serve to eliminate unnecessary correspondence with lenders who wish the Secretary of State to assure them that Treasury approval has been obtained.
      Subsection (6) of the new clause increases the CAA's borrowing limit from £125 million to £200 million. This increase is required to cover the CAA's substantial capital investment programme over the next few years. The CAA's outstanding borrowing currently totals more than £100 million and the existing borrowing limit of £125 million is insufficient to carry it through 1981. The new limit of £200 million proposed by the new clause should permit the authority to meet its needs over the next four to five years.
      Subsection (6) of the proposed new section 8 no longer includes a technical provision, first enacted by section 5(1) of the 1978 Act, which enables the CAA to exceed its borrowing limit for the purposes of paying off the whole or part of the initial debt or any loan. This technical provision, which was needed to permit the authority, when close to its borrowing limit, to exceed temporarily that limit during the process of rolling over loans, is no longer required as a result of the proposed increase in the CAA's borrowing limit, and is consequently repealed.

      1263
      This new clause gives rise to three consequential amendments to schedule 3, part II.
      I commend this new clause to the House. The hon. Member for Hackney, Central (Mr. Davis) grappled with some of these problems, and I am sure that he, too, will welcome it.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.
      Further consideration of the Bill adjourned.—[Mr. Berry.]
      Bill, as amended (in the Standing Committee), to be further considered this day.

  SOUTH TRAFFORD DISTRICT HOSPITAL
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Berry.]
  12.11 am
  Mr. Fergus Montgomery: In the previous debate hon. Members have spoken in the interests of their constituencies. I am pleased to be able to raise, even at 12.11 am, a matter of great concern to my constituents—South Trafford district hospital. That project has been subject to a great deal of delay. I wish to discover why the hospital development has not been approved in principle by the Department of Health and Social Security. I hope that my hon. Friend can end the uncertainty in his reply.
  The first formal planning submission to the DHSS was made in June 1978. A revised stage 1 submission was made in May 1979. Further information in support of the submission was presented to the DHSS in March 1980. That information described in considerable detail the need and the nature of the proposed development.
  I understand that my hon. Friend the Minister for Health is undertaking a review of all major hospital developments awaiting approval in principle. He apparently has certain criteria against which the developments are to be judged. First, there is a proposed upper limit of 600
  1264
  beds for district services. Secondly, any consequential closures of small hospitals should be taken into consideration. If the South Trafford district hospital is judged against those criteria, the plans submitted will pass with flying colours. The total number of beds on completion would be 546, which is below the limit set. When phase 1 is completed, Denzell hospital with 19 geriatric beds will close. The premises of that hospital are on lease from the local authority. That lease is due to expire shortly.
  No other closures are envisaged because of the need to maintain and expand local provision for the elderly, the elderly severely mentally infirm and the mentally handicapped. Those facilities are in great need in the South Trafford area. Ministerial approval has not been forthcoming, and I am curious to know why the decision has been delayed by the DHSS.
  While the first formal planning submission was made to the DHSS in June 1978, the new hospital had been allocated a place in the regional health authority's capital programme as long ago as April 1976. It is more than four years since it went into the region's programme. At that time, the expected starting date for phase 1 of the scheme was 1980–81. By May 1980, the programme starting date had been put back to 1984–85.
  The further delay is attributable, in part, to the regional health authority's adjustments to its capital programme to take account of the present financial climate and the additional delay also reflects the lack of a positive decision by the DHSS which has effectively held up detailed planning throughout the past year. It is not without significance that the plan has been firm in all major respects since 1977 and therefore the subsequent delays cannot be attributed to changes of intention or any other local circumstances.
  I do not think that my hon. Friend the Under-Secretary or anyone else in the DHSS will deny the need for a new hospital in the South Trafford area. The project was being talked about in the 1960s, when it was felt that there was a need for a new hospital in the area.
  In the submissions made to the DHSS the main objectives were, first, to make good the considerable existing deficiencies

  1265
  in hospital beds and day places in Trafford; secondly, to reorganise the acute services on a more efficient and economical footing, so that ultimately they will all be provided at Park hospital and the South Trafford district hospital—all will be provided in the area made up by Trafford—and, thirdly, to confirm that certain services—maternity, accident and emergency services—will continue to be provided for South Trafford residents in Manchester hospitals.
  The need for the new hospital has been acknowledged by the RHA in its regional strategic plan of 1979 which stated that there was a well-defined need in South Trafford. It said:
  "Even with the enhanced capital programme now intended for the North-Western Region it is impossible to contemplate the total rebuilding of any district general hospitals in the foreseeable future. This means that the phased redevelopment of district general hospitals on their existing site is, for the most part, the only possible proposition. However, in one or two cases where there is a well-defined need (e.g. South Trafford) or where the existing general hospital is already very large (e.g. Victoria Hospital, Blackpool) additional district general hospital sites will be required."
  Nothing could be more clearly stated.
  The main alternative to the new South Trafford hospital would be to extend Wythenshawe hospital in Manchester, which would become a hospital of about 1,500 beds—a project that I should have thought would be totally at variance with the 600-bed limitation on size proposed by my hon. Friend the Minister for Health. The new South Trafford hospital is intended to complement the developing facilities at Park hospital in the constituency of my hon. Friend the Member for Stretford (Mr. Churchill) in meeting the major part of Trafford's future district hospital needs.
  I recognise that certain services will continue to be provided from Manchester hospitals, but the plan will remedy directly the existing gross deficiencies of provisions for the elderly and the mentally ill. Indirectly, it will enable local hospital provision to be made for the mentally handicapped, where none now exists, through the alternative use of existing small hospitals and it will put the provision of acute services on a secure footing for the future.
  The provision of a sound basis for acute services in South Trafford is a
  1266
  vital feature of the total plan, but the DHSS apparently finds it difficult to accept that feature of the plan. The debate about acute services has, in consequence, overshadowed and detracted from the force of the plan in recifying, at an early date, the acknowledged deficiencies in the priority services for the elderly and the mentally ill in Trafford.
  We have also to consider the question of cost. In 1978, when DHSS approval was first sought, the cost of phase 1 of the hospital was about £9 million. Today it stands at approximately £15 million. Costs will undoubtedly escalate alongside any further delays.
  Other excess costs, both direct and indirect, also derive from the uncertainty about future plans. For example, there are a large number of small acute hospitals in the Trafford area. Apparently it can be proved that the cost per inpatient day in an acute hospital with fewer than 50 beds is higher than in an acute hospital with over 300 beds. This is a measure of the relationship between fixed overheads—for services such as boilerhouse capacity, kitchen facilities, and so on—and the number of beds available.
  For example, the 29 acute beds of the Sale and Brooklands hospital could be absorbed within one ward of a larger district general hospital, with virtually no increase in fixed overhead costs. However, the cost of maintaining the Sale and Brooklands hospital for long-stay geriatric patients would reduce considerably. A use of that kind for the hospital and for other existing hospitals in the Altrincham area would be much more appropriate to their size and location within the community. On the regional average cost figures for 1979 it is estimated that, for example, the cost of operating Sale and Brooklands hospital as a geriatric unit, instead of an acute unit, would show a saving of about £210,000 a year.
  The absence of a decision about the South Trafford hospital inevitably leads to indecision elsewhere, since most of the plans for redevelopment of existing services are linked inextricably with intentions for the new hospital. This is of particular significance with regard to the small hospitals for which a change of use is planned. Like many of the hospitals in the North-West of England. they are old and in urgent and continuing need of

  1267
  renovation. The form of renovation adopted, however, will be different depending on whether the hospitals are to continue as acute units or are to be converted for long-stay purposes. Functional requirements are different, but, while capital investment must be maintained in the buildings if they are not to become dilapidated, the area health authority is not in a position, because of the uncertainty, to decide how best to invest.
  I believe that the residents in my constituency are the recipients of a patchwork hospital service. Some parts of that service will continue by design to be provided in hospitals in other areas. But the present situation whereby residents from Altrincham and Sale are having to use geriatric and mental illness hospitals in Knutsford and Macclesfield causes serious problems.
  I know of at least two elderly constituents who journey every week at great difficulty to Macclesfield to visit their respective spouses. It is a considerable journey for people who have no car and who have to make it by public transport. I cannot help feeling how much easier it would be for them if there were suitable hospitals in the South Trafford area.
  The provision of those and other related services on a properly integrated basis within Trafford is bound to produce savings for the National Health Service, but, more important, a new South Trafford hospital will bring with it direct social benefits of a kind envisaged in the recent DHSS proposals, "Health Services—The Future Pattern of Hospital Provision in England". For the first time the people in the South of Trafford will have a central point of focus for their hospital services, and their existing hospitals, which are so well supported by voluntary effort, will largely continue in use.
  The new district hospital would not serve only the people who live within the boundaries of South Trafford. It would also be of great value to the people living in the area of North Cheshire. Both Trafford council and the community health council have welcomed the prospect of a new hospital. No doubt they both realise that it will mean the provision of truly integrated health and social services within Trafford.
  1268
  In a foreword to the consultative paper on the hospital services, my hon. Friend the Minister for Health says
  "In the past Government has tended to prescribe a single basic pattern for the whole country. This is both unrealistic and undesirable. Different circumstances demand different solutions. Our aim is to establish a set of broad policies acceptable to the professional and other interests concerned and then to give health authorities the greatest possible discretion within these policies and within their financial allocations to arrange their services in the way best suited to their local circumstances."
  The area health authority and the regional health authority are in agreement that their financial resources should be used to build a new hospital in South Trafford. It has been shown that the hospital would comply with the broad policies of the DHSS. I feel, therefore, that the case is unanswerable. I hope that my hon. Friend, in his reply, will be the bearer of good news and give us in South Trafford the signal to go ahead with this scheme.
  12.26 am
  The Under-Secretary of State for Health and Social Security (Sir George Young): I am glad to have the opportunity of debating an issue which, I know, is of concern to the constituents of my hon. Friend the Member for Altrincham and Sale (Mr. Montgomery). He put his case eloquently and displayed a deep knowledge of health issues in his constituency, as those who know him would expect.
  I hope that I shall be able to cover all the issues which my hon. Friend has raised, although I think I should say at the outset that I shall not be able on every point to give the definitive answer which I believe he would like to hear. There are good reasons for this, however, as I hope to show.
  My hon. Friend has emphasised that there is a need for a decision to be made urgently on the proposed South Trafford district general hospital so that the starting date envisaged by the North-Western regional health authority of 1984–85 can be achieved. He suggested, politely, that discussions between the Department and the region have been unnecessarily protracted without reaching any firm conclusions.
  I should like to answer this point first by going back for a moment over the

  1269
  history of the scheme. As my hon. Friend knows, a development in South Trafford has been under discussion for many years. Late in 1976, it was agreed that the region would prepare proposals for a new hospital there to be submitted to the Department. This submission was received by the Department about 18 months later, but, because of doubts about the scheme which had been proposed, this was withdrawn by the region and a second submission was made in May 1979. Since then, discussions have continued between the Department and the regional health authority with the aim of resolving a number of fundamental problems associated with the scheme which still remained.
  These discussions merged into the review of hospital schemes initiated earlier this year by my hon. Friend the Minister for Health and to which my hon. Friend referred, and my officials gained the impression that the region had decided to regard the South Trafford scheme as non-urgent and, indeed, had taken it away to consider it afresh. However, I now understand that this is not the case and that discussions are to be resumed in the near future in the wider context of the long-term strategy for health services in Greater Manchester.
  Before turning to the specific problems which I have mentioned, I should like to set the scene briefly by relating the services in South Trafford to those in what has been called inner Greater Manchester. The Trafford area health authority lies to the West of the city of Manchester and contains two main centres of population, divided by the River Mersey—Stretford and Urmston in the North, and Altrincham and Sale in the South. The Trafford metropolitan district to which the area health authority corresponds is an amalgamation of a number of metropolitan boroughs and urban districts in Cheshire and Lancashire, and, unlike most of the Greater Manchester authorities, lacks any historic identity.
  The 1981 hospital planning or catchment population for the Trafford area is estimated by the regional health authority as 220,000. For hospital purposes, the area divides into two main parts which are defined by the distribution of the population and the lines of communication. Historically, geographically and socially, the two parts are quite distinct
  1270
  and communications between them are relatively poor for an urban area.
  The northern portion looks for its services to the Park hospital at Davyhulme, which at present has 360 acute beds and is being developed into a district general hospital over a period of years. The RHA's capital programme includes schemes to add geriatric beds and beds for the elderly severely mentally infirm, which will bring the total number of beds to just under 500. There is no major hospital centre at present in the South of the area and some services are provided by a number of small local hospitals.
  There are 164 acute beds at Altrincham general, the Sale and Brooklands memorial hospital and St. Anne's ENT hospital and 38 geriatric beds at Denzell hospital and Ashton-under-Mersey. The residents of South Trafford receive a substantial part of their acute services from Wythenshawe hospital in the South district of Manchester AHA, including maternity, accident and emergency and children's services for which there is no provision in South Trafford itself.
  As my hon. Friend pointed out there are no mental illness beds in South Trafford and no geriatric beds other than the 38 which I have mentioned. Mental illness beds for North and South Trafford are at the newly upgraded Bridgewater hospital, which is in the Salford area but is managed by the Trafford AHA. Bridgewater also has geriatric beds, but I understand that these are at present used mainly by North Trafford residents.
  The area as a whole exports 50 per cent. of its geriatric cases to Withington and Wythenshawe hospitals in south Manchester and 20 per cent. to the Merseyside region. South Trafford probably accounts for the bulk of these exports. But although patients are going to hospitals outside their own area there can be no doubt that relative to the region as a whole the population of Trafford enjoys a high level of service. Some of the hospitals which receive them are relatively close by.
  As my hon. Friend has pointed out, the case for siting a new hospital in South Trafford rests most importantly on the need to remedy these deficiencies in geriatric, ESMI and mental illness provision in the area as a whole. I recognise the strength of local support for these

  1271
  objectives and regard them as entirely acceptable in themselves.
  Let me say at once that I fully accept in principle the need to site these services locally and to provide, so far as is possible, acute geriatric and mental illness services in the same location as other acute specialties. I recognise that the RHA's plans to include 100 geriatric and ESMI beds, together with 80 day places in all, in phase 1 of the development would represent a substantial step towards remedying the gaps in provision. I am also aware that its proposal for 150 mental illness beds and 170 day places in phase 2 would enable the needs of the whole Trafford area for mental illness facilities to be met. My hon. Friend the Member for Stretford (Mr. Churchill), has also approached me on this subject.
  I should like to confirm that the ultimate size of the new hospital as envisaged by the RHA does not conflict at all with our recent thinking on hospital size. At 489 beds, it is well within the range that we regard as viable.
  When all this has been said, however, it is necessary to consider in a wider context the region's wish to accord high priority to a new hospital for South Trafford. It must be seen, first, against the background of the RHA's own declared strategy and in the light of the implications for other parts of the region of committing £12 million to a major capital development in this location. Secondly, any solution for South Trafford must find its place in the overall strategy for the inner part of the conurbation.
  Finally, the number of closures which in the long term would result from the opening of the new district general hospital indicates that all the available options must be given the most careful consideration before being rejected. I will take each of these points in turn.
  As I am sure my hon. Friend will agree, the pressures facing the North-Western region are considerable. The region has inherited some of the oldest hospital buildings in the country. Two-fifths of them were built before the turn of the century and more than half before 1918. There are also pockets of serious under-provision in particular services and particular localities. Some of the worst deficiencies—as in South Trafford—are
  1272
  in services for the elderly, especially those suffering from severe mental infirmity, and the mentally ill, and in facilities for the mentally handicapped.
  Looking at the region as a whole, it is clear that in some places there are deficiencies almost right across the range of services. The strategic plan which the regional health authority published in July last year sets out a comprehensive programme for putting these deficiencies right. The region's declared aim—which I entirely commend—is that the filling of outright gaps in the level of services must command the highest priority, and that improving the location of services and replacing old buildings—desirable though both of them are—must take second place.
  Against this background, it must be borne in mind that Trafford is the only area in the region which is significantly over-funded in relation to its resource allocation working party target. The proposed development would have the effect of giving priority to injecting extra resources into the area, while the residents of other areas face deficiencies in their services across the spectrum. I should need, therefore, to hear more convincing arguments than I have yet heard that relocation of beds in South Trafford is so vital in relation to the level of services which the residents at present receive, whether within the area or in South Manchester, that this priority can be regarded as equitable. After all, it is on the same principle of equity that the north-western RHA as a whole benefits under the RAWP arrangements in relation to the South-East.
  I have already indicated that I find persuasive the case for developing geriatric, mental illness and ESMI services in the long run within the Trafford boundaries. Nevertheless, at a time when resources are constrained, developments which are desirable in themselves cannot all be given equally high priority. I am less clear about the region's plans to provide 140 acute beds—196 after phase 3—at the proposed hospital. The over-provision of acute beds compared with a shortage of long-stay facilities in Manchester is a well-recognised and thorny problem to which there are no easy or short-term answers. In my view, it can properly be considered only in the context of the strategy for the health

  1273
  services of the conurbation. I am therefore asking my officials to take forward, as a matter of urgency their discussions with the region on the future of Greater Manchester.
  I turn to the question of closures. I must say that I feel some disquiet on learning that six or seven small hospitals would ultimately close as a result of opening the proposed district general hospital.
  Mr. Montgomery: Which hospitals will be closed if the new district hospital is given the go-ahead?
  Sir G. Young: I obtained the information from the RHA which will have the list of the six or seven hospitals which, in its view, will have to close. I shall ensure that my hon. Friend has that list as soon as possible.
  On the face of it, this seems to run counter to our thinking on the development of hospital services, and I would certainly wish to be assured that all possible options had been explored before I could approve the South Trafford development as presently envisaged. Such options would include the possible development of community hospitals in the area and of other hospitals outside the area but accessible to Trafford residents. These are all matters to which I would expect the Department to give thorough consideration.
  1274
  I realise that my hon. Friend the Member for Altrincham and Sale may find some, indeed most, of my answers disappointing, but I am sure he will agree that the commitment of £12 million can be approved only after thorough consideration, taking into account the broader aspects of Health Service policy which I have outlined.
  To sum up, the issues which I am having explored as a matter of urgency are these. First, has the South Trafford scheme been given the priority which is merited by the relative needs of Trafford as compared with other areas in the region? Secondly, to what extent do the RHA's proposals make sense in the context of a strategy for Greater Manchester, taking into account the convenience to patients of crossing area boundaries? Thirdly, do the concomitant closures make sense? I have asked for the review of the long-term strategy for Greater Manchester to be carried out with all possible speed.
  I agree about the need to resolve the uncertainty and blight that further delay would cause. My hon. Friend has served a useful purpose in outlining the consequences of continued indecision. My Department will do all that it can to come to a decision on these vital issues as quickly as possible.
  Question put and agreed to.
  Adjourned accordingly at twenty-one minutes to One o'clock.

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  Whales
  Whales

Preamble
The House met at half—past two of the clock: The DEPUTY CHAIRMAN of COMMITTEES (The Earl of Listowel) on the Woolsack.
Prayers—Read by the Lord Bishop of Norwich.

HEALTH AND SAFETY EXHIBITIONS
Lord CROOK: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what provision is being made, following the closure on 30th June of the Health and Safety Centre in Horseferry Road, for the exhibition of important material about health and safety in industry, commerce and offices.
The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie): My Lords, the Health and Safety Executive will continue to participate in a wide range of industrial, commercial and safety exhibitions and to use other effective means of disseminating health and safety information including publications, films and other promotional activities.
Lord CROOK: My Lords, while thanking the noble Earl for a reply on a subject different from that to which the Question was addressed, may I ask whether he is aware that there has been an exhibition there on which Members of this House have relied for 53 years?
The Earl of GOWRIE: My Lords, the Government recognise that it is important that the Health and Safety Executive should continue to make information available to employers, employees and other groups, and information will continue to be made available. It was not felt, however, that this particular exhibition centre was cost—effective.
Baroness SEEAR: My Lords, is it impossible for the noble Earl to think again about this matter? Is he aware that this museum has been used most effectively for training in industry and for training students from all over the country for many years? It is a quite invaluable exhibition, the loss of which will be greatly regretted.
The Earl of GOWRIE: My Lords, I join the noble Baroness in paying tribute to the work the centre has done. Nevertheless, it is a very expensive business and it is the view of the Health and Safety Executive that they can continue with the dissemination of necessary information without this annual charge, which is rather in excess of £200,000 a year.
Lord WELLS-PESTELL: My Lords, is the Minister aware that my noble friend Lord Crook has a particular interest in this matter, in that he was associated with this organisation for a great many years?
The Earl of GOWRIE: I am aware of that, my Lords, and that is one reason why I paid tribute to the work the centre had done; but we must remember that any monies that can be saved by the Health and Safety Executive in this area can be deployed by them in other areas where they themselves judge they may be cost-effective.
Lord BRUCE of DONINGTON: My Lords, can the noble Earl give the House some idea of the criteria which were used to determine whether this centre was or was not cost-effective?
The Earl of GOWRIE: My Lords, the Health and Safety Executive, like all Government bodies, have had to recognise the public expenditure constraints under which they must operate, and within those constraints they have to decide what the most effective provision for their work may be. As I said, the Health and Safety Executive came to the conclusion that they could deploy resources more effectively than in the Horseferry Road Centre.

SAFETY SIGNS: DISPLAY OF POSTERS
2.40 p.m.
Lord CROOK: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will arrange for display in the Library of the House of the four posters just published showing the 23 standardised safety signs for EEC countries adopted with effect from 1st January 1981.
The Earl of GOWRIE: My Lords, I have arranged for copies of the posters to be placed in the Library.
Lord CROOK: My Lords, I thank the noble Earl.
Lord BROCKWAY: My Lords, in view of the closing of the Horseferry Road Centre, may I ask the Minister whether his department will send copies of the posters to the many safety committees of local authorities in this country? Secondly, will he collate the posters which they are issuing—I am thinking particularly of Camden Council—which are very striking and which may be used more widely in this country and in Europe?
The Earl of GOWRIE: I do not think there is any difficulty in publicising the work of the Health and Safety Executive, my Lords. It is in the business of publicising its work, and that is one of the reasons why it is anxious to do so within the confines of your Lordships' House.
Lord LEATHERLAND: My Lords, will the noble Earl arrange for a prominent position in this display to be reserved for the poster which says, "Keep Left"?
The Earl of GOWRIE: My Lords, the way in which propaganda is emphasised in this House, is, happily, not a matter for me.
Lord CAMPBELL of CROY: My Lords, bearing in mind the very late hours which we have been warned the House will have to sit in July and early August, may I ask the Minister whether the Government will consider providing four-posters in the Library in addition to the proposed display?
The Earl of GOWRIE: My Lords, as a harassed junior Minister, I am quite anxious that my noble friend should take proceedings against my noble friend the Chief Whip with the Health and Safety Executive if he feels he can do so.
Lord BROCKWAY: My Lords, may I ask courteously whether the Minister will reply to the two questions I put to him and to which he made no reply? First, will he provide copies of these posters to the safety committees of local authorities to enable them to do their work? Secondly, will he collate the posters which they are already issuing, many of which are very valuable, so that they may have wider adoption in this country and perhaps in Europe?
The Earl of GOWRIE: My Lords, I answered the noble Lord's earlier question perfectly fairly. The point of having a Health and Safety Executive is that it should make these decisions about the dissemination of its own information, and that Ministers should not do so.

OVERTAKING BY HGVs
2.43 p.m.
Viscount MOUNTGARRET: 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 provision could be made to prohibit the overtaking by heavy goods vehicles exceeding three tons axle weight, when proceeding uphill, of other moving vehicles on any road which has a gradient of more than 1:10.
Lord MOWBRAY and STOURTON: My Lords, where local circumstances warrant it, there is already power under the Road Traffic Regulation Act 1967 for the appropriate authority to impose such a prohibition by order on a specified length of road. The Government are not persuaded that there is sufficient justification for a general prohibition.
Viscount MOUNTGARRET: My Lords, I thank my noble friend for that reply. Does he not think that it would be appropriate if the Government were to draw the attention of local authorities to this inconvenience, which I am sure he and many other hundreds of motorists have suffered, by being unreasonably impeded on inclines, particularly lengthy ones, by leviathan juggernauts, straining every ounce of energy, billowing out black diesel fumes, attempting to grind past others striving hard to—
Several noble Lords: Reading!
Viscount MOUNTGARRET: My Lords, is my noble friend not aware that this overtaking is not allowed on the Continent? Is there any good reason why a prohibition cannot be simply implemented in this country?
Lord MOWBRAY and STOURTON: My Lords, a prohibition can be very simply implemented in this country, if the Department of Transport or the local authority concerned so wished. We are at the moment in consultation with Kent County Council regarding the possibility of such an order being made in respect of Swanscombe Hill.
Baroness SHARPLES: My Lords, is my noble friend aware that I hold a heavy duty licence? Does he not agree that it is vital that as quickly as possible we do whatever we can to help prevent accidents which inevitably occur on such inclines when there is a tail of traffic behind a very heavy lorry overtaking another lorry?
Lord MOWBRAY and STOURTON: My Lords, I quite agree with the noble Baroness. The best we can hope for is that drivers use their common sense. If two heavy vehicles are travelling at about the same speed, it is not very clever of the driver of one of them to try to overtake the other. If noble Lords know of such incidences occurring regularly in particular places, I would ask that they let the Department of Transport, myself, or one of my right honourable friends know about it, or alternatively, press the local authority to make an order. This is a perfectly simple thing to do where there is a need for it.
Lord DRUMABLYN: My Lords, might it not be suitable to include this point in the next issue of the Highway Code?
Lord MOWBRAY and STOURTON: My Lords, I believe that the Highway Code already includes advice about overtaking in sensible places, but I shall have a look at what my noble friend has suggested.

GOODS AND SERVICES EXPORTS: EXHIBITIONS
2.46 p.m.
Lord HYLTON: 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 sponsor an exhibition

7
of British civil goods and services suitable for use in developing countries on a scale comparable to the current British Army Equipment Exhibition.
Lord TREFGARNE: My Lords, there are already many exhibitions at home and overseas featuring British civil goods suitable for developing countries, which buyers from those countries attend.
Lord HYLTON: My Lords, I am grateful to my noble friend for that Answer. However, does he not agree that there would be some merit in concentrating the present exhibitions in one place? Would this not also be very much in accordance with the recommendations of the Brandt Commission Report, and would it not follow on from the discussions recently held at the Venice Economic Summit?
Lord TREFGARNE: My Lords, I think that the Brandt Commission Report was concerned more with providing the resources for these purchases, than with displaying the goods, or persuading the developing countries which goods they ought to purchase. As for the suggestion of a single venue for such an exhibition, I believe that the interests of the developing countries are best served by giving them a wide choice of specialist exhibitions.
Lord AVEBURY: My Lords, can the noble Lord say whether the exhibitions to which he refers are on the same scale, and are supported with the same extensive back-up by the Government, as the recent defence sales exhibition in Aldershot? If that is so, can the noble Lord very kindly tell the House how much was spent by the Ministry of Defence on that exhibition, and which exhibitions concerned with sales to developing countries are supported on a comparable scale?
Lord TREFGARNE: My Lords, Government support for exhibitions of the type referred to in the Question exceeds £13 million a year, which is substantially more than the costs of the particular exhibition referred to.
Baroness LLEWELYN—DAVIES of HASTOE: My Lords, may I ask the noble Lord whether the Government,
8
before drafting the Answer, consulted the Crown Agents, who are quite particularly engaged in that kind of endeavour?
Lord TREFGARNE: My Lords, the Answer is of course drafted by all relevant departments.
Lord HYLTON: My Lords, will my noble friend consider whether or not support can be given to British civil goods for developing countries to an extent comparable to the support now given to military sales, which I understand are backed up by some 400 civil servants working for the defence sales organisation?
Lord TREFGARNE: My Lords, my noble friend is misinformed. Government support for the general classes of exhibition to which I referred substantially exceeds the support for the exhibitions to which my noble friend has referred.
Lord HAWKE: My Lords, will Her Majesty's Government consider a suggestion that I have made more than once in the past; namely, that this aid to developing countries should be on a lease—lend basis, rather than on a cash or loan basis?—because, as Her Majesty's Government well know, almost to a man these countries are completely broke.
Lord TREFGARNE: My Lords, of course we have to consider all our aid arrangements on their merits and have regard to the facts in each particular case. I should not want to make a general arrangement such as my noble friend suggests.

BUSINESS
Lord DENHAM: My Lords, it may be for the convenience of your Lordships if I announce that dinner will be available at the usual time this evening.
The Committee stage of the Housing Bill will be adjourned at approximately seven o'clock for approximately an hour. Consideration of the Commons amendment to the Lords amendments to the Transport Bill, and the Third Reading of the Gas Bill, will be taken during this adjournment.

NEW TOWNS BILL
Read 3ª, and passed.

HOUSING BILL
2.51 p.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of THE ENVIRONMENT (Lord Bellwin): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, that the House do now again resolve itself into Committee.—(Lord Bellwin.)
Lord DENHAM: My Lords, I wonder whether it would be helpful—and I assure your Lordships that I do not intend it in any other way—if I were to point out that last Thursday, when we started this Housing Bill, after a fairly long day we had got through 17 amendments out of a very large number. I realise that this is a long and controversial Bill, and that there is a great deal of interest in it in all parts of your Lordships' Committee; but after today we are sitting on it only until 8 o'clock on Wednesday, and we hope to finish the Bill on Thurdsay night. What follows, therefore, is that the further we can get today the earlier
we shall be able to rise on Thursday, in view of the Friday sitting at 11 o'clock which is to follow.
Baroness LLEWELYN—DAVIES of HASTOE: My Lords, I had not intended to intervene, but I hope the noble Lord realises that there would in fact be time to finish the Bill on Friday, very shortly. We hope to finish it on Thursday, but, of course, no undertakings can be given by any part of the Committee to that effect.
On Question, Motion agreed to.
House in Committee accordingly.
[The Earl of Listowel in the Chair].
Clause 7 [Discount]:
Lord MONSON Lord MONSON moved Amendment No. 18:
Page 6, line 6, leave out ("33") and insert ("20").
The noble Lord said: I beg to move Amendment No. 18, and with the leave of the Committee I will speak at the same time to Amendment No. 19. The purpose of these amendments is to reduce from 33 per cent. to 20 per cent. the discount available to those tenants wishing to buy under Part I of the Bill who have been in their council accommodation, or series of council properties, for only three years. Correspondingly, the discounts further up the time—scale will also be reduced; that is, council tenants having been in residence for, say, ten years would have their discounts reduced, if these amendments are passed, from 40 to 27 per cent. When a tenant has been in occupation for 33 years, the full discount of 50 per cent. would continue to apply, as it does under the Bill as drafted.
In support of these amendments, I do not think I can do better than quote from what the Housing Centre Trust said about the clauses in question. I believe the Housing Centre Trust was mentioned briefly in Committee last Thursday. Your Lordships may know that the president of the Trust is the noble Lord, Lord Greenwood of Rossendale, and the vice—presidents include Lord Brooke of Cum—nor, and the noble Viscount, Lord Esher. So it is a truly cross—party organisation with no political axe to grind whatsoever. Here is what the trust has to say about the Government's proposals:
"We question the propriety of disposing of a public asset at less than the best price obtainable. We submit that the generous scale proposed, taken in conjunction with inflation, is unacceptable. There is no precedent in valuation law for discounts to sitting tenants to be based solely on length of tenancy, let alone on the aggregate length of a series of tenancies….It seems to us inequitable that a tenant who has already benefited from 20 years of subsidised and usually satisfactory housing should now additionally be privileged to buy his house at half price".
Let us consider for a moment the value of a post-war semi-detached house in the South—East of England. It will not be less, I submit, than £30,000. A discount of 33 per cent. for someone who has been in residence, and not necessarily in the same house, for a mere three years will amount to £9,900. This is tantamount to a gift to the tenant—not in cash, admittedly, but a gift, none the less—of £3,300 a year. I really submit that there is no moral justification for this, and I doubt very much whether there is any practical

11
justification, either. I do not believe the Government have made their case there.
There is another point to be considered. Last Thursday a series of amendments were moved, supported from all sides of the Committee—from the Conservative Benches in the person of the noble Lord, Lord Hylton, from the Labour and the Liberal Benches and from the Cross-Benches℄to exempt from the provisions of Part I certain categories of housing (housing in stress areas in the Greater London Council area, houses in national parks, and so on), and in reply the noble Lord, Lord Bellwin, made the valid point that those excluded by such amendments, had they been passed, would feel aggrieved that they were missing out on the opportunity to buy. Of course, it is perfectly true that if they are missing out on a bargain they will feel aggrieved. By reducing the discount, the bargain element will be less, I submit.
I realise, of course, that the 33 per cent. figure was included in the Conservative manifesto—but there were a great many things included in the manifesto which are not or cannot be fulfilled, and I really do not think that any intelligent person believes that anyone who casts his vote for a particular political party automatically endorses every single item in that party's manifesto. Nobody can seriously believe that. I hope your Lordships will give this amendment your full support. I beg to move.
Lord BELLWIN: The noble Lord has said that the discounts available under Clause 7 of the Bill when a dwelling is sold under the right to buy are unduly generous. I cannot agree. They are certainly not ungenerous, but they are nevertheless fair both to landlords and to tenants, and fairly reflect the relationship in which they stand to each other as seller and buyer. When a tenant in the private sector arranges to buy his home from his landlord, he does not expect to pay, nor does the landlord expect to receive, the price that the dwelling would have fetched if it had been sold on the open market with vacant possession. The price which is paid takes due account of the realities of the situation and the presence of a sitting tenant with security of tenure. There is no reason why those realities should be
12
disregarded when a sale takes place in the public sector.
The basic discount of 33 per cent. provided in Clause 7(1) has accordingly been set at a level which is broadly equivalent to the sort of discount that a tenant in the private sector might be able to negotiate if he bought his home from his landlord. The additional percentage points, up to a maximum discount of 50 per cent., which the buyer receives for each year spent as a secure tenant over and above the three-year qualification for the right to buy, are in recognition of the extent to which he has contributed to the cost of his accommodation by paying rent over all the years.
A basic 20 per cent. discount after four years, as proposed in the amendment tabled by the noble Lord, Lord Monson. would be ungenerous because it would not adequately reflect the relationship between a landlord vendor and a sitting tenant who buys. For example, it would take 16 years as a secure tenant to qualify for the basic 33 per cent. provided for in the Bill as drafted, and that, I repeat, is the sort of basic discount that any private sector might expect to negotiate. As the noble Lord himself has just said, to qualify for the maximum of 50 per cent. would then take no less than 33 years as a secure tenant, and that is quite unacceptable.
I noted what the noble Lord said about the observations of the Housing Centre Trust, but as I said the other day it would not be the first time that I disagreed with some of their observations. As to the point that the noble Lord made when he said that there was no practical justification for this, if anyone doubts the practical justification in terms of incentive, it might be interesting to know that in Leeds when the 20 per cent. discount was being offered the rate of application to purchase was latterly between 30 and 35 a week. Once the discount was increased, as in the Bill, the average number of applications jumped to 140 per week; so that I should have thought it was a practical incentive. I would hope that the noble Lord will feel able to withdraw his amendment and, if not, I hope he will understand why we resist it.
Baroness BIRK: I listened to what the Minister said in answer to the noble

13
Lord, Lord Monson. My colleagues and I will do our best to keep discussions short at this Committee stage. I hope the Minister appreciates that this is a complex and lengthy Bill. One way in which proceedings could be shortened would be for the Government to accept some of the amendments. When the Minister talks these days about being generous or not I begin to wonder in what context he is speaking. He is speaking in the context of one of the most severe economic situations in which the country has found itself. I am not putting that down entirely to the present Government; the international situation is difficult. But it seems to me to be not the right time to be generous. With possible cuts across the social services, with the fear of unemployment, with anxiety in business, in industry and everywhere, we cannot afford as a nation to be generous even to those who are in great need. Yet at this moment there are discounts being offered which (I agree with the noble Lord, Lord Monson) are almost outrageously generous.
The Minister says that when the discounts were increased, the number of applications increased. Of course, they did! What did he expect? If at the same time—and he was arguing this all through the Committee stage on Thursday—together with the right to buy (or the compulsory sale) there would still be, in the opinion of the Government, adequate housing for people to rent, then the more generous the inducement you offer—and that together with a cut in the housing expenditure, so that the housing investment programmes are cut—the more the amount of the rented sector must shrink. These are the Minister's own words. This must be so.
One of the arguments the Minister put up was that people who had been in houses and paying rent for a considerable time should have some benefit from it. What about the people who are paying rent and who are not able to buy their own house? Are they to get a discount on their rent or a handback in order to mark the fact that they have been paying rent for their council houses for 20 or 30 years? I think seriously—and this is not a party political point—that in the present climate and with the amount of money involved and in order to get a fairer distribution between rented housing
14
and houses that are sold, to reduce the discount in the way proposed by the noble Lord, Lord Monson, still leaves (I would have considered) an adequately generous offer today. If the noble Lord intends to press this to a Division, I and my colleagues will be prepared to support him.
Lord HYLTON: I express general support for this amendment. May I ask the Minister whether he would consider this proposition and give a reply now or later? if 50 per cent. discount is the correct figure after 20 years' occupation, then surely 33 per cent. is too much, too high, after only three years.
Lord BELLWIN: As the noble Baroness, Lady Birk, has said, one could pick up and continue the debates we had the other day. I shall try not to do so. Replying to the point my noble friend Lord Hylton has made, I do not think that. In the first place the 33 per cent. was in the manifesto and it was always understood that that would be the basic starting point after three years' occupancy as a secure tenant. I do not think that to go 1 per cent. a year thereafter is wrong at all.
May I say to the noble Baroness, Lady Birk, that it is true that if we were to accept amendments it would shorten the proceedings. I can think of a way to shorten them even more: it would be if she were to withdraw some of them. I do not think I can add a great deal. I do not take the point made—and will not expand on it now but will do so later—as to the effect on other tenants. It is right to raise the point of the effect of the sales policy on other council tenants. I can give more than one explanation of how they are helped very much; but, in the interests of brevity, let us leave that for the time when we are talking about the financial inplications. I repeat that this is very much a cornerstone of Government policy. We feel it is right on all counts. While I respect the aims and motivations behind the amendment, I fear we cannot accept it.
Lord GREENWOOD of ROSSENDALE: May I say how strongly I support the noble Lord, Lord Monson, in what he has said. I think there would be wide support among noble Lords for that point of view. The point I wish to raise is

15
narrower. In case the reference that the Minister made to the Housing Centre Trust (of which I have the honour to be president) might have been regarded as disparaging, would he assure the Committee that the fact that he disagrees with its views on some subjects does not detract from his admiration for it or from the esteem in which his department holds it?
Lord BELLWIN: Having arrived at the department in only relatively recent times, I am not sure what the department thinks of the Housing Centre Trust. I have known them for many years and there is no doubt that they have made, and, I am sure, will continue to make, an important contribution to the whole of what is being done in housing in this country.
Lord UNDERHILL: May I ask the noble Lord two simple questions? Reference was made to the 33 per cent. at which it would be possible for a sitting tenant to negotiate a private sale. Has any survey been conducted to achieve the figure of 33 per cent.; or is it something that has been gathered as perhaps being possible? Was there a survey? Secondly, I know he will deal with the financial implications later but this does affect this particular issue now. What will be the effect on local authority housing finances if houses are sold at very low cost?
Lord BELLWIN: As to the first point, of the survey, I cannot quote a specific survey; but much research was done into this a long time ago. I have no doubt that any check on the percentage difference of the market value of a house with vacant possession, as opposed to one with a sitting tenant, must fall within the ball-park that we are talking about. I cannot quote a specific survey.
On the other point, regarding the possible effect on housing finances, I did not want to get into this now but I will give one instance which I hope will indicate that the effect will be positive. First of all, those local authorities who have housing revenue accounts which are not run with any rate fund contribution have for long been able to apply any of their receipts from the sale of council houses to the housing revenue account. Because they are not allowed to have a surplus in
16
balance within those accounts, they have had to do either of two things with the money: either to use it to hold down rents (which no one would question would help other tenants) or to use it to spend on other things to do with housing—usually improved maintenance, repairs and the like; so that in that sense they benefit very much indeed.
Baroness PHILLIPS: I should like to follow up this point, although I know we shall be on finance later. Throughout the whole of this Bill there does not seem to have been a reference that I have heard to the fact that as in private business these houses have been paid for wholly before they are sold. The money has to be borrowed at the expense of the ratepayers. If that money has already been repaid, all well and good. But surely some of these houses will still have to continue to be paid for by the ratepayers, so they will be subsidising a sale of a house.
Lord BELLWIN: That is not quite so. On a house which is sold when subsidy is still on it—and that would apply to the great majority of houses—the money received is offset against the interest that would have to be paid on the continuing debt. The statistics which I shall gladly be quoting at a later stage will indicate that the net effect of, on the one hand, offsetting what one loses by way of income from rents on dwellings and, on the other, the continuing cost of maintenance and of paying the interest on the remaining outstanding debt more than offset each other. We will get down to the detail of it when we come to it.
Baroness GAITSKELL: May I ask the Minister whether he is going to drown us with words when there is a perfectly reasonable, strong amendment brought forward from the Cross-Benches? All the Minister can do with everything he says is completely unconvincing. There is not a word of conviction about the whole thing. I think that it is absolutely disgraceful that this kind of amendment is not passed through this House easily and quickly.
Lord BELLWIN: I am sorry if the noble Baroness considers that my words are unconvincing. They may be to her. I sincerely hope they are convicing to many other Members of the Committee.

17
I take issue with her very much when she says that I make my points without conviction. I should like her and other noble Lords who may have any doubts to know that I have been involved in the issue of selling council houses for longer than most people in the House of Lords, going back over 14 or 15 years. There are not many who have been involved in selling them for that length of time. I am deeply of the belief that the Government's policy is absolutely right. If the noble Baroness feels that I do not speak with sufficient conviction, then if she listens later I shall try to improve on my delivery.
Baroness GAITSKELL: I did not wish to offend. I did not use the word in that sense at all; I would not criticise the noble Lord about conviction. But it seems to me that this is the kind of amendment that the whole of this Committee can accept.
Lord MONSON: I am grateful to noble Lords for the support that I have received from both sides of the Committee on these amendments. The noble Baroness, Lady Birk, rightly made the point, on Lord Bellwin's argument about tenants' contributions, that a tenant who had been in a council house or flat for many years
and who could not afford to buy or did not want to buy might justifiably ask for a reduction in rent at the end of a certain number of years. Furthermore, given that the rents are subsidised, it may well be that the rents have not covered the outgoings in terms of repairs, insurance and interest on borrowed money over the period.
The noble Lord, Lord Bellwin, also drew an analogy with the private sector, where houses are sold to sitting tenants, which I do not think is valid. There is a security of tenure in the private sector which bears no comparison with that available in the public sector. I believe that discounts of such magnitude impose an unacceptable burden upon ratepayers and, indirectly, upon taxpayers. I strongly believe that public opinion would be in favour of a lower discount. For that reason, I feel that I must press this amendment.
3.15 p.m.
On Question, Whether the said amendment (No. 18) shall be agreed to?
Their Lordships divided: Contents, 67; Not-Contents, 85.

CONTENTS

Amherst, E.

Donaldson of Kingsbridge, L.

Macleod of Fuinary, L.

Amulree, L.

Evans of Claughton, L.

Maybray-King, L.

Ardwick, L.

Fisher of Rednal, B.

Milford, L.

Ayleston, L.

Gaitskell, B.

Monson, L. [Teller.]

Bacon, B.

Gladwyn, L.

Northfield, L.

Balogh, L.

Gordon-Walker, L.

Oram, L.

Banks, L.

Gosford, E.

Peart, L.

Beswick, L.

Greenwood of Rossendale, L.

Phillips, B.

Birk, B.

Grey, E.

Rathcreedan, L.

Blease, L.

Hale, L.

Ritchie of Dundee, L.

Blyton, L.

Henderson, L.

Sainsbury, L.

Boston of Faversham, L.

Hunt, L.

Seear, B.

Brockway, L.

Hylton, L.

Segal, L.

Bruce of Donington, L.

Irving of Dartford, L.

Simon, V.

Buckinghamshire, E.

Jacques, L.

Stewart of Alvechurch, B.

Burton of Coventry, B.

Janner, L.

Stewart of Fulham, L.

Byers, L.

Kilmarnock, L.

Strauss, L.

Craigavon, V.

Leatherland, L.

Taylor of Mansfield, L.

Crook, L.

Lee of Newton, L.

Underhill, L.

Crowther-Hunt, L.

Listowel, E.

Wallace of Coslany, L.

David, B.

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

Wells-Pestell, L.

Davies of Penrhys, L.

Wootton of Abinger, B.

Diamond, L.

Lloyd of Hampstead, L.

NOT-CONTENTS

Abercorn, D.

Bellwin, L.

Campbell of Croy, L.

Adeane, L.

Belstead, L.

Carrington, L. (A Principal Secretary of State.)

Allerton, V.

Bessborough, E.

Ampthill, L.

Blake, L.

Clancarty, E.

Balfour of Inchrye, L.

Boyd-Carpenter, L.

Clwyd, L.

Barnby, L.

Bridgeman, V.

Cockfield, L.

Cottesloe, L.

Grimston of Westbury, L.

Nugent of Guildford, L.

Craigton, L.

Halsbury, E.

Nunburnholme, L.

Cullen of Ashbourne, L.

Harmar-Nicholls, L.

Orkney, E.

Davidson, V.

Hawke, L.

Penrhyn, L.

de Clifford, L.

Henley, L.

Reigate, L.

De Freyne, L.

Hill-Norton, L.

Romney, E.

Denham, L. [Teller.]

Hood, V.

Sandford, L.

Digby, L.

Hylton-Foster, B.

Sandys, L. [Teller.)

Drumalbyn, L.

Ilchester, E.

Shannon, E.

Dundee, E.

Lindsey and Abingdon, E.

Sharpies, B.

Effingham, E.

Long, V.

Sligo, M.

Ellenborough, L.

Loudoun, C.

Soames, L. (L. President.)

Elliot of Harwood, B.

Lyell, L.

Spens, L.

Emmet of Amberley, B.

Macleod of Borve, B.

Strathclyde, L.

Faithfull, B.

Malmesbury, E.

Strathspey, L.

Fortescue, E.

Marley, L.

Trefgarne, L.

Fraser of Kilmorack, L.

Milverton, L.

Trenchard, V.

Gage, V.

Mountgarret, V.

Trumpington, B.

Gainford, L.

Mowbray and Stourton, L.

Vaizey, L,

Gisborough, L.

Moyne, L.

Vickers, B.

Glenkinglas, L.

Newall, L.

Vivian, L.

Gowrie, E.

Norfolk, D.

Young, B.

Gridley, L.

Northchurch, B.

On Question, amendment agreed to.

[Amendment No. 19 not moved.]
3.22 p.m.
Lord HYLTON Lord HYLTON moved Amendment No. 20:
Page 6, line 11, leave out subsection (2).
The noble Lord said: I come now to a series of probing amendments. Each particular amendment deals with a quite separate point. Should the Committee wish it, I shall be quite happy for them to be taken together, but perhaps we could take them one by one, and I will begin with Amendment No. 20. This is a probing amendment to ascertain the meaning of the word "costs" in line 13. Does it refer to gross costs or net costs? Does it include construction costs, maintenance costs, legal costs, the cost of interest or any one or more of these? Also, why is the special date of 31st March 1974 specified? It occurs to me that that might have been the date of reorganisation of local government in England but, if so, why is that significant? I beg to move.
Lord BELLWIN: Regarding Amendment No. 20, together with Amendments Nos. 21 and 22, I think really I should like to speak, with your Lordships' permission, to all these amendments because I believe I can cover the points raised by my noble friend, and perhaps some others as well, which may short-circuit some of his queries. Needless to say, if I do not do so, I shall be glad to
20
try to pick up any other points he may feel I have missed.
These amendments would delete a provision which is known in the jargon as the "cost floor" on discounted sales. The effect of this provision is to provide that discount shall not reduce the price of a dwelling-house below a figure representing the aggregate of certain costs, incurred on it since 31st March 1974. A broadly similar provision applies under the existing general consent for council house sales. The clause leaves the detailed machinery of the cost floor provision to be prescribed in a determination to be made by the Secretary of State, since the subject involves a wealth of detail which is naturally unsuitable for embodiment in a statute. The intention is, however, that this cost floor will take into account significant costs incurred since the cut-off date of 31st March 1974 in constructing, acquiring, improving or converting the dwelling concerned.
There is nothing sinister in this provision. Its purpose, quite simply, is to ensure that no landlord is hound to incur an immediate loss on the capital cost of the accommodation that is sold under the right to buy. This is clearly a desirable safeguard for the public purse, and I am sure that no noble Lord would wish to sec it deleted from the Bill.
The guts of the provision are contained in subsection (2), which contains the power for the Secretary of State to make his determination. The cut-off date of 31st March 1974 is the date of the reorganisa-

21
tion of local government in England and Wales under the Local Government Act of 1972. Because of those changes, data for calculating costs incurred before the cut-oft date might often not be fully available. The cut-off date, therefore, is intended to provide landlords with a workable system of calculating the cost floor. Because of movements in building costs and market values, it is likely that expenditure before that date would rarely, if ever, have had a significant effect on the sale price of a dwelling had it been taken into account in the cost floor.
Subsection (3) allows for the Secretary of State's determination to make different provisions for different areas. This formulation allows a useful degree of flexibility to make allowance for specifically local, regional or national conditions, and it has been adopted as a matter of general practice for directions, orders and determinations under the Bill. The Government have at present formed no intention to make different provisions for different areas in the Secretary of State's determination under this clause.
Subsection (3) also gives the Secretary of State discretion to make exceptions to his determination under subsection (2). Again, there are no instances in which the Government have formed a definite intention to use this power, but its presence in the Bill will allow suitable steps to be taken where, because of extraordinary and unforeseen circumstances, the operation of the cost floor might pose a threat to the right to buy. If such circumstances arose, I assure your Lordships that the interests of tenants would be very carefully weighed against those of the public purse, which the cost floor provision was specifically designed to safeguard, before any exception was made.
Subsection (4) provides a financial safeguard which is complementary to, and independent of, the cost floor in subsection (2). It enables the Secretary of State by order to prescribe a maximum cash figure by which discount may reduce the purchase price. In some cases, for example, there could be properties sold whose market values were exceptionally high. It would be reasonable for a tenant of a dwelling valued at, say, £16,000 to be able to take advantage of a 50 per cent. discount where he was suitably qualified and where the cost floor did not bite; but this would not be so self-evidently true if a dwelling
22
was valued at, say, £100,000. It could be desirable, again in the interests of the public purse, for a line to be drawn, and this provision for a cash ceiling on discount would have that effect. In the light of what I have said, perhaps my noble friend may feel satisfied with the information given and possibly may feel able to withdraw his amendment.
Lord HYLTON: I am most grateful to my noble friend for his explanation, which I shall study with great care. I am aware that a number of files around the country were lost during the local government reorganisation. I am just wondering whether it is right that costs prior to March 1974 should be written off or neglected.
Lord BELLWIN: It is not so much a question of being written off or neglected as the degree of practicability. I think that this matter was carefully thought through, and it was decided that this was the most practical way of dealing with it. But just as the noble Lord says he will consider what we have put, as with everything that he said I hope we will consider any observations he may care to make either now or in any other form.
Lord HYLTON: With that assurance, I beg leave to withdraw Amendment No. 20.
Amendment, by leave, withdrawn.
[Amendment No. 21 not moved.]
3.30 p.m.
Lord HYLTON Lord HYLTON moved Amendment No. 22:
Page 6, line 23, leave out subsection (4).
The noble Lord said: I should just like to ask why this second limit is considered to be necessary, unless it is that the discounts otherwise written into the Bill may in some cases be thought to be too large.
Lord BELLWIN: I do not think there is much I can add to what I have already said on this, but as noble Lords in the Committee will have gathered, we are in a very complex area now. I suspect it is going to become even more complex in the next hour or so. I would gladly say that there will be a number of matters

23
for which we may have to give more detail, perhaps in another way.
Lord HYLTON: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord HYLTON Lord HYLTON moved Amendment No. 23:
Page 6, line 31, leave out from ("tenant") to end of line 35.
The noble Lord said: I should like to ask here why the armed forces are singled out for particular treatment. If we are to include the armed forces in a special way as regards the qualifying period for house purchase, why do we not also include the police service, the ambulancemen or the emergency services generally?
Lord BELLWIN: We believe that this particular form of making this provision is fully justified. Those serving in the regular armed forces of the Crown on or after 21st December 1979, the day after publication of the Bill, will have the benefit for discount purposes of time spent in accommodation provided in connection with their membership of the armed forces. The husband or wife of someone serving on or after that date who subsequently becomes a secure tenant will also be able to count for discount time spent in accommodation provided because he or she was married to a member of the armed forces.
The purpose of this provision is to show recognition of the unique service to the community provided by the armed forces, and of the fact that that service frequently—and I think this is the particular point my noble friend is looking for—involves living in circumstances which would not allow them to gain entitlements under Chapter 1 of this Bill if no special arrangements were made. It is not, however, a provision which the Government consider that it would be justifiable to extend to anyone who has been a member of the armed forces, or the spouse of one, at any time during the past, because to do so would involve going back into history where records would be difficult to find and check. Any cut-off date for the provisions would be bound to cause hard cases, but 21st December 1979 was chosen so that no member of the
24
regular armed forces of the Crown who was serving when the Government's proposals were made public is excluded.
Lord BOYD-CARPENTER: Will my noble friend allow me to assure him that some of us think this is a most admirable provision in the Bill? One of the problems with recruiting for the armed forces is that service in the forces deprives the serviceman, and sometimes his family, of advantages which otherwise come in the ordinary way of life to those not so serving. For my part, I am delighted to see this provision in the Bill and I hope the Minister will keep it there.
Lord STRATHCLYDE: I should like to support what my noble friend has just said; I entirely agree with him. As one who was a member of the armed forces for a great number of years, I sympathise with the position that the wives of people serving in the forces are in, under certain circumstances, which this will help them to avoid.
Baroness FISHER of REDNAL: I think this is an admirable clause, but it is nothing new, as the noble Lord will understand. For many years now—25 years or more—many large local authorities have given added points to people who are in the armed forces, so that they come to the top of the queue when they give up their serving time. This is really a continuation of what perhaps good local authorities have been doing on the letting side. Now it is on the purchase side.
Lord BELLWIN: I am most grateful to my noble friends and to the noble Baroness, Lady Fisher of Rednal. What she says is quite correct. We are merely extending the principle to this new provision.
Lord SIMON of GLAISDALE: I hesitate to interrupt the chorus of approbation. The question that I propose to ask is not related purely to the substantive provisions of the Bill but to the drafting. The armed forces of the Crown are defined in subsection (10) of this clause with reference to the House of Commons Disqualification Act. We have been promised for a long time a new interpretation Act. A cross-reference like this is highly inconvenient to anybody who wants a definition. As I say, I do not

25
expect the noble Lord the Minister to answer the question, but I should like to put it on record. When are we going to have the interpretation Act for which we have been looking for so long?
Lord BELLWIN: I am grateful to the noble and learned Lord for the point he makes. As he so rightly assumed, I am not in a position to answer him now, but I do assure him that it will be taken away —it is on the record—so that we can see whether we can give him some information that might be helpful.
Lord HYLTON: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 24 not moved.]
3.38 p.m.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 25:
Page 7, line 28, at end insert—
("(8A) Subsections (5) to (8) above shall have effect as if—

(a) the references to a secure tenancy included a tenancy which either was a secure tenancy within the meaning of the Tenants' Rights, Etc. (Scotland) Act 1980 or would have been such a tenancy if Part II of that Act had been in force and the bodies mentioned in section 10(2) of that Act had included the predecessor of any such body; and

(b) the references to a secure tenant included the tenant under such a tenancy as is mentioned in paragraph (a) above, except when the landlord was a body specified in paragraph (e) or (g) of section 10(2) of the Act of 1980, and also included a tenant of the Northern Ireland Housing Executive or of a predecessor of that Executive.").

The noble Lord said: This amendment seeks to mirror a similar provision in the Tenants' Rights, Etc. (Scotland) Bill. It is concerned with the position of a person who may exercise the right to buy in England or Wales under the Housing Bill after spending time as a tenant in Scotland or Northern Ireland. Broadly speaking, it will mean that such a person will be able to claim discount in respect of his Scottish or Northern Irish periods of tenancy if they corresponded to one of the categories of tenancy in England or Wales for which the Housing Bill allows discount to be claimed.
The one exception to this is the case of housing association tenancies in Scotland. Because of fundamental differences in Scottish and English law, it was impractical to draw the distinction in respect of housing association tenants in Scotland which is drawn in respect of such tenancies in England and Wales by Clause 2(1) and Clause 7(6) of the Housing Bill. Those subsections exempt a number of housing trusts and associations, most of which are charities, from the right to buy. If the Bill had allowed former tenants of similar associations and trusts in Scotland to claim discount in England or Wales in respect of those tenancies, a difficult anomaly would have been created. As a result, former tenants of charitable trusts or associations in Scotland would have been treated more favourably for discount purposes than former tenants of similar trusts and associations in England. Housing association tenancies in Scotland, I remind your Lordships, do not attract either discount or the right to buy under the Tenants' Rights, Etc. (Scotland) Bill. I beg to move.
Clause 7, as amended, agreed to.
Clause 8 [Repayment of discount on early disposal of freehold or lease]:
3.40 p.m.
Baroness BIRK Baroness BIRK moved Amendment No. 26:
Page 7, line 38, leave out ("five") and insert ("ten").
The noble Baroness said: It may be for the convenience of the Committee if I speak to Amendments Nos. 26 and 27 together. The first amendment extends from five to 10 years the period during which there is a liability to repay a proportion of the discounted value if the property is resold, and provides for the proportion of the discounted value which is repayable to reduce by 10 per cent. per annum. The reason for this is that, given the very generous discounts which are being offered and which go up to 50 per cent. of the value of the property, it is only right that there should be an obligation to repay part of this if the property is sold in the reasonably near future. Otherwise, it is clear that former tenants will be able to make large specula-

27
tive capital gains, at the expense of the public authority, within a very short period of exercising the right to buy.
The Government have, to some extent, recognised this, but propose to require payment only if the property is resold within five years, and the liability for repayment reduces by 20 per cent. per annum under that time scale. This, I submit, is a very limited period and Amendment No. 26 proposes to double it. It is not unusual in other fairly similar fields to have a time limit of 10 years
For example, quite recently, during the time when I was a Minister at the Department of the Environment, we had in the last Bill on ancient monuments that went through a clause under which, if a grant was offered by the Historic Buildings Council for repairs to a house and the house was sold within 10 years, then that grant, or part of it—whatever was equitable in view of the work done—should be repaid. Obviously, the Government money that was going into the house meant not only that the house was improved, but that it would fetch a higher price if it were sold.
The time limit we imposed, after a great deal of consideration, was 10 years. Five years is a very short period in which somebody can buy a house at a very good price and then resell it, and be completely in the clear afterwards. It is far too short a period and, from the point of view of any Government, it is handing over too much money and the possibility of making a profit too easily.
The second amendment would, to a certain extent, safeguard public authorities against speculation in their former assets, and would also generate some additional income to compensate for the low market value which they are required to put on sales to long-standing tenants. It would not prejudice the bona fide purchaser of a former council property who needed to move house before 10 years, because of a change of work, as he would obtain the market value of the property which is likely to be far in excess of the price he paid; that is, the earlier market value less discount. He would simply be required to repay to the public purse a proportion of the profit he had made out of the resale of his former public property, and the
28
discounted value would reduce by 10 per cent. per annum. This is the other side of the equation, making it a rather more equitable proposition for the local authority. I beg to move.
Lord HARMAR-NICHOLLS: I hope that the Government will resist this amendment. I rather think that the noble Baroness has a conscience about it, because the requirement to extend the period from five years to 10 years will interfere with the mobility of labour, There is no doubt about that. One of the things that the nation is concerned with is getting greater mobility of labour, in order to take advantage of the changed make-up of industry in this country. To feel that you cannot move because of the problem of your house is interfering with the extension of the new industries and the new ideas we need if we are to solve the present problem which is causing unemployment and all the other things that we find so miserable. If you have a good idea, be generous with it, and five years is the right degree of generosity while preserving the asset and the value of the community's possessions.
The noble Baroness is being contradictory, because her second amendment tries to face up to the point I made. But saying, "We do not want to interfere with mobility", and producing words which are, to some extent, an excuse for taking away the advantages which the five years give, is a contradiction that we ought to accept. Now that, as I hope, we shall be deciding that it is a good thing for people to own their houses, provided that they are bona fide, we ought to go forward with confidence and generosity. But, mainly, we must do all we can to encourage the mobility of labour so that our skills can be placed where they are wanted. The noble Baroness's amendments would interfere with that and for that reason ought to be resisted.
Lord EVANS of CLAUGHTON: Whether it should be five or 10 years is a matter of judgment. Normally, in the local government sales that have taken place in the past, there has been a five-years' pre-emption. I must say, with respect to the noble Lord, Lord Harmar-Nicholls, that I do not think mobility of labour is a key feature of this amendment. The freedom of people to move

29
from one house to another is taken care of by later amendments in this very large Marshalled List.
What I and my noble friends are concerned about is that we had understood—and I believe it to be the Government's case—that the concept of the sale of council houses is that people can own their houses. It is not a question of enabling or encouraging people to make speculative gains. I suppose that virtually the only legal gain that you can make these days without having to pay tax is by selling your principal residence.
It is a matter of delicate balance, but the time limit suggested by the noble Baroness, Lady Birk, is preferable, if we put the accent on the concept that people should have the right to buy the council houses they live in and should enjoy them, and not on the concept that they should be seeking opportunities to make speculative gains. I agree that, in certain circumstances and special cases, there will be people who will require to move within a period of less than 10 years, but they will still get some profit from the discount provisions. So, on balance—and it is a difficult balance—I prefer the period set down in the amendment moved by the noble Baroness.
Lord MONSON: I frequently find myself in agreement with the noble Lord, Lord Harmar-Nicholls, but I am afraid that in this case I do not. I strongly support the noble Baroness in her amendment. She made out an impeccable case for it. It logically complements my pair of abortive amendments, Nos. 18 and 19, except that the case for these two amendments is very much stronger. I think that public opinion would be most offended to see very large tax-free gains being made within a space of merely five years. I hope that if the Government do not give way she will press the amendment and I, for one, shall certainly support her.
Lord DIGBY: On this idea that people are making a lot of tax-free gains, they are also paying. The whole basis of this Bill is that instead of paying small rents they will be paying very sizeable extra amounts, and I do not accept that we should think it absolutely wrong that someone should make a gain. That person is putting an investment into his
30
house and if he makes a gain, then good luck to him.
Lord JANNER: I should like to support this amendment from a different point of view. The speculative element is one of the things that is frightening people in this country. To invite people to speculate will go against the kind of feeling that people in private residences in particular have with regard to the manipulation that is going on at the present time. I think that the amendment is fair, in the circumstances, and that it will have to be considered from the speculative angle at later stages. I strongly support the amendment.
Viscount GAGE: If a man buys his house and then, after four or five years, dies, under the amendment moved by the noble Baroness will the widow be compelled to live in that house until the 10 years are up before she can sell it?
Lord STEWART of FULHAM: That contribution exposes some of the misunderstandings that there are on the other side of the Committee about the amendment. This amendment does not compel anybody to go on living in a house. The noble Viscount might address the question to the Government: what happens if a purchaser dies before the five years that they propose are up? Neither the clause nor the amendment oblige anybody to go on living in a house. The question is this. If you are allowed to buy a house, which originally was council property, on very advantageous terms, how soon ought you to be able to sell that house and in effect make a gain out of it? That is the point we are arguing.
The two amendments, so far from contradicting each other as the noble Lord, Lord Harmar-Nicholls, suggested, as a matter of plain arithmetic must go together. If you have a 10-year period instead of a five-year period, the reduction in what has to be paid will be by 10 per cent. each year instead of by 20 per cent. each year. If the noble Lord thinks it out, he will see that this is so. It has nothing to do with mobility of labour. If you want to provide for mobility of labour, you do that just as well—indeed, more simply—by providing a greater abundance of

31
council property to let. That is quite obvious.
Clearly this is a problem for anybody who decides to buy a house, whether by virtue of this Bill or in any circumstances. He has to consider whether in the future this may face him with a problem if, for very strong employment reasons, he wants to move and dispose of his asset. Therefore, he has to weigh up whether or not it is worth his while to buy. But that happens, irrespective of this Bill. If he decides, having got the house on very advantageous terms, that in a very short time he wants to sell it, perhaps for very good employment reasons, it is not unreasonable that some of the advantage he has got out of it should go back to the public from which it came originally.
I am afraid that the Government are now trying to build up a policy the inspiration for which comes from Ernie, who chooses the winning numbers. It is quite clear by now that the bulk of the population are going to be worse off as a result of the Government's policies, but if they can hold out the chance that each of us might be the lucky one who makes a speculative gain from one or other of the things that the Government have done, it may buoy up the general feeling towards perhaps this not being so bad a Government after all. That, as I see it, is what the Government are doing. They are introducing an Ernie principle into the running of the economy. I think it is an unsatisfactory principle, and I am glad to see that this amendment mitigates some of its effects.
The DUKE of NORFOLK: I really cannot allow the noble Lord to compare this subject with Ernie. When a man buys a house on a private housing estate it very often happens that within two or three years he moves to another job in another part of the country by reason of promotion. People change their location within a firm and go from one area of the country to another. I know this from the experience I had when I built a little housing estate in Lancashire. I have spent most of my life on housing estates—what we in the army call the "married family patches". If we take Germany as an example, they have no shackles like this. They can sell and buy their houses—they are not normally council houses—and
32
move from one area to another as they are promoted. The whole purpose of the Bill is to remove the shackles and therefore the plight under which, unfortunately, we are living.
May I make one further point with reference to the noble Lord who spoke last. It is not true to say that a man can get promotion by taking a tenanted house. There are enormous waiting lists. Many people who want to move within a firm for promotion reasons are unable to do so because they cannot get out of one tenanted house and into another somewhere else. I believe that the period of five years in the clause is absolutely right.
Lord STEWART of FULHAM: May I say in reply to the noble Duke that he has raised the question of private estates. If a man buys a house privately at the market value, it is his business when he sells. But if he buys a house, which was built at public expense, at well below the market value on very favourable terms, it is a matter of public concern to ask to what extent ought he to be able to make money out of that transaction.
The Duke of NORFOLK: Does the noble Lord really suggest, with inflation as it is now and as it is likely to be, that in five years' time it will be much below the market value?
Lord STEWART of FULHAM: The noble Duke supports the Government, not I. He will take, if he likes, his pessimistic view of the future of inflation.
Baroness FISHER of REDNAL: I failed to follow the reasoning of the speaker on the Back Benches opposite. The noble Lord on the Front Bench keeps telling us that these people are not going to sell their houses, that they do not want to make a profit out of them and that they want to continue to live in them; there will therefore be very few which will come on to the market. There seem to be crossed wires between the Front and the Back Benches on the opposite side. The previous speaker spoke about having the opportunity to sell and move around the country, but the noble Lord on the Front Bench does not think that this is what will happen.

33
He thinks they will continue to live in their properties.
Lord HARMAR-NICHOLLS: I apologise for speaking again, but I believe that the noble Lord, from the Dispatch Box opposite, and the noble Baroness who has just spoken are being very unfair. I am rather surprised at the noble Baroness because she comes from the Birmingham area, as do I, so I know that her experience must be the same as mine. The crossed wires are not on this side of the Committee. They are opposite. The argument of the noble Lord and the noble Baroness is that the only people who will buy these houses will be those who will want to sell them quickly in order to make an outrageous profit at the expense of the community. We say that the number of people who will want to sell will be minimal but that those who do want to sell, for all sorts of reasons—for mobility of labour reasons or because a husband dies—ought not psychologically to have to have put against them the advantages that we are giving to them by encouraging them to buy their houses.
The noble Lord was very unfair in the way that he disregarded the question put by my noble friend. If a husband dies, it is possible that the wife will not then want to carry on in the house, for all sorts of reasons which are well understood if one understands the psychology of people who lose their partner. To say that because she has suffered the loss of her husband she must also suffer the loss of some of the advantages that the family would have had if her husband had not died, is a complete negation of the spirit in which we ought to promote this Bill.
With regard to mobility of labour, again psychology must come into it. The noble Lord must know—I know that the noble Baroness knows it because, from the area she comes from, she has experienced it, as I have, on many occasions—that the psychological advantage of being able to get the market price for your house and have the full benefit from it does weigh when you have to decide whether or not to accept a job in another part of the country. The family budget is examined carefully. To suggest that that would not be taken into account is a misreading of the whole psychology that is holding back the mobility of labour which this country
34
wants. I believe that the noble Lord, as always, was plausible but, uncharacteristically on this occasion, very unfair.
4 p.m.
Lord MOWBRAY and STOURTON: We have had a very interesting debate on this matter and I am most grateful to my noble friend Lord Harmar-Nicholls in particular for his forceful comments. As the noble Baroness explained to us, these amendments would vary the discount sharing provision in Clause 8, so that a purchaser under the right to buy was liable to repay a proportion of the discount for the 10 years following his purchase. This would double the period of liability and the amount repayable would diminish by 10 per cent. stages, rather than by 20 per cent. as Clause 8 at present provides. Thus not only would the purchaser have this liability for longer, he would have to pay back more discount if he disposed of his property in a way which triggered off the discount sharing charge.
With one or two exceptions, this period of 10 years would be longer than any period for which restrictions have ever been imposed on the sale of council and new town houses. The maximum period for the restrictions in the present consent is eight years, and then only for the sale of empty houses. The maximum period of restrictions in sales to sitting tenants is five years. The noble Baroness may have in mind the provision now in Clause 18 for the imposition of a 10-year preemption condition when dwelling houses are sold under the right to buy in specified rural areas. But this condition does not impose a financial penalty on the purchaser because the pre-emption is to take place at market value.
As the noble Lord, Lord Evans, said, these are largely matters of judgment on which we as parties have different philosophies. My noble friend Lord Gage asked about what happens on the death of a tenant. There is no discount repayment if the purchaser dies within five years; it is only if he sells, of course. Noble Lords and noble Baronesses opposite have been speaking about large speculative gains but, as my noble friend Lord Harmar-Nicholls said, they do not have to sell, they will only have the option. The vast majority of people will

35
buy in order to live in the house. If they were to take advantage and sell they would still have to pay the amount of the so-called gain in buying a new house which they would have to move into. No one will be worse off; no one is going to be made to buy a house. If he does not want to buy a house or cannot afford to do so he can continue to stay there as a local authority tenant.
We believe firmly that more choice and more variety will bring far more reality into the housing situation, and I believe that this amendment would make the discount sharing provision too stringent, especially when it is borne in mind that in the private sector tenants with security of tenure would expect to buy at below market value without any requirement to repay. Clause 8 provides what we believe to be a necessary financial safeguard. It is already adequate for that purpose.
I hope your Lordships will understand that our judgment in this is bound to be different from the judgment of noble Lords sitting immediately opposite me, although I should have thought that the party of the noble Lord, Lord Evans, would have been nearer to our philosophy in this matter; but that is something for noble Lords to judge.
Baroness PHILLIPS: Before the noble Baroness replies, may I say that I think it would be most unfortunate if the party opposite went on record as the defenders of the people who wish to buy houses, and we on this side of the Committee were described as the grinders of the faces of the poor. Nothing could be further from the truth. It is always useful to have a long memory, and I think I can recall that it was one of the philosophies of the Conservative Party apropos local authority housing, that in my own area there was a description of a poor old lady who lived in a private house and who had to pay rates which made some contribution to the people who were living in rented local authority housing. I cannot see the difference, except that in this case it is possible that they could make a profit from the poor old lady living in a privately owned house. That is the kind of thing that we have in mind.
Lord CLEDWYN of PENRHOS: I should like to follow and support what
36
my noble friend has just said. The noble Lord, Lord Mowbray and Stourton, referred to the differing philosophies of his party and of this party. I do not know precisely what he meant, but I assume I am right in saying that his argument is that his party believes in a so-called property-owning democracy whereas this party does not. I see that the noble Lord assents. Therefore I wish to make a short point: when the Leasehold Bill was going through Parliament, it was designed to ensure that people should have the right to purchase the reversions of their own houses. The party opposite opposed that measure, clause by clause and line by line, at every opportunity. I know that perfectly well because I played a part when that Bill was going through Parliament. Therefore when it comes to talking about a property-owning democracy there is a good deal of humbug in what the noble Lord has been saying.
Lord EVANS of CLAUGHTON: Possibly to comply with the suggestion made by the noble Lord, Lord Mowbray and Stourton, we should have tabled an amendment giving the figure of 7½ years! The basic point that concerns me is that there is a generous discount which we debated on the amendment tabled by the noble Lord, Lord Monson. It is a very generous discount that purchasers of council property are given. We think it is over-generous and we have to compare that with the position, of which I have quite a lot of experience, of tenants in the private sector who have lived perhaps for 30 or 40 years in a privately-tenanted house which they have repaired and very often improved themselves, and they say: "Now we can afford to buy this house," and one gets a survey for them. The survey comes back and the valuation is £X thousand vacant possession value. The tenant then says: "It is not vacant possession value. I am buying as the sitting tenant"; and the surveyors in my part of the world will always say that for a sitting tenant in a privately rented property the value to him or her is almost the same as vacant possession value. The point I am making is that the tenant of a council house is getting a special benefit.
4.8 p.m.
Baroness BIRK: It seems to me that there is quite a lot of feeling in different

37
parts of the Committee on this amendment, and I preface my remarks by saying that I frankly think this is something which the Government should reconsider. The noble Lord, Lord Mowbray and Stourton, says that we now have restrictions greater than have ever been known on (presumably he means) pre-emption and resale. In fact we have never had a situation like this before, where local authorities are being put into the position compulsorily of having to sell houses. It is an entirely different situation, so one cannot talk about restrictions greater than have ever been known before.
I think my noble friend Lord Stewart dealt very neatly with the points raised by the noble Lord, Lord Harmar-Nicholls, but I would emphasise with regard to the question of mobility of labour that I did not bring that in to salve my conscience or the conscience of anybody else. I was making the absolutely valid and accurate point that the purchaser of a former council property—and that is what we are talking about—who needs to move before the period of 10 years expires, will still get the existing market price for his house, less the discount which is really part of the public contribution. Taking the assessment given by the noble Duke, the Duke of Norfolk, of inflation in the future, then that man will presumably be in a position to buy another house somewhere else because he will already have had an asset which will have increased in value. I think the noble Lord Lord Evans, is absolutely right; it is a matter of judgment.
My noble friend Lord Stewart was absolutely right when he said that there
was a great deal of misunderstanding and, without wishing to rub the point in, here again I think that Notes on Clauses would have been a great help on the whole of this Bill. I think the noble Lord, Lord Harmar-Nicholls, in one of his interventions said that the number of people who will want to sell is minimal. If they are minimal, why not agree to a very sensible arrangement which would at least come down on and act as some sort of penalty on those who may be speculating? Otherwise it will be minimal and people will still have their own property.
I think my noble friend Lord Stewart dealt quite fully with the position of the widow or widower. If, in the case of a widow, it is going to be based on when her husband dies, it could be one year, two years; we cannot depend on people remaining alive until five years have passed, if then the requirement to sell back to the authority goes. I would ask the Government to consider taking it back and reconsidering this point, which again seems to me not a party political point; it seems to me to make very good sense. It is looking after public stock and public assets and taking what I would have thought was a very sensible financial view. If the Government are not willing to do that, I intend to press the amendment.
4.12 p.m.
On Question, Whether the said amendment (No. 26) shall be agreed to?
Their Lordships divided: Contents, 85; Not-Contents, 100.

CONTENTS

Amherst, E.

Crowther-Hunt, L.

Henderson, L.

Amulree, L.

David, B.

Hill-Norton, L.

Ardwick, L.

Davies of Penrhys, L.

Houghton of Sowerby, L.

Avebury, L.

Denington, B.

Hunt, L.

Aylestone, L.

Diamond, L.

Hylton, L.

Bacon, B.

Donaldson of Kingsbridge, L.

Ilchester, E.

Balogh, L.

Elwyn-Jones, L.

Irving of Dartford, L.

Banks, L.

Evans of Claughton, L.

Jacques, L.

Barrington, V.

Fisher of Rednal, B.

Janner, L.

Beswick, L.

Fulton, L.

Jeger, B.

Birk, B.

Gaitskell, B.

Kilmarnock, L.

Blease, L. [Teller.]

Gladwyn, L.

Leatherland, L.

Blyton, L.

Gordon-Walker, L.

Lee of Newton, L.

Brockway, L.

Goronwy-Roberts, L.

Listowel, E.

Burton of Coventry, B.

Greenwood of Rossendale, L.

Llewelyn-Davies of Hastoe, B.

Byers, L.

Hale, L.

Lloyd of Hampstead, L.

Cledwyn of Penrhos, L.

Halsbury, E.

Lloyd of Kilgerran, L.

Collison, L.

Hatch of Lusby, L.

Lovell-Davis, L.

Maelor, L.

Ponsonby of Shulbrede, L. [Teller.]

Stewart of Alvechurch, B.

Maybray-King, L.

Stewart of Fulham, L.

Milverton, L.

Porritt, L.

Stone, L.

Monson, L.

Rathcreedan, L.

Strabolgi, L.

Noel-Baker, L.

Ross of Marnock, L.

Strauss, L.

Northfield, L.

Sainsbury, L.

Taylor of Mansfield, L.

Oram, L.

Seear, B.

Underhill, L.

Peart, L.

Sefton of Garston, L.

Wallace of Coslany, L.

Phillips, B.

Segal, L.

Wells-Pestell, L.

Piercy, L.

Simon, V.

Wootton of Abinger, B.

Stamp, L.

Wynne-Jones, L.

NOT-CONTENTS

Abercorn, D.

Elliot of Harwood, B.

Marley, L.

Adeane, L.

Emmet of Amberley, B.

Montgomery of Alamein, V.

Allerton, L.

Exeter, M.

Mowbray and Stourton, L.

Amory, V.

Fairfax of Cameron, L.

Moyne, L.

Ampthill, L.

Faithfull, B.

Murton of Lindisfarne, L.

Avon, E.

Fortescue, E.

Newall, L.

Balfour of Inchrye, L.

Fraser of Kilmorack, L.

Norfolk, D.

Barnby, L.

Gage, V.

Northchurch, B.

Bellwin, L.

Gainford, L.

Nugent of Guildford, L.

Belstead, L.

Glenkinglas, L.

Nunburnholme, L.

Bessborough, E.

Gowrie, E.

Orkney, E.

Blake, L.

Grantchester, L.

Penrhyn, L.

Bridgeman, V.

Gridley, L.

Reigate, L.

Campbell of Croy, L.

Grimston of Westbury, L.

Robbins, L.

Carrington, L. (A Principal Secretary of State.)

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

Romney, E.

Saint Oswald, L.

Chelwood, L.

Hanworth, V.

Sandford, L.

Clwyd, L.

Harmar-Nicholls, L.

Sandys, L. [Teller.]

Cockfield, L.

Hawke, L.

Sharpies, B.

Cotteslow, L.

Henley, L.

Sligo, M.

Craigavon, V.

Home of the Hirsel, L.

Soames, L. (L. President.)

Craigton, L.

Hood, V.

Spens, L.

Cullen of Ashbourne, L.

Hornsby-Smith, B.

Strathcarron, L.

Davidson, V.

Hylton-Foster, B.

Strathclyde, L.

de Clifford, L.

Kinloss, Ly.

Strathcona and Mount Royal, L.

De Freyne, L.

Lindsey and Abingdon, E.

Denham, L. [Teller.]

Long, V.

Strathspey, L.

Derwent, L.

Loudoun, C.

Swinton, E.

Digby, L.

Lucas of Chilworth, L.

Trenchard, V.

Drumalbyn, L.

Lyell, L.

Trumpington, B.

Dundee, E.

Macleod of Borve, B.

Vaux of Harrowden, L.

Ebbisham, L.

Macpherson of Drumochter, L.

Vickers, B.

Effingham, E.

Malmesbury, E.

Vivian, L.

Ellenborough, L.

Mancroft, L.

Young, B.

On Question. amendment agreed to.

[Amendment No. 27 not moved.]
4.20 p.m.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON had given notice of his intention to move Amendment No. 28:
Page 8, line 5, at end insert ("or
(c) the grant of a lease or sub-lease for a term of twenty-one years or less with an option to renew or to purchase the freehold or lease as the case may be; ").
The noble Lord said: We have been exhorted to speak today and no doubt for the rest of the week as briefly as possible. I think that I shall be able to do that by refraining from moving this amendment, because Amendment No. 28A covers the
40
loophole which my honourable friends in another place discovered in the proposed legislation. In the other place it was suggested that an amendment should be put down to fill that loophole. I think that Amendment No. 28A in the name of the noble Lord, Lord Bellwin, and the noble Lord, Lord Mowbray and Stourton, does that and therefore, I am happy not to move this amendment.
Lord BELLWIN Lord BELLWIN moved Amendment No. 28A:
Page 8, line 31, at end insert ("and for the purposes of this section the grant of an option enabling a person to call for a disposal falling within subsection (3) above shall be treated as such a disposal.").
The noble Lord said: I beg to move Amendment No. 28A. With the leave

41
of the Committee I shall speak also to Amendments Nos. 75A, 163A, 164A and 164B. These amendments are the outcome of an undertaking which my honourable friend the Parliamentary Under-Secretary of State gave to Mr. Alton in the other place.
Mr. Alton had expressed concern about a possible loophole in the provision in Clause 8 for the repayment of discount where a purchaser under the right to buy resells within five years. He drew attention to the possibility that the liability to repay discount in these circumstances might be avoided by granting a subsequent purchaser an option to buy rather than convey the dwelling-house to him straightforwardly during the five year period. Because the grant of the option would not count as a disposal, there would be no liability to repay discount at that stage, and when the sale finally took place the five years would be up.
Successful use of such a dodge would depend on the sale of an option to buy a house for a high price in several years' time. The man buying the option might move into the house as a tenant until he could exercise the option and buy outright unless he were a speculator who did not wish to occupy the house. It is not clear how easy it would be in practice to strike bargains of this type, but we agree that there is enough of a risk to justify bringing forward amendments to the Bill so as to deal with the risk.
Indeed, a similar option device could be used to get round the 10-year rural preemption safeguard under Clause 18. Also, if, as the Bill stands, an option were granted where a covenant had been imposed under Clause 18 limiting future purchases to people living or working locally, that option would not trigger the covenant but the consequent disposal would. This would make for confusion. The problems could also arise on voluntary council house sales where discount sharing or a rural areas safeguard was imposed under Clause 88. We have therefore tabled amendments to Clauses 18, 87 and 88 as well as to Clause 8 itself.
The noble Lords, Lord Evans of Claughton, and Lord Byers, have put down an amendment to Clause 8 in similar terms to that moved by their honourable friend Mr. Alton in the other place. Their
42
amendment was defective however and did not cover all the eventualities. We are grateful to the noble Lords and their honourable friend for drawing attention to the essential point, but I hope that in the light of these Government amendments they will not feel it necessary to move their amendments. I beg to move.
Lord EVANS of CLAUGHTON: May I say on behalf of my noble friends and myself how grateful we are to the noble Lord and his noble friends for putting down this amendment and the other amendments to which he referred? Although it would not have been often used as a device because it is rather complex, this might well have given people an opportunity to make very considerable speculative gains to which they were not entitled. I am extremely grateful to the Minister for the amendments that he has put down.
Clause 8, as amended, agreed to.
Clause 9 [Right to a mortgage—amount to be secured.]
4.25 p.m.
Lord HYLTON Lord HYLTON moved Amendment No. 29:
Page 8, line 37, leave out paragraphs (b) and (c).
The noble Lord said: I beg to move Amendment No. 29. It may be for the convenience of the Committee if I speak also to Amendment No. 30. These are both probing amendments and I should like to ask first, why is it thought right that the tenant's legal costs should be included in the mortgage to which he will be entitled. Secondly, how will "available income" be defined? Will it be on the same sort of criteria as building societies employ? What will the factor be by which the income is to be multiplied? If the answer is "building society practice", then I should point out that there has been, over the years, very considerable variation in building society practice. The multipliers have ranged from two-and-a-half to three and perhaps in some cases even a little wider than that.
Finally, I should like to ask the meaning of the word "appropriate" on page 9, line 3. I wonder whether it is a suitable

43
word for inclusion in a statute because, of its nature, it seems to imply a value judgment to be made by somebody. I beg to move.
Lord BELLWIN: I shall try to answer the points which my noble friend has raised. The intention behind our arrangements for costs under the right to buy is that each side of the transaction should pay its own costs, as normally is the case with sales in the private sector. The provision in subsection (1) that the mortgage should include those costs—legal or otherwise—which the vendor either validly charges to the purchaser (namely, the costs arising from the mortgage) or which it initially meets on his behalf is a valuable help for purchasers in meeting all the liabilities they will face on becoming home-owners.
My noble friend asked how "available income" will be defined; what the factor will be; and the meaning of "appropriate". We are at present considering the calculation of income for mortgage purposes and other aspects of the regulations. It is not yet possible to give definite information as to what these are likely to be, but they can reflect what a purchaser spends on everyday living and his existing credit commitment.
My noble friend also asked about the size of the deductions and how much flexibility it is necessary or desirable to have in the regulations. The answer is that the precise provision of the mortgage regulations is still under consideration, as I said a moment ago. The provision for different factors and different amounts to be applied to different incomes is necessary to take account of the individual incomes of those purchasing jointly. It is an integral part of the procedure giving tenants the right to purchase jointly.
My noble friend also suggested that subsection (5) seemed to be contradictory and asked why it was necessary. That provision permits the landlord to allow the tenant a larger mortgage than he is entitled to, so long as the amount of the mortgage does not exceed the aggregate purchase price and costs as set out in subsection (1). Subsection (5) ensures that the landlord may not attempt as a way of getting round the right to buy, to force a larger mortgage on the tenant
44
than he wished to have. It will, however, enable a landlord to grant a larger mortgage backed by guarantees from people whom the tenant did not wish to have as joint purchasers or who did not wish to be so, but who were willing to take on the commitment of helping the tenant with the purchase. I hope that perhaps my noble friend will feel that that explanation will enable him to withdraw his amendment.
Lord HYLTON: I am grateful to my noble friend for what he has said. However, I do not quite see why it should be thought right, in all cases, to provide the purchaser's costs by means of a mortgage. I should have thought that there was a very good case for expecting the purchaser to put at least some stake of his own into his purchase. I am also somewhat concerned to hear that, when we could be rather close to the coming into effect of this Bill as an Act, thinking is still taking place as to how the regulations will be drawn up. I understand that that could be a matter of only eight weeks after Royal Assent. Is my noble friend able to say a little more?
Lord BELLWIN: There are, indeed, a number of matters that are still being discussed with bodies which are involved and interested. I think that it is right that that should be so. Indeed, I am sure that he will be pleased to know that some of the very points still being discussed are ones that have been raised by my noble friend himself, and are matters where we have given undertakings that we would be talking about certain aspects. I suspect that that will be the case until the very time when we move that the Bill do now pass. I hope that my noble friend will feel that that is encouraging rather than discouraging.
Lord HYLTON: I do not wish to press this amendment any further, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 30 not moved.]
Baroness DAVID Baroness DAVID moved Amendment No. 31:
Page 9, line 1, leave out from ("account") to end of line 21 and insert ("determined by the landlord, having regard to the normal commercial

45
criteria of building societies and the guidance issued by the Secretary of State, on the basis of the tenants income, needs, and commitments and the manner in which he has discharged his obligation as a tenant to pay rent.
(3) Where the right to a mortgage belongs to more than one person the limit is the aggregate of the amounts to be taken into account determined by the landlord, having regard to the normal commercial criteria of building societies and the guidance issued by the Secretary of State.
(4) The Secretary of State may give guidance generally or to specified descriptions of authorities in respect of any matter arising with respect to this section.").
The noble Baroness said: As it stands, Clause 9 provides that the amount of a mortgage advance will have to be determined from a formula laid down in regulations issued by the Secretary of State. The Minister has undertaken that the regulations will conform with the normal commercial criteria in granting mortgages, although this is not written into the Bill and, of course, we know that the regulations are not yet with us.
Inescapably, the determination of the amount of the mortgage by central Government regulations must mean the application of some more or less crude formula to the income, and perhaps some other circumstances, of the applicant. An inherent part of normal commercial criteria is that although such formulae can provide a rule of thumb, each application must be considered in its own individual circumstances. This must mean an element of local discretion for those responsible for granting the mortgage, corresponding to the element of discretion that the managers of individual branches of building societies take for granted.
The proposed amendment allows the local authority to consider the tenant's income, needs, commitments and past rent record, and itself to arrive at the amount of the mortgage to be granted. However, it also provides that the local authorities must have regard to guidance—not regulations—issued by the Secretary of State and to the normal commercial criteria of building societies. It is contended that this amendment provides a proper balance between the Secretary of State's concern for a reasonable response by local authorities to the right to a mortgage and the local authorities' concern for a reasonable measure of discretion to allow them sensibly to under
46
take their responsibilities under this section. I think that it also might provide some protection for the prospective buyer if there is an element of local discretion as to whether that buyer is able to fulfil the obligations. There must be some anxiety about those who may default on their mortgages, and I think that this local dimension would be a help in this way. I beg to move.
Lord BELLWIN: There are obviously strong arguments for allowing a landlord—and indeed the Housing Corporation though it is not mentioned in this amendment—to be able to calculate a purchaser's mortgage entitlement in a way which takes proper account of his ability to make his mortgage repayments, which in its turn will depend to a considerable extent on his existing commitments. This is why the Secretary if State said in another place that it was his intention to ensure that normal commercial practice applies under the provisions of Clause 9. Clause 9 empowers the Secretary of State to make regulations determining how the amount of mortgage entitlement is to be calculated. That remains our guiding principle in this matter. It is our intention that the mortgage to which a purchaser is entitled should be one which he can reasonably afford to repay.
But there are important arguments in the other direction. The right to a mortgage is a crucial corollary of the right to buy. We have to be sure that tenants can get the maximum mortgage which they can reasonably afford. We cannot allow for unreasonable cautiousness on the part of the landlords; nor should there be scope to evade the right to buy by finding ways to offer inadequate mortgages. The regulation-making power in Clause 9 is designed to provide the means for us to get the balance right. With this in mind, we brought forward amendments at Report stage in another place to enable the Secretary of State, when prescribing what counts as available income, to take into account sums reflecting the needs and commitments of purchasers as well as their income itself. This will provide sufficient flexibility to ensure that under the regulations purchasers do not become entitled to borrow amounts which they cannot reasonably be expected to repay.

47
The noble Baroness has now added to the amendment which was originally tabled a provision for the Secretary of State to give guidance about the granting of mortgages to purchasers under the right to buy. But it is unclear what status that guidance would have. The amendment says that an authority must have regard to the guidance. Does that mean that it would have to follow it? If so, why should the Bill be amended in this respect, when the net result would not be so different from that with the regulation-making power in the Bill as it stands? If not, then the power of the Secretary of State to give guidance would not provide the necessary assurance to tenants that they have an adequate right to a mortgage. This refinement to the amendment is not a sufficient palliative. The amendment as a whole still does not meet the Government's requirements. As to a purchaser's previous history as a tenant, there is already the safeguard in Clause 15(7). A landlord need not complete the transfer of the dwelling house to the tenant if there are significant arrears of rent outstanding.
This amendment has a purpose with which I think there may be some initial sympathy, but I hope that what I have said will have illustrated that it is unnecessary and that it holds potential dangers. It could, if accepted, result in some tenants being deprived of a mortgage to which they were reasonably entitled and which they could afford to repay. Furthermore, it would be naive not to recognise that some local authority landlords who were opposed to the right to buy would, with such discretionary opportunities, gleefully take advantage of such a loophole, thereby denying that right to their tenants. With this explanation, I hope that the noble Baroness may feel able to withdraw the amendment.
Lord HYLTON: Obviously, I do not have any particular brief for subsection (4) of this amendment which may need a little redrafting or strengthening. But I feel that the amendment is an improvement on the Bill and gets the balance between the central power of the Secretary of State and the local power of the local authority into a better relationship. At page 9, line 22, in subsection (5), what I had thought to appear contradictory,
48
I now begin to understand. That gives the local authority some greater discretion. I believe that that supports this amendment as it is framed. I am sorry that my noble friend cannot see his way to being able to accept it.
Baroness DAVID: Do I understand from what the Minister has said that one of the reasons the Government are against this amendment is the fear that Labour authorities will try to exploit any discretion to undermine the effective operation of the right to buy? Perhaps I could have an answer to that.
Lord BELLWIN: Indeed, I do, yes. I thought that I had said that.
Baroness DAVID: We have cleared that up. It seems to me that the amendment would not prevent the right to buy because it gives only a limited discretion to the local authority. The right to a mortgage would still remain. Can the Minister tell me when these regulations will be published? Are we going to get them before Report stage?
Lord BELLWIN: As I stand at the moment I cannot say exactly when, but before the day is out I shall endeavour to give the information to the noble Baroness.
Baroness DAVID: I have listened carefully to what the Minister has said. I am not altogether happy about his reply. I should very much like to see the regulations too. I shall at the moment withdraw the amendment and shall possibly come back with it or one similar at Report stage.
Amendment, by leave, withdrawn.
[Amendments Nos. 32 and 33 not moved.]
4.41 p.m.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 34:
Page 9, line 28, at end insert—
("(6) The Treasury shall provide all monies required to enable local authorities to make such mortgage advances as are required by this section.").
The noble Lord said: I put this amendment down in order to try to discover the answer to some problems that seem to me to arise from the Bill as drafted, although I hope that the noble Lord will

49
be able to give me a satisfactory explanation. It seems to me that, while most of the mortgage money for tenants of council property will not actually have to be provided but will be dealt with by merely not paying the cash value, in certain other cases, for instance where a housing association house is sold, it may be necessary for the local authority to make money available for such a purchase—to make the actual cash available rather than a book entry.
From my experience in local government and the Housing Act mortgages of the past, if you did not get in very quickly for your local authority mortgage, the local authority resources ran out. If you had not applied for your mortgage under the Housing Act by June or July, very often in the part of the world that I come from there was no mortgage money left. If Her Majesty's Government's wishes are that there should be a reduction in public sector expenditure, it may be that, unless additional words of this nature are put in, the opportunity of selling not so much local authority housing as housing association or other public bodies' housing would be frustrated if local authorities did not have the money available.
My amendment seeks to require the Government to make monies available for local authorities so that, if you like, that excuse will not be available against exercising the right to sell. I am really trying to find out what the Government's plans are because, as I understand it, there is no actual clarity yet as to whether the housing corporation will be providing the money, or what body will be providing the money, for the sale of council houses and private sector houses where actual cash has to change hands. I beg to move.
Lord BELLWIN: Let me quickly and, I hope, briefly, put the noble Lord's fears at an end. I can assure him that the right to a mortgage will not put any strain on local authority mortgage loan money. When a tenant exercises his right to buy and, along with that, his right to a mortgage, there will be no need for the local authority to raise money to advance to the purchaser. After all, the local authority already owns the house and is merely handing over that ownership to the tenant. On a sale under the right to buy, therefore, it will
50
simply forgo an immediate receipt, leaving the amount of the mortgage outstanding. There is no question of the authority having to find new money. I hope that with that explanation the noble Lord will feel able to agree to withdraw his amendment.
Lord EVANS of CLAUGHTON: With respect, I did say in my introductory remarks, which may not have been as clear as perhaps your Lordships would have liked, that I was not so concerned as to whether there was a contra-entry where the purchase was from a local authority, because, as the noble Lord said, no cash passes from one hand to the other, which I mentioned. What I am concerned about is to discover what happens to a tenant who purchases from a housing authority, or some authority other than the local authority. From what source will the money for that be made available? Is it going to be the Housing Corporation, or where is it going to come from? Is it going to come from the actual resources of the local authority?
Lord BELLWIN: I am not clear here as to what the noble Lord means. If we are talking entirely of a local authority selling to its sitting tenant, then the position is as I have already stated and as the noble Lord so obviously knows. What other body he is referring to, I am not sure. When a housing association tenant exercises the right to a mortgage—possibly that is what the noble Lord has in mind—the money will come from the Housing Corporation and not from the local authority.
I think I said at Second Reading, or some time last week when we were discussing matters, that the Government, once they know the extent of the likely requirements, will then be looking at the monies which are made available to the Housing Corporation because that is a route it will take. I hope that is helpful.
Lord EVANS of CLAUGHTON: That was the point I was trying to find. I accept that the regulations have not yet been made. I wanted to be sure that there would not be any obstacle to a person purchasing from other than a local authority. I think that the assurance

51
that the noble Lord has given is sufficient to enable me to—
Lord BELLWIN: Would the noble Lord give way for a moment? It might be helpful if I made a comment on a point that the noble Baroness made a moment ago and that the noble Lord just mentioned regarding the regulations. I am advised that the regulations cannot be made until the Bill is passed and the power to do so becomes available.
Lord EVANS of CLAUGHTON: I am grateful, and I beg leave to withdraw the amendment in my name.
Amendment, by leave, withdrawn.
Clause 9 agreed to.
Clause 10 [Notice of purchase price and right to mortgage]:
4.47 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 35:
Page 10, line 8, after ("12") insert ("and section 15(3A)").
The noble Lord said: The mass of paper increases as the hour advances. I hope that your Lordships will bear with me. Together with this amendment may I speak also to Amendments Nos. 37, 40, 41, 42, 43, 45, 48, and 49. This amendment to Clause 10 paves the way for an important series of amendments, including those to which I have just referred. I should like to speak to all of them together although the more important ones relate to Clauses 12 and 15. The amendments involve a substantial revision of the provision in the Bill for a tenant whose mortgage entitlement is insufficient to enable him to exercise his right to buy to be able to deposit £100 with his landlord and defer completion for two years. This enables a tenant who cannot afford to buy at once to save for two years towards a fixed purchase price.
The provision is one to which we are firmly committed. It was promised at the time of the general election. We have found it necessary to make important changes to the way in which it will operate, although our policy remains unchanged.
I am well aware that this policy is not to the liking of some people. They make the point that someone who buys his home after taking advantage of these arrangements will benefit from a price which represents in percentage terms a discount higher than the one to which the tenant was originally entitled. If we compare the price that the purchaser pays with the value of the home when he eventually completes, that is certainly true. It is a necessary corollary of the arrangements we have introduced.
I make no apology for these arrangements. They enable us to extend the frontiers of home ownership so that it is within the reach of a group of people who could otherwise never have aspired to it. I must make that quite clear before I turn to the amendments. At present the right to defer completion is dependent on the service of a completion notice by the landlord. We believe that the tenant should be able to claim his right to defer completion of his purchase by depositing £100 with his landlord without having to wait for a completion notice, and these amendments bring that about. The purchaser will therefore be warned of the right to deferred completion when he receives notice of the purchase price under Clause 10. That is provided for in Amendment 35. The notice of mortgage entitlement under Clause 12 will also advise him of his right to deferred completion and enclose a form for claiming it, as provided in Amendment 37.
Where appropriate, the tenant will be able to claim deferred completion within three months of the landlord's notice under Clause 12(4), which informs the tenant of the landlord's calculation of his mortgage entitlement, or within a longer period if the landlord or county court considers there are reasonable grounds for extending the period. Thus, the tenant could claim his right to deferred completion before all the relevant matters had finally been agreed or determined, and therefore before it had been established whether or not he was entitled to delayed completion. In a case where it then turned out that there was an entitlement, the arrangements we are concerned with would operate. On the other hand, in a case where there was no right to delayed completion although the £100 had been deposited. the landlord would be able to serve a completion notice in the usual

53
way and the tenant would be entitled to the return of his £100.
Another defect with which these amendments deal is that the tenant is, as the Bill stands, required to complete his purchase within two years of the service of his notice claiming to exercise the right to buy. But there might be cases where a tenant made every effort to proceed with the sale and complete the purchase within the two years but, for reasons beyond his control, the purchase was non the less not completed within that period. The tenant could thus lose his right to complete the transaction at the old price through no fault of his own. The amendment would, therefore, provide that where a tenant has indicated his willingness to proceed with the sale, by requiring the landlord to reassess his mortgage entitlement within two years but the sale has not been completed within that period, the landlord may, where there are reasonable grounds for doing so, extend the period for completion at the original price. This might be desirable where, for instance, there had been some delay over processing the period mortgage application. If there are reasonable grounds for the landlord to act in such a way but he fails to do so the county court may extend the period by order.
These amendments are complicated, but they embody an important aspect of our policy. In moving the first of them, I am glad to say that in tabling it we are improving the Bill and helping it to reflect more closely the policy of the Government.
Clause 10, as amended, agreed to.
Clause 11 agreed to.
Clause 12 [Claim to a mortgage]:
4.53 p.m.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 36:
Page 11, line 32, at end insert ("and
(c) the provisions which, in the opinion of the landlord or Housing Corporation, should be contained in the deed by which the the mortgage is to be effected.").
The noble Lord said: This is a procedural amendment. Its effect would be to require the local authority, when
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notifying the purchaser of the amount it considers may be left outstanding on mortgage and the way in which this amount has been arrived at, also to notify him of the provisions which it proposes should be included in the mortgage. The Housing Corporation would be under a similar obligation when it was to advance money to a housing association. This would mirror the procedure under Clause 10, where the proposed terms of the conveyance or lease have to be notified to the purchaser. This amendment will remove any chance of an authority failing to reveal the proposed terms of the mortgage until the last moment.
Lord BELLWIN Lord BELLWIN moved Amendment No. 37:
Page 11, line 32, at end insert—
("(4A) The notice shall also inform the tenant of the effect of section 15(5A) below and shall be accompanied by a form for use by the tenant in claiming, in accordance with section 15(3A)(c) below, to be entitled to defer completion.").
The noble Lord said: I spoke to this with Amendment No. 35. I beg to move.
Clause 12, as amended, agreed to.
Clauses 13 and 14 agreed to.
4.55 p.m.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 38:
After Clause 14, insert the following new clause:
"Children succeeding parents
( .—(1) Where the secure tenant of a dwelling-house (in this section referred to as "the former tenant") dies or otherwise ceases to be a secure tenant of the dwelling-house, and thereupon a child of his who occupies the dwelling-house as his only or principal home (in this section referred to as "the new tenant") becomes the secure tenant of the dwelling-house (whether under the same or under another secure tenancy), the landlord may, if it thinks fit, count the whole or part of any period qualifying under this section—

(a) for the purposes of section 1(3) above; or

(b) towards the period to be taken into account under section 7(5) above for the purposes of discount;

or both (and may count different periods under paragraphs (a) and (b) above).
(2) A period qualifies under this section if it is a period during which the new tenant, since

55
reaching the age of sixteen, occupied as his only or principal home a dwelling-house of which a parent of his was the secure tenant or one of joint tenants under a secure tenancy, and either—

(a) it was the period at the end of which he became the secure tenant; or

(b) it was a period ending not earlier than two years before another period qualifying under this section.

(3) For the purposes of this section two persons shall be treated as parent and child if they would be so treated under paragraphs (a) and (b) of section 49(3) of this Act.
(4) This section has effect, whether or not the former tenant and the new tenant are also the former tenant and the new tenant within the meaning of section 13 above.").
The noble Lord said: This amendment meets a commitment given in another place. One often hears it said that children sooner or later inevitably grow up and leave home. In fact, this is not always true; not all of them leave home. Grown-up children may continue to live as members of their parents' households for long periods, and some of them will eventually become secure tenants of dwellings of which a parent was the secure tenant before them. Others may eventually take over the secure tenancy of a dwelling in which they have started off their married life living with in-laws. By the time the secure tenancy formally passes from parent to child in this way, either because the parent has died or because the tenancy has been transferred otherwise, the child may for some years have been bearing a major part of the expenses of the household, or even bearing them altogether. But if the child then decides to exercise his right as a secure tenant to buy his home, under the Bill as it stands he will not be able to count any of that time either for the three-year qualification period for the right to buy in Clause 1(3) or to claim discount on it under Clause 7.
This new clause would allow such deserving cases, at the discretion of their landlords, to be granted either entitlement to the right to buy, or discount under Clause 7, or both, in respect of time spent since the age of 16 occupying as their only or principal home dwellings of which a parent was the secure tenant. We decided that this arrangement had to be discretionary because it would have been impossible to devise a mandatory provision which was sensitive
56
enough to distinguish between cases which were genuinely deserving and those which were not, given the huge range of personal and family circumstances which could be involved. This is a modest provision to enable landlords to give a fair deal to a comparatively small number of deserving cases. I am sure that even those of your Lordships who do not approve of the principle of the right to buy will not begrudge its presence in the Bill.
Baroness FISHER of REDNAL: I do not disagree with this proposal, but I should be grateful if the Minister could clarify two points. Because many parents cannot have children of their own, they foster children at a very young age until those children become adults, and I am wondering whether "child" in the new clause will be of help to the foster child. Secondly, does "a child of his" embrace "her", as we would expect under the Sex Discrimination Act?
Lord MOWBRAY and STOURTON: I am not sure I have all the points the noble Baroness has in mind. It is true that some children will have spent some time as adult members of their parents' households before moving away to become secure tenants in their own right. On the other hand, of course, they will have been accumulating periods of entitlement to the right to buy and to discount in their own right ever since they did so, and a discretionary power will accordingly be of less significance to them. I accept that a small number of deserving cases may be excluded from the discretion we propose, but the fact is that we have confined the provision to tenants who have succeeded a parent as secure tenants of the same dwelling because we believe that only a limited discount concession in particular could be justified on financial grounds, and because we believe that the provision as it stands will cover the great majority of the most deserving cases. I am delighted again to be able to confirm to the noble Baroness that as under the Sex Discrimination Act the terms "his" and "her" will be effective in this Bill.
Baroness FISHER of REDNAL: Perhaps I framed my question badly and it was not readily understood, but f was trying to speak quickly so as not to delay the Committee. I understand that Clause 49 contains a definition of a person who is a

57
member of another's family. This appears at page 35 of the Bill. I hope that this time I hall make myself a little clearer. My point is that there is no definition of what is known as a foster-child. If we are to encourage local authorities to foster more and more children—and this is in fact encouraged, and is taking place—could such children be included in the definition, so that both the legitimate and the illegitimate child are covered?
Lord MOWBRAY and STOURTON: I understand that under the definitions in Clause 49 foster-children are not included, but step-children will be included. Speaking off the cuff, I am not sure whether illegitimate children will also be covered, but I believe that as a result of recent laws illegitimate children will have rights in this matter in the same way as other children, but foster-children are not included.
Lord GREENWOOD of ROSSENDALE: If the noble Lord is correct in his interpretation that the legal meaning of parent and child excludes foster-children, then speaking as a foster-grandparent, I must say that the Bill contains a very serious deficiency. Perhaps the noble Lord will agree to look at this point before the Report stage, so as to be quite sure about it.
Lord MOWBRAY and STOURTON: I see the justice of what the noble Lord Lord Greenwood of Rossendale, said, and I shall certainly undertake to do as he asks.
Clause 15 [Completion]:
The DEPUTY CHAIRMAN of COMMITTEES (Lord Jacques): I should point out that if Amendment No. 39 is agreed to, I shall not be able to call Amendments Nos. 40 to 49.
5.2 p.m.
Lord HYLTON Lord HYLTON: moved Amendment No. 39:
Page 13, line 6, leave out subsections (2) to (6).
The noble Lord said: I put down this amendment with a probing intention, because I wanted to hear from the Govern
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ment some justification of the whole option period. I listened very carefully to what my friend the Minister said when earlier he moved a whole string of amendments which have some bearing on these options. I cannot say that I then heard anything which made me feel happier about options. I hope that my noble friend will not now say that this was in the manifesto and that we must take it or leave it.
My view is that a local authority tenant who has occupied a house for a period of years has been subsidised by the rest of the community for whatever the period happens to be. If he wants to go ahead and buy, he receives his appropriate discount. He might then put down this relatively small option sum, £100, and following that, he receives the benefit of whatever is the going rate of inflation. As I understand it—I may be wrong—during the two years he also receives the benefit of a further 2 per cent. on his discount. So when he has received all these benefits he is a highly favoured person and, as I said on Second Reading, I cannot see that this represents social justice. I beg to move.
Lord BELLWIN: In reply to my noble friend I should like again to touch upon one of the aspects of this matter which may not be very clear. The amendment would make two fundamental changes to the right to buy procedure. It would mean that local authority landlords no longer had the power to serve completion notices on any tenants who were delaying, and it would remove the option procedure from the Bill. With regard to the service of a completion notice, I think it is only reasonable that, just as a landlord is required to proceed with his side of a sale as soon as possible, the landlord should be able to require a tenant who is delaying to complete within a fixed period of time. The other major provision in Clause 15 which this amendment would seek to remove is that whereby a tenant who cannot afford to buy straight away may have a 2-year option to purchase the dwelling-house at the original valuation.
The Government are firmly committed to this provision. I am sorry that I must put the matter in the way that my noble friend asked me not to put it, but this provision was contained in the manifesto, quite clearly, and it will enable those who are not immediately able to buy outright

59
to have the prospect of being able to buy a property within a defined period. This is a tightly drawn provision. The option procedure will be available only in limited circumstances; that is, where tenants' mortgage entitlement would not enable them to buy immediately. I consider that most people who wish to buy will want to do so at once, so that they can start paying off their mortgage, and so that the five years for discount sharing begins to run soon.
However, we believe that Clause 15 is somewhat unfair on the tenant at present, since he must wait for a completion notice before taking out an option. For this reason we tabled the earlier amendments (which we have already discussed) which will enable the tenant to take the initiative in taking out an option as soon as all matters relating to the grant of the freehold or lease and the amount of the mortgage have been agreed or determined.
This topic has been discussed at considerable length in another place and elsewhere. I am aware that some people feel that a special benefit is being given to those who wish to proceed in this way, but the Government believe that it is not inequitable. Anyone who really wants to buy a house will want to get on with it, but if he cannot put down the money, we want to be able to help him.
As my noble friend said, all this may result in the person receiving a discount of the kind forecast, but that is merely the procedural outcome of the matter. This represents a commitment which we made. There was no mystique about it; nothing was hidden. We have always made it clear, and we are committed to it.
Viscount SIMON: Probably I have not fully understood the clause. The Minister said that the option is available for people who are unable straight away to proceed with the purchase. But is it not likely that people will say, "I am sorry, but I cannot take up the purchase at once", simply because there would be an enormous advantage in buying the house two years hence at a price which is now current?
Lord BELLWIN: Such people may indeed say that they will wait for two years. The motive behind that may be
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the one that the noble Viscount suggests, or that they want to save as much as possible. Surely when purchasing a house it is always preferable to put down the maximum possible amount so that the remaining capital sum on mortgage is as small as possible. That would be another reason why people might want to delay the matter.
Not unreasonably, we are discussing here, and in the many other debates on this Bill, the peripheral cases which will arise. Some people may consider that such cases would be much more than peripheral, but I do not share that view. I entirely recognise the concern of my noble friend, but may I say, without discourtesy, that we are probably more of one mind on some other matters. As the noble Lord, Lord Evans of Claughton, said, in so many of these matters one takes a view and makes a judgment. The Government took a view in this case a long time ago. They feel that they are committed to it and that the provision is not unfair.
Lord CLEDWYN of PENRHOS: I wonder whether the noble Lord can confirm one point, which I do not necessarily refer to in a spirit of criticism. As I understand it, the provision would place the tenant who is in the circumstances outlined in a much more favourable position than the private tenant who is in similar circumstances.
Lord BELLWIN: It is not normal, I quite agree, that in making a purchase you can arrange to have a price that will stay fixed for two years. Yes, that is a very fair point to make; but, again, one would have to look at it in the total context of the whole scene and of what one is doing and what one is seeking to do.
5.10 p.m.
Baroness BIRK: I may be wrong, but I get the feeling, both from what the Minister said to his noble friend and from what he said in reply, that he is not quite as happy about this provision as he is about some of the other proposals in this Bill. I should like to support the noble Lord, Lord Hylton. I think his amendment, as I believe the Minister mentioned at one point, is probably defective, because I do not think he needs

61
to delete all the subsections to achieve what he wants. In fact, all he needs to delete, as I understand it, are subsections (2)(b), (4) and (5). Then, he would not take out the paragraph referring to the exercise of the right to a mortgage. But, of course, this is not the point. I am quite certain that the Government are not resisting this amendment on the basis of defective drafting; it is on the principle of the whole thing.
It seems to us that this is an extremely important part of the Bill; and, I am afraid, it is once again adding extra seductive lumps of sugar to something that has already been, one could say, almost over-sugared. There is the right to buy, and on top of that there are the discounts. The Minister may not like hearing all this again, but I am speaking specifically to the amendment and it is impossible to isolate these things because they are all tied up together. If there was no compulsory sale on the part of the local authority and no system of discounts, or much lower ones at the discretion of the authority, as was the practice before, then one might talk about an option in different terms.
The Minister said that the way in which the matter had been drafted now meant that it had been very tightly tied down. We will come to that. Unfortunately, these are all in different clauses, and there is a new clause on this matter being moved by the Government. I would say that it is not yet tightly tied down; but, nevertheless, even if it were, the point about these amendments is whether, on top of the right to buy and the discounts, there should in fact be added an option. I think one could just as well argue that if people with all those financial advantages, almost at their elbows, at their fingertips, still cannot complete a purchase, giving them an option which will extend for two years and which will enable them to buy their house or flat at the price that it was at the beginning of the two years is really financial irresponsibility on the part of the Government.
I also question very much whether it is in fact ethical or morally right to put that sort of pressure on people who are probably not in a position to afford to buy their house at that time. This is a pressure like that which is often exercised,
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and which succeeding Governments have tried to cut down, in the hire-purchase field. This is the same sort of thing. So I think that for economic reasons and for social reasons, and for ethical reasons this whole option clause is quite wrong. The attempt to help the buyer who needs more time has been covered by the right to a mortgage and by mortgage facilities before ever this Bill appeared. We had special help for the first-time buyer. It is through the mortgage right that this should be done, and there should not be this extra option.
Incidentally, I should also like to know what it is estimated it will cost the local authority in legal and other expenses when somebody takes out such an option, as a number of people will. The demand could be absolutely enormous, because here it is not just demanding a house to buy; it is taking out an option which you can exercise or which you need not exercise; so it is skin off nobody's nose to take out an option like this. But presumably somebody has got to process these applications; somebody has to look at them; somebody has to write letters to deal with them. I should like to know whether there has been any calculation made of the extra cost, particularly in the circumstances when, at the end of the two years, the option is not taken up.
I really think that this is an iniquitous part of the Bill, and that the Bill could stand up on its own, with all the Government's principles about the right to buy, without having this extra bit on top of the discounts. We have seen what the response has been when we had tried to extend the time during which people cannot sell their houses without paying back the discount. That has remained five years rather than 10. The attempt by the noble Lord, Lord Monson, to cut down the rate of discount has been refuted; and now, on top of that, we have these options. It is in the manifesto, as the Minister said, but again I repeat that no Government have the right to take something blindly a year after they came into office, and probably 18 months after the manifesto itself was drafted, and not look at it in the context of the economic situation today. So I really think that the amendment moved by the noble Lord, Lord Hylton, is worthy of support.
Lord UNDERHILL: Before the Minister replies, I wonder whether I could follow up this particular point. We are being told at the present time that local authorities must do everything possible to keep within financial limits, and here we have a case where, due to inflation—because we must assume that inflation is continuing at the particular time—we could easily find ourselves with house prices having gone up 40 per cent. in a period of two years; and yet here we have a contract which is to be kept at the original purchase price agreed two years previously. We are always being told by noble Lords opposite that public authorities should be looking at things on a commercial basis. It seems that everything possible is being done in this Bill to ensure that those persons who wish to buy are going to get every opportunity, which is not open to people in other spheres.
I wonder whether the noble Lord would give some indication whether, in the light of this very generous provision, the Government have any intention of bringing in legislation to provide the same sort of facilities for people who wish to buy from private landlords. Or would it be the case that that would be hitting the landlords' pockets, and therefore that cannot possibly be agreed; but as this is public money there is therefore no hesitation on the part of the Government in seeing that it is disbursed in this way to people who wish to buy?
Lord BELLWIN: The noble Lord, Lord Underhill, has suggested that private people should perhaps be given the right to buy in special circumstances, and spoke about that hitting the landlords' pockets. I would have thought that it would have exactly the opposite effect. I should think that many landlords would be only too delighted if they were able to sell to people who might be assisted to buy in one way or another; but I think that that is really a side issue.
I do not know that there is a lot more that I can add to what I have already said on this. I understand the points which have been made by my noble friend, as I have said, and by the noble Baroness. I do not take the point at all about the general mal-effect upon finances generally. I said last week, I think it was, on the
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Question, Whether Clause I shall stand part?, or on Second Reading—it is a job to remember which it was—that certainly no one argues that it is not a good thing from the point of view of the tenant, but I was also absolutely satisfied, and no doubt it would come out when we got into the nuts and bolts of the implications of the rights to buy, that it was also an excellent thing for the local authority as well, and for everybody concerned. Therefore, although one might disagree now and may even disagree later (although I hope not, when we get down to the detail), the fact is that I do not think that, on those grounds, I have any sympathy with the arguments. Where I do take some of the points made—and the noble Baroness was very sensitive to the way I was putting the points, perhaps—is in that I understand exactly in this case what the concern is. I am not without sympathy for them, but I must say that on balance—and it is a matter of judgment —it is a fair thing. It was thought through a long time ago. It is no new thing. On balance, it is a good thing, and that is why I support it.
Lord HYLTON: I acknowledge that this amendment is defective in its drafting. Perhaps that is not altogether harmful in what is something of a probing amendment. I feel that the Government are leaning over backwards in favour of the marginal buyer. Having said that, I do not wish to go on battering my head against the manifesto, the mandate and the serried ranks of the Tory Party. We shall have a further opportunity to discuss the matter on the Opposition Amendments Nos. 44, 46 and 47. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord BELLWIN Lord BELLWIN moved Amendment No. 40:
Page 13, line 10, leave out paragraphs (a) and (b) and insert ("to complete the transaction within a period stated in the notice").
The noble Lord said: I have already spoken to this amendment with Amendment No. 35. I beg to move.
5.22 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 41:
Page 13, line 23, leave out from ("than") to end of line 26 and insert ("whichever of the following is applicable, that is to say—

(a) if the tenant has not claimed to exercise the right to a mortgage, three months after the end of the period within which a notice claiming it could have been served by him;

(b) if he has claimed the right to a mortgage, but is not entitled to defer completion, three months after the service of the notice under section 12(4); and

(c) if he is entitled to defer completion, two years after the service of his notice under section 5 claiming the exercise of the right to buy or, if later, three months after the service of the notice under section 12(4) above.

(3A) A tenant is entitled to defer completion if—

(a) he has claimed the right to a mortgage; and

(b) the amount to be left outstanding or advanced on the security of the dwelling-house is less than the aggregate mentioned in section 9(1) above; and

(c) he has, within the period of three months beginning with the service on him of the notice under section 12(4) above or within that period as extended under subsection (3B) below, served a notice on the landlord claiming to be entitled to defer completion and has, within the same period, deposited the sum of £100 with the landlord.

(3B) Where there are reasonable grounds for doing so the landlord shall extend (or further extend) the period within which a notice under subsection (3A)(c) above must be served and the sum of £100 deposited; and if it fails to do so the county court may by order extend or further extend that period until such date as may be specified in the order.").
The noble Lord said: I spoke to this amendment, too, with No. 35. I beg to move.
Baroness DAVID Baroness DAVID moved, as an amendment to the amendment, Amendment No. 41A:
Line 17, leave out ("to be left outstanding or ") and insert ("which he is entitled, or is treated as being entitled, to leave outstanding or have").
The noble Baroness said: The Government have implied throughout, when talking about the £100 option scheme, that these options will be available only to those who cannot afford to buy immediately. Mr. Stanley, in Standing Committee "F" in another place, said:
"The object of the options concept is to enable those who at present are not able to buy outright the prospect of being able to buy a property
66
within a defined period. That is the whole rationale of the clause".
Mr. Ginsburg said on Report:
"The provision that we have made is tightly drawn. The options procedure will be available only in limited circumstances where a tenant's mortgage entitlement would not enable him to buy immediately".
The Bill's Explanatory and Financial Memorandum introduces the proposal with the words:
"if his mortgage entitlement is insufficient".
Yet there appears to be nothing in the clause as drafted which limits the options to those who cannot afford to buy. As it stands, it appears to allow any purchaser simply to choose to delay for two years and thereby take advantage of the extra effective discount which will arise to avoid house price inflation over that period. It might be thought that there was a difficulty in introducing into the clause the inherently subjective distinction between those who can and those who cannot afford to buy; but the Bill's existing provisions make such a distinction in relation to the right to a mortgage. Subsections (1) to (4) Clause 9 define the amount that the tenant is entitled to leave outstanding or have advanced to him. Clause 9(5) gives the local authority discretion to treat him as entitled to leave outstanding a higher amount.
The amendment that I am moving into Clause 15 from Clause 9 by introducing these concepts would ensure that the £100 options could be exercised only where a tenant had failed to qualify, in the terms of the Bill's own provisions, for a mortgage large enough to enable him to buy immediately. Since, according to Mr. Stanley, this is the whole rationale of the clause, it will be interesting to see how the Government respond; but to make their own purpose more clear I imagine that they will welcome and accept this amendment and be flexible for, I think, the first time. I beg to move the amendment to the amendment.
Lord MOWBRAY and STOURTON: I am grateful to the noble Baroness for explaining what she meant on this amendment. We were puzzled about it and have only just had our advisers' comments on it. I must make it clear at the outset that the provisions in Clause 15 which enable a tenant purchaser to complete his sale at a price which has been frozen

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for two years are designed to help a particular category of tenant. There is no question of every council tenant, no matter how high his income, being able to turn up with his £100 and being able to take advantage of the option to complete later on.
The category of purchaser we are concerned with in these provisions is made up of those who are just on the wrong side of the financial dividing line between those who can afford to buy at once and those who cannot. We want to give them a leg up so that they can cross that barrier. In order to define this group of people in a way which is practical, we have come up with the scheme which is now embodied in Clause 15 as amended by Government Amendment 41. This makes it clear that the only tenant who can take advantage of the option to complete at a later date is the one who has applied to exercise the right to a mortgage, but whose entitlement turns out to be too low to enable him to buy at once. Where it looks on the face of it as though the tenant was entitled to complete later, and he deposited his £100 in order to claim to do so, but it subsequently turns out that his entitlement was high enough to buy immediately, he will either put his £100 to the cost of the house, or get it back if he decides not to go ahead.
From what I have said, I hope it will be clear that I do not accept that there is any danger of these provisions being abused by those who may wish to manoeuvre themselves into an option. It will depend on the outcome of the valuation of the house and calculation of the price payable, and the calculation of the mortgage entitlement under the regulations which my right honourable friend will make under Clause 9. Despite what the noble Baroness has said, I can see no way in which her amendment would either clarify or make more rigorous the provisions of Government Amendment 41, and I therefore hope that she will withdraw her amendment.
Baroness BIRK: I thought that my noble friend Lady David clearly explained this amendment. This is not a matter of principle at all. It is a matter of our believing that it does the job that the Government have said they want their amendment to do, but it ties it even more
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tightly. I would ask the noble Lord and his noble friend to take this back and look at it. The noble Lord said that he had only just had a chance to see the amendment and to see the advice on it. I agree that it was tabled only on Friday. Therefore, I cannot see that anything is going to be lost—and there may be quite a bit gained—on this particular point if this is taken back and looked at. On the objective in this narrow area, evidently we are in agreement to make it as tight as possible. This, as my noble friend quoted, was said in another place also. To me, it looks as though our words:
"is entitled or is treated as being entitled"
are tighter than
"to be left outstanding".
All that we are discussing is which is the tighter drafting. With respect, I submit that the amendment to the new clause is the tighter piece of drafting and I would ask the Minister to take it back.
Lord BELLWIN: I do not think we can take it away in the manner that the noble Baroness, Lady Birk, suggests. On the face of it, there seems to be no reason to do that. Having said that, I will undertake to look at it and if there is any cause for special concern—or if the noble Baroness would care to discuss it later with me and anything transpires from that —we will deal with it in that way.
Baroness DAVID: Having listened to what has been said, including what the Minister said, I am quite willing to withdraw this amendment on the understanding that we shall have some further information. If not, we may come back on Report.
Amendment to the amendment, by leave, withdrawn.
5.30 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 42:
Page 13, line 34, leave out ("(2)(b") and insert ("(3A)(c)").
The noble Lord said: I spoke to this amendment with Amendment No. 35. I beg to move.
The DEPUTY CHAIRMAN of COMMITTEES (Baroness Wootton of Abinger): The next amendment is No. 43. I have to draw the attention of the Committee to the fact that if Amendment No. 43 is agreed to, I shall not be able to call Amendment No. 44.
Lord BELLWIN Lord BELLWIN moved Amendment No. 43:
Page 13, line 36, leave out from ("transaction") to ("that") in line 37.
The noble Lord said: I spoke to this amendment when I moved Amendment No. 35. I beg to move.
Baroness BIRK: This is all so complicated. It seems to me that that wording has nothing to do with the other amendment but I am sure that it must be so and I accept that. Speaking on this, with the leave of the Committee, I shall speak to Amendment No. 44 because I am not quite sure what Amendment No. 43 means. The point of Amendment No. 44 is to reduce the time that the option can be held, from two years to six months. This really does more than any of the amendments—even Amendment No. 41 with its amendment—to make sure that an option is granted only in order to help people over a very short, bridging period. In those circumstances, it could be argued that an option was just about feasible because it would take about six months for people to organise themselves, for the conveyance to be carried out and for everything to be done to enable the purchase to go forward.
What it does not do is to allow people to have what is a lengthy period of time which we discussed on a previous amendment moved by the noble Lord, Lord Hylton. It is a practical matter and quite frankly reduces the time of the option almost down to a minimum. If, as the Government say, it is to help people along the way a bit but not take it as far as they would like it to go, to an extent however that we feel would be quite wrong in the circumstances, then the six months is about the only other alternative which I would have thought could be considered at all viable in the whole context of buying discounts and options. Therefore, I hope that the Government will certainly look on this with a more kindly glance than they looked on the
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other amendment which was moved by the noble Lord, Lord Hylton.
Lord BELLWIN: This is probably the third time that we have spoken on this matter in the Bill. I have tremendous sympathy with the noble Baroness in the difficulty of finding a way round the various amendments, and so on. I do not think that we are going to be able to help her very much here. There are one or two points that I ought to make clearer than I may have done before when discussing this whole subject. The option procedure is a tightly drawn provision. It will only be available in limited circumstances—that is, where a tenant's mortgage entitlement would not enable him to buy immediately. I do not think that it has been said before but a prospective purchaser has to be able to show that he cannot buy immediately. It is not simply good enough to say, "I do not want to buy immediately".
I do not want to repeat what I said before on this; that would be wasting the time of the Committee. But, as to the life of the option, it must be long enough to fulfil its purpose: that the tenant should know in advance the price at which he can buy while he saves the money to do so. It would not help to reiterate some of the basic philosophical arguments and points about past commitments that I have before me. We are all aware of those. It is a fact that when this whole proposal was first mooted—and it was done by the now Secretary of State in a speech made at around the time of the election—we were referring to two or three years as the period. So if it is any comfort to the noble Baroness—and I am sure it is not—it is two years that we are talking about and not three. I suppose that everything is relative.
I say again that the option procedure is an integral part of the right to buy, as we see it. We believe that a period shorter than two years would be too short to make the option of any benefit, given that some time will elapse from a tenant's initial application to the date at which it becomes clear that he may have the option to complete at the fixed price within two years. I am sorry that I cannot go further than that.
Lord EVANS of CLAUGHTON: I see this is again going back to the question

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of the mandate and the manifesto. Like other noble Lords, I am getting confused with the plethora of amendments. May I inquire why, if the matter is being left at two years between the date of wishing to have the purchase and then completing under the option, there should not be a revaluation? The way inflation is "steaming" away, and is expected to do so, certainly in the housing sector, why will not the Government say: "We insist on two years but if the person completes the purchase for which he has an option within the two year period there should be a revaluation of the value of the house"? The value will change materially in two years, I would have thought.
Lord HYLTON: I take the point that my noble friend is making about the grounds for having an option being tightly drawn. I accept that. It may be that six months is too short a period for the option to run. Equally, I feel that two years is too long. I am sorry that my noble friend was not able to be more forthcoming. I wonder whether there are some grounds for a compromise period here.
Lord BELLWIN: I have always been—and I hope I have shown in your Lordships' House and in Committee no less—a great lover of compromise where it is possible. I hope that I will continue to show that where it is possible. I fear, however, that I do not have the room to manoeuvre in this particular instance. I cannot help my noble friend.
The DEPUTY CHAIRMAN of COMMITTEES: We now pass to Amendment No. 45. I have to point out that if Amendment No. 45 is agreed to, I shall not be able to call Amendments Nos. 46 or 47.
Lord BELLWIN Lord BELLWIN moved Amendment No. 45;
Page 13, line 40, leave out from ("transaction") to second ("the") in line 43 and insert ("but withdraws his notice claiming to exercise the right to buy or is, by virtue of subsection (4) above, deemed to have withdrawn it").
The noble Lord said: I spoke to Amendment No. 45 when I moved Amendment No. 35. I beg to move.
Lord BELLWIN Lord BELLWIN moved Amendment No. 48:
Page 13, line 44, at end insert—
("(5A) A tenant who is entitled to defer completion may, at any time before the service on him of a notice under subsection (2) above, serve a further notice under subsection (1) of section 12 and, if he does so, subsection (4) and (where applicable) subsection (5) of that section shall then apply accordingly.").
The noble Lord said: I spoke to this amendment with Amendment No. 35. I beg to move.
Lord BELLWIN Lord BELLWIN moved Amendment No. 49:
Page 14, line 1, leave out subsection (6).
The noble Lord said: I spoke to this amendment with Amendment No. 35, and I beg to move.
The DEPUTY CHAIRMAN of COMMITTEES: Amendment No. 50: I have to point out that if this amendment is agreed to it will not be possible to move Amendment No. 51.
5.40 p.m.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 50:
Page 14, line 13, leave out subsection (8).
The noble Lord said: I should be grateful if your Lordships would be willing to consider Amendments Nos. 50 and 51 together. It may sound a technical lawyer's point—the question of how important the completion of a purchase is when used against a landlord—but in the normal practice of completing transactions for the sale of property, where a court makes an order that the person shall complete a contract for the sale of land, it is done by ordering completion to be done by a method known as "specific performance" and not by injunction, as this subsection proposes.
There is a very important practical difference. If the normal conveyancing procedure were followed in this Bill and completion was enforced on a vendor by the system of specific performance, a court official would then execute the conveyance as "specific performance"

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and the landlord would be overtaken by the court order and the court officials signing the conveyance, and the transaction would be completed.
It seems to me that by going for the unusual procedure—certainly extremely unusual in the world of conveyancing—where you use the system of injunction the penalty for disobeying an injunction is imprisonment. It seems rather an extreme way of dealing with a conveyancing transaction that a vendor of any kind, whether it be a local authority or otherwise, should be committed to prison for refusing to complete.
From a practical point of view—and perhaps this is the most important point with regard to this amendment—it would seem to me infinitely preferable to adopt the solution of a court order for specific performance, so that we would avoid the opportunities given to councillors in local authorities, if such councillors disagreed with the selling legislation, to make dramatic martyrdoms in public; because it seems to me that if an injunction is disobeyed there might be many councillors of certain political views considerably to the left of my own who may feel that it would be newsworthy and very spectacular to get themselves committed to prison, to demonstrate in a dramatic way their opposition to the provisions for sale. Therefore, what I am suggesting is, on the face of it, a technical amendment that specific performance is more usual than injunction, and also specific performance avoids the drama that disobedience to an injunction might bring. In considering these amendments, I have the option, first of all, of leaving out the subsection altogether; but I would prefer, if your Lordships will not leave out the subsection altogether, that the words "specific performance" should be substituted for "injunction", for the reasons I have given. I beg to move.
Lord JANNER: I should like to support this amendment as a person who for some 60 years has been in practice as a solicitor. I am bound to say that the noble Lord has given in very clear terms the reasons why his amendment should be accepted. It would be very unusual for anything in the course of a conveyancing transaction to impose at any time the penalty of imprisonment, and I hope the Government will realise that. It is not only unusual,
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but it could be exercised in a way which the noble Lord has already pointed out: it could be utilised for political purposes as well, and for committing a breach of the law. After all, the important thing is the law as it stands, whether or not we agree with all of it, and we know that breaches of it are very frequently utilised in order to bring public attention to matters which ought in other ways to have been aired. I hope that the noble Lord will realise this and, if I may say so with respect, will take the advice of those of us who are actually in practice, and have been in practice for years, to approve of this amendment.
5.44 p.m.
Lord MOWBRAY and STOURTON: As has been explained, these amendments are concerned with the case of a tenant who is exercising the right to buy and wants to complete the sale. As the noble Lord, Lord Evans, explained, the amendments are not compatible with each other: the second would amend what the first would leave out, but the effect of the first amendment would be that the Bill no longer explicitly gave a tenant a remedy through the courts if the landlord failed to complete the transfer of the dwelling-house to him as soon as the transaction was far enough advanced. It could cast doubt on the ability of the county court to entertain proceedings to enforce the statutory duty imposed on a landlord by Clause 15 of the Bill.
Once everything has been either agreed by the vendor and purchaser under the right to buy, Clause 15 places the landlord under an obligation to convey the freehold of the dwelling-house to him, if it is a house, or grant him a long lease, if it is a flat. It would be wrong to describe the purchaser as having a contract at that stage, because the procedure which we have adopted does not embody a formal contract step. On the other hand, once the purchaser reaches the stage envisaged in Clause 15 he will have reached a point at which it would clearly be appropriate for him to be given the power to enforce the transaction through the courts. That is what is achieved by Clause 15, and subsection (8) merely places it beyond doubt that the county court, which is the usual forum for proceedings under Chapter of the Bill, can exercise for this purpose

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a jurisdiction to grant an injunction to enforce this statutory duty.
Proceedings of this kind will no doubt be very rare. There must be few cases in which a vendor would not fulfil its statutory duty, having got so far, and of course the powers of the Secretary of State under Clause 22 would be available if it was considered that they were appropriate in any case. Nevertheless, the Government consider that it would be wrong not to make it clear that the individual can enforce the sale at this stage should he decide to do so.
The noble Lord, Lord Evans, and the noble Lord, Lord Janner, both argued cogently that the Bill might encourage martyrs because imprisonment is the remedy for breach of an injunction. I have to say, however, that anyone who is determined enough to defy an order of a court, of whatever kind, may end up in prison at the end of the day. I hope that this will never happen as a result of this Bill. I find it very hard to think of a county council trying to bludgeon a small man into not buying his house. It would be quite wrong, in my view, to regard the danger to which the noble Lords have drawn attention as a pretext for incorporating what the Government do not consider to he an appropriate remedy in the Bill.
The second amendment would replace the remedy of injunction by that of specific performance. Specific performance is, as the noble Lord, Lord Evans, has reminded us, a remedy for the enforcement of contracts. But under Chapter I of the Bill, there is no contract between the parties, and specific performance would therefore be quite inappropriate.
The Bill provides, in Clause 5(3), that a tenant should be able to withdraw from his exercise of the right to buy at any time. A contractual commitment would inhibit that flexibility also, which enables a tenant to take a considered judgment as to whether to go on to take the responsibility of home ownership. Until the price and terms of sale and the amount of the mortgage are known, the tenant cannot finally decide. A contract before that stage would be premature but once the relevant matters have been agreed or determined, the parties can proceed
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directly to completion of the purchase without further formality or the tenant can, if he wishes, withdraw. This gives the tenant a right to buy rather than a duty to do so. A contract would, of course, bind both parties. Already local authorities such as the GLC have found it convenient to dispense with contracts when selling council houses to tenants. It gives greater flexibility.
The tenant has, as the Bill stands, an adequate legal means of enforcing completion when it is appropriate for him to do so. The first of these amendments would put him in a worse position, and the second is not considered to be an appropriate remedy to enforce a statutory duty. I hope that on further reflection the noble Lord will be able to withdraw these amendments.
5.51 p.m.
Lord EVANS of CLAUGHTON: I accept the remarks made by the noble Lord, Lord Mowbray and Stourton, with regard to my first amendment, No. 50. I agree that there probably needs to be some kind of sanction to ensure that a vendor carries out his commitment. I accept that. It had been my intention to say that I would then prefer that the second amendment, No. 51, should be considered. It is not quite that the noble Lord has taken me unawares, but he has put me in a position where I want to reconsider the position about injunctions and specific performance. I must reiterate with all the force I can that specific performance, if it could be applied, if it may be applied in some other way to this Bill, would be a neater and a tidier and a less messy procedure and certainly one that would not have the emotional implications of the remedies for failure to obey an injunction. I agree with the noble Lord. Like him, I hope this would never have to be used, or very rarely used.
I am not quite as optimistic as he is about the concept of the large local authority bullying the small individual purchaser, because there are many people, rightly or wrongly, in local government who hold very strongly the view that people should not have the right to purchase houses, and it may well be that people would seek this as a method to martyrdom. As I say, I do not think

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that would help either the cause that the Government want, or indeed the cause that those of us who are worried about some aspects of the right to sell, would want. All I can do, therefore, is beg leave to withdraw both these amendments at this time, reconsider them and possibly bring something else forward later on. On that basis, I beg to withdraw Amendment No. 50.
Amendment, by leave, withdrawn.
[Amendment No. 51 not moved.]
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 52:
Page 14, line 17, at end insert ("and, if there is then a subtenancy, section 139 of the Law of Property Act 1925 shall apply as on a merger or surrender.")
The noble Lord said: This is a minor technical amendment. Clause 15(9) of the Bill provides that a purchaser's secure tenancy shall come to an end on the completion of his purchase under the right to buy. This amendment is designed to protect the position of any sub-tenancies which he may have granted before then. It provides for this by applying Section 139 of the Law of Property Act 1925. I beg to move.
Baroness PHILLIPS: I should like to make just one point. I did not think there were sub-tenancies in local authority housing.
Lord MOWBRAY and STOURTON: Under this Bill, when we have enacted it, there will he sub-tenancies. It is merely a right to take in lodgers that we are talking about.
On Question, Whether Clause 15, as amended, shall stand part of the Bill?
5.55 p.m.
Lord STEWART of FULHAM: I wonder whether it would not be better for us to remove the clause from the Bill at this stage and give the Government time to think about putting in something a little more appropriate at a later stage. Already in the course of the discussion on this clause the noble Lord, Lord Bellwin, has agreed to discuss certain matters with my noble friends on the Front Bench.
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It was very right and courteous of him to do that, but the reason he did it was that on some points neither of us can be quite certain what the clause actually means. As has been pointed out to us from the Liberal Benches, we have a choice between either having provisions in the Bill that may result in people going to prison—with the prisons as overcrowded as they are at present—or there may be no way of enforcing the law at all. Here, again, we should gain from further consideration of the Bill by the Government.
Then we add to those lesser points the fact that the Bill has again the disquieting suggestion of a lottery about it. It means that if one purchases this option for £100 and it is to be for two years and not six months, the thing one is buying may have increased in money value by 40 per cent. in that period. It is a remarkable privilege one gets. Apparently it is not to be open to the public in general. It will be a piece of luck who gets this and who does not.
The Government have insisted throughout the argument that this is meant to help people who are in the unfortunate position of being nearly, but not quite, able to buy the house with the help of a mortgage. That is our understanding; it has been the Government's argument. If that was so one would have much sympathy with it. At one stage the noble Lord, Lord Bellwin, said that it will not be enough for the man to say that he cannot complete; he has got to show that he cannot. I wonder—I will give way if the noble Lord can help me—whether he will tell me where in Clause 15 the proposed purchaser is put under the obligation to prove or to come near to proving that he cannot complete.
Lord BELLWIN: The way in which it will become clear that a purchaser is unable to buy at once is as follows. The amount of mortgage entitlement of the purchaser will be calculated under the Clause 9 regulation. Where the amount which emerges turns out to be below the price which he is going to have to pay then, and only then, will he get his option to complete later. Otherwise, if he wants to complete, he must do so as soon as everything is clear.
Lord DAVIES of LEEK: May I put a point? I am a little concerned because

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there is obvious difficulty in understanding. As the noble Lord opposite rightly said, all this is a pillar of cloud. Under subsection (1), a tenant's notice may be withdrawn at any time by notice in writing served on the landlord. There are no sanctions whatsoever there. I am concerned with a third point. We are offering a bonanza. It has been pointed out from the Liberal Benches that the spiral of inflation is going on. So Davies of Leek may consider that some of his family ought to go into this buying of council houses racket and I may struggle with a little bit of wire pulling to get some of my family in council houses. What is in the Bill to stop anybody running that kind of racket? Nothing whatsoever. The Government have opened up such a bonanza that they will not know how to deal with it. I suggest that the clause better be taken back and a good look taken at the entire Bill.
Lord JANNER: There is one point in particular on which I should like to have some explanation. We are told that the matter will depend upon whether a person is in a position to purchase or whether help should be given to him. I would like to know how an inquiry is going to be made as to the position of an individual; how far his private affairs are going to be probed into. Are these people going to have the right to serve a subpoena on the bank or whoever else may be concerned? The noble Lord may think me very ignorant about this. The Government are in fact going to assess the position of an individual and I would like to know, if I may, how it is proposed to make that assessment, who will make it, and what rights these people will have in order to probe.
Lord STEWART of FULHAM: The interventions that my noble friends have made indicate that there is a great deal of difficulty about this. I have again been studying Clause 9, to which the noble Lord, Lord Bellwin, referred me. Clause 9 deals with the amount of mortgage to which a person is entitled, but it does not give an entirely clear answer. The amount is set out in subsection (1). Then subsection (2) states:
"The amount mentioned in subsection (1) above is subject to the limit that it does not
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exceed the amount to be taken into account, in accordance with regulations under this section"—
we have not seen the regulations—
"as the tenant's available annual income multiplied by such factor as, under the regulations, is appropriate to it".
We do not have the regulations, so it is not crystal clear from Clause 9 what mortgage the tenant will be entitled to. But, even if it were, surely the person we are talking about is somebody who wants to buy a house, has to pay a given price for it, is entitled under Clause 9 to a certain amount on mortgage and is, or says he is, unable to meet the difference. At what stage is he required to prove that he cannot meet the difference? That question is still there and has not been answered. Therefore, it would help the Government and all of us if they took a deep breath and redrafted this clause althogether. For that reason, I suggest that at this stage we do not let it stand part of the Bill.
Lord HYLTON: Before my noble friend replies, I should like to ask him a very technical question of which I have given him notice, and it is this. Does subsection (7) of Clause 15 apply generally to all house purchasers, or does it apply only during the period of the option to those who are able to take advantage of the option?
Lord BELLWIN: May I, first, say that I hope that noble Lords opposite do not consider—I am sure that they do not—that because one is willing to take something away and have a look at it, that that automatically implies that one is dissatisfied. It is one of the courtesies of the House to consider something which is raised, which it might be useful to do, or to see whether there is a case for looking again. So although, as I said earlier to the noble Baroness, Lady Birk, it would be helpful to give more information or to give a better explanation—which one would always want to be doing—it should not be concluded that one was unhappy with the whole of a clause.
I am sure that that is not what the noble Lord, Lord Stewart, meant, anyhow, when he referred to this being a lack of option. I do not accept that either. Nor do I accept that there is no way of enforcing the clause. I am sure that there is. What we ought to be doing is ensuring that we have the best way.

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The noble Lord, Lord Evans, made an interesting point about specific performance. I am not sure how far it gets us down the road, in one way as against another, but one certainly ought to think about it, which we will do. I wish that the noble Lord, Lord Davies, had not used the word "racket "when talking about buying council houses. In no way is it a racket. It is exactly the opposite and I am sure, knowing the noble Lord, that he did not mean that.
Lord DAVIES of LEEK: I did not. But it could become a racket.
Lord BELLWIN: He talked about getting some of his friends into council houses, but if he could do that easily he would be destroying his own earlier argument that it is a difficult thing to do. But, even more important, I should have to remind him that, even if they were in, they would have to wait three years and after that time they might not be so enthusiastic as the noble Lord suggested.
The noble Lord, Lord Janner, asked how one assesses entitlement or otherwise to an option. I have to refer him to the point I made to the noble Lord, Lord Stewart, and I do not necessarily disagree with the point that he made. I referred him to Clause 9 and what flows from that. Yes, it is indeed a very complex point, but that does not mean that it is necessarily bad or wrong. It may mean that it requires more clarification, and that we will look at. But that is a whole world away from taking out the clause, which we clearly could not do.
As to the point which my noble friend Lord Hylton raised, he always catches me on the hop. Perhaps he could just remind me. One tries to jot down these things at a rapid rate—
Lord HYLTON: My point was about subsection (7) of this clause, and failure to pay rent.
Lord BELLWIN: The intention of this subsection is to allow the tenant to delay purchase by up to two years, but only where his mortgage entitlement under this chapter is insufficient. During that period of two years, he may purchase at a price based on the valuation at the relevant time as defined in Clause 3(5). That is the date on which a tenant served notice
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under Clause 5, or the date of enactment of the Bill if his notice was served within six months of the commencement of Part I of the Bill. The discount would be made that to which he was entitled by virtue of Clause 7. In other words, the price would be unaltered by any change in value after the relevant time, nor would the discount be increased on account of the tenant having remained a tenant.
Lord ROSS of MARNOCK: Before the noble Lord sits down, can he answer a fairly simple question? Who determines whether or not a person can afford to pay this? The noble Lord has referred to a formula. We cannot work that out, because that depends on the regulations and the Government have not published them. But there is evidently a gap. So who determines? Does the tenant determine that he cannot meet the obligations, or is it the housing authority? If it is the housing authority, is there any appeal?
Lord BELLWIN: Once the regulations are clearly made and laid down, there will be no difficulty. Everyone will be able to see what they comprise, and when a tenant who is applying wishes to get the information it will be made available to him. Once he knows what it is, he can then make the decision.
Lord ROSS of MARNOCK: Yes, but that means that it is the tenant who makes the decision?
Lord BELLWIN: No, not necessarily. If the terms that are laid down in the regulations are ones which he cannot fulfill, then he knows what the position is. But once they are there for everyone to see, it will not be a question of who decides. That is what they will be and it is as simple as that. In this Bill, we are trying to make it as clear as possible, so that everyone knows his entitlements, rights and limitations. I readily agree that this is a very complex matter. The noble Lord, Lord Stewart, suggested that we might look to see whether the wording could be made clearer, and I said that one should always do that. I do not think we can go much further.
Lord ROSS of MARNOCK: The only bit further that the Minister can go is to give an indication of what the regulations contain. We are near enough to the end

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of the Bill for the Government to have their minds made up as to what the regulations will be, and on that basis we shall have some elucidation about the responsibilities that will fall upon a tenant. I come back to my original question. Is it the tenant who decides that he cannot afford and, therefore, applies for the option?
Lord BELLWIN: No, it is neither the tenant nor the landlord. It is the facts as they will be which will decide the issue. The noble Lord asked whether I would take this away. I have already said to the noble Lord, Lord Stewart, that, No, I cannot do that. But everything that has been said here will be considered very carefully, to see whether we can provide greater clarification or improvement. That is one of the reasons why these Bills come to your Lordships' House.
Baroness BIRK: The Minister said just now that the object was to make the Bill as clear as it could be. He could have fooled me. I thought the object must be the reverse. It is so obscure and its density is so great. We now have a situation in which those of us on this side of the Committee—and I suspect that this applies to other Members of the Committee as well—feel very strongly about the principle of the option scheme.
In addition, the Minister has been unable to show that what he is arguing for is in the Bill. He has argued all the way through that the option scheme is not in order to give people a treat or a bonanza but to help those who may need extra help over a short period of time to find that extra bit of money with which to buy a house. The Minister has very great experience—I am not criticising his intelligence or intellect—but he has been quite unable to put a finger on any sentence in the Bill which says specifically that this is the way in which this is going to be judged. Is the reason that
there is going to be a means test and the Government do not want to say so? Or is it that it is all to be left in the clouds and that at the end of the day anybody who wants it will get the two-year option?
In answer to an earlier amendment moved by my noble friend Lady David, the Minister said, and repeated it to my noble friend Lord Ross of Marnock, that all this will be in the regulations. As my noble friend Lord Ross of Marnock quite rightly said, although we have got to this stage of the Bill there are no draft regulations and we do not even know what will be in them.
In this Bill there are about 18 occasions where the Secretary of State has almost absolute power. It would be quite wrong not only for this side of the Committee but for the Committee as a whole to let this clause stand part of the Bill in the condition it is in at the moment. Therefore, we shall not be able to allow Clause 15 to stand part of the Bill.
Lord HYLTON: Before my noble friend the Minister says anything further, or before we take a vote, he gave me a very interesting reply to the question I put to him. I have the greatest sympathy for him but I do not think it was a reply to my question. I was trying to discover whether a tenant who is in arrears with his rent can exercise the right to buy at all. I realise from subsection (7) of Clause 15 that he cannot exercise his right to buy if he is in arrears during the option period.
Lord BELLWIN: I confirm that that is so. In those circumstances, a tenant cannot exercise the right to buy.
6.13 p.m.
On Question, Whether Clause 15. as amended, shall stand part of the Bill?
Their Lordships divided: Contents, 96; Not-Contents, 72.

CONTENTS

Allen of Abbeydale, L.

Blake, L.

De Freyne, L.

Allerton, L.

Campbell of Croy, L,

Denham, L. [Teller.]

Alport, L.

Cathcart, E.

Derwent, L.

Amory, V.

Chelwood, L.

Digby, L.

Ampthill, L.

Cockfield, L.

Drumalbyn, L.

Auckland, L.

Craigmyle, L.

Dundee, E.

Bellwin, L.

Cullen of Ashbourne, L.

Ellenborough, L.

Belstead, L.

Davidson, V.

Elles, B.

Bessborough, E.

de Clifford, L.

Elliot of Harwood, B.

Exeter, M.

Kemsley, V.

Rawlinson of Ewell, L.

Fairfax of Cameron, L.

Kilmany, L.

Redmayne, L.

Faithfull, B.

Kinloss, Ly.

Reigate, L.

Fortescue, E.

Long, V.

Rochdale, V.

Gage, V.

Loudoun, C.

Sandford, L.

Gainford, L.

Lyell, L.

Sandys, L. [Teller.]

Gibson-Watt, L.

Macleod of Borve, B.

Sempill, Ly.

Gisborough, L.

Malmesbury, E.

Sharples, B.

Glenkinglas, L.

Mancroft, L.

Soames, L. (L. President.)

Gowrie, E.

Marley, L.

Spens, L.

Grantchester, L.

Masham of Ilton, B.

Stamp, L.

Greenway, L.

Monckton of Brenchley, V.

Strathclyde, L.

Gridley, L.

Montgomery of Alamein, V.

Strathcona and Mount Royal, L.

Grimston of Westbury, L.

Mottistone, L.

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

Mowbray and Stourton, L.

Stathspey, L.

Moyne, L.

Swinfen, L.

Hanworth, V.

Murton of Lindisfarne, L.

Swinton, E.

Harmar-Nicholls, L.

Newall, L.

Trefgarne, L.

Hawke, L.

Northchurch, B.

Tryon,L.

Henley, L.

Nugent of Guildford, L.

Vaux of Harrowden, L.

Home of the Hirsel, L.

Orkney, E.

Vickers, B.

Hood, V.

Orr-Ewing, L.

Vivian, L.

Hornsby-Smith, B.

Pender, L.

Young, B.

Hylton-Foster, B.

Penrhyn, L.

NOT-CONTENTS

Airedale, L.

Diamond, D.

Lovell-Davis, L.

Amherst, E.

Donaldson of Kingsbridge, L.

Maelor, L.

Amulree, L.

Evans of Claughton, L,

Monson, L.

Ardwick, L.

Fisher of Rednal, B

Noel-Baker. L.

Aylestone, L.

Fulton, L.

Peart, L.

Bacon, B.

Gaitskell, B.

Phillips, B.

Balogh, L.

Gifford, L.

Pitt of Hampstead, L.

Banks, L.

Gordon-Walker, L.

Ponsonby of Shulbrede, L. [Teller.]

Barrington, V.

Goronwy-Roberts, L.

Beswick, L.

Gosford, E.

Ross of Marnock, L.

Birk, B.

Greenwood of Rossendale, L.

Seear, B.

Blease, L.

Hale, L.

Sefton of Garston, L.

Blyton, L.

Hatch of Lusby, L.

Simon, V.

Boston of Faversham, L.

Henderson, L.

Stewart of Alvechurch, B.

Brockway, L.

Houghton of Sowerby, L.

Stewart of Fulham, L.

Bruce of Donington, L.

Hutchinson of Lullington, L.

Strabolgi, L.

Burton of Coventry, B.

Irving of Dartford, L.

Taylor of Mansfield, L.

Caradon, L.

Jacques, L.

Underhill, L.

Cledwyn of Penrhos, L.

Janner, L.

Wallace of Coslany, L.

Collison, L.

Kilmarnock, L.

Wells-Pestell, L.

Craigavon, V.

Leatherland, L.

Wigoder, L,

David, B.

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

Winstanley, L.

Davies of Leek, L.

Wootton of Abinger, B. [Teller.]

Davies of Penrhys, L.

Lloyd of Kilgerran, L.

Wynne-Jones, L.

Denington, B.

Longford, E.

On Question, amendment agreed to.

Resolved in the affirmative, and Clause 15, as amended, agreed to accordingly.
Clause 16 agreed to.
6.20 p.m.
Baroness DENINGTON Baroness DENINGTON moved Amendment No. 53:
After Clause 16, insert the following new clause:
(Protection of old persons' dwellings
.—(1) Where a conveyance or grant executed in pursuance of this Chapter is of a dwellinghouse being one of a group where the dwellings were identified on the submitted plan approved by the Department of the Environ-
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ment (or its predecessor) as old persons dwellings and which it is the practice of the landlord to let for occupation by persons of pensionable age, and has been designed or specially adapted for that purpose, the conveyance or grant shall contain a right of pre-emption precluding a disposal of the dwelling-house falling within subsection (2) below for a period of ten years beginning with the conveyance of grant unless the owner for the time being has first offered to sell the dwelling-house to the landlord with vacant possession and the landlord has refused the offer or has failed to accept it within one month after it is made, the price (subject to subsection (4) below) to be the price which, at that time, the dwellinghouse would realise if sold on the open market by a willing Vendor and which shall be determined by agreement between the parties but in default of such agreement which shall be determined by the District Valuer whose determination of such

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price shall be conclusive and not be capable of being questioned in any proceedings.
(2) A disposal falls within this subsection if it is—

(a) a further conveyance of the freehold or an assignment of the lease; or

(b) the grant of lease or sub-lease for a term of more than 21 years otherwise than at a rack rent;

whether the disposal is of the whole or part of the dwellinghouse; but neither a disposal in pursuance of an order under section 24 of the Matrimonial Causes Act 1973 nor a vesting in a person taking under a will or an intestacy is a disposal falling within this subsection.
(3) The reference in subsection (2) above to a lease or sub-lease does not include a mortgage term.
(4) Where a dwellinghouse falling within this section is sold by the landlord at a discount, the pre-emption right contained in the conveyance or grant shall provide that on the first occasion of a disposal falling within sub-section (2) above which takes place within a period of five years from the date of the conveyance or grant, the purchase price payable on the exercise of the right shall be reduced by the amount specified in subsection (5) below.
(5) The amount by which the purchase price payable on the exercise of the pre-emption right is to be reduced in the circumstances mentioned in subsection (4) above shall be an amount equal to the discount to which the secure tenant was entitled on the sale by the landlord but reduced by 20 per cent. of that discount for each complete year which has elapsed between the date of the conveyance or grant and the date of purchase under the pre-emption right.
(6) Nothing in this section shall affect the operation of section 8 of this Act in relation to dwellinghouses to which this section applies.
(7) The pre-emption right referred to in this section shall be a local land charge and the Chief Land Registrar shall enter the appropriate restriction on the register of title as if application therefor had been made under section 58 of the Land Registration Act 1925. ").
The noble Baroness said: Following the undertaking that was given last Thursday by the Minister, on this question that concerns us on all sides of the Committee, dealing with the sales of old people's dwellings, some of my noble friends would be grateful if the Minister would repeat his undertaking. We are not quite clear what it was. Is he going to bring forward another clause, or is he going to wait until Report stage? If the Minister can make that clear, it will be helpful. I beg to move.
Lord BELLWIN: I am most grateful to the noble Baroness. We had a long and really quite fascinating debate on this
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whole matter last time on the amendments raised by my noble friend Lord Hylton, in which the noble Baroness, Lady Denington, also spoke, and points were raised by the noble Lord, Lord Evans. I then said that, as a result of what had been said and also as a result of some of the points which I myself made, I would take the matter away to be considered and that I felt it was most likely that we should want to do something about it. I am not quite sure of the best timing but I have already discussed it with my ministerial colleagues and they are now looking at the best and most practical ways of doing it. No doubt conversations will be taking place shortly, but certainly we hope before Report stage to be in a position to do something. If that satisfies the noble Baroness and other Members of the Committee that will be an end to it; if it does not, then presumably we shall have to look at it in another way. But I hope to be able to give notice of what we intend to do in good time so that all concerned will be able to make their decisions accordingly.
Baroness DENINGTON: I thank the Minister and I am happy to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 54 not moved.]
Schedule 2 [Conveyance of freehold and grant of lease]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 55:
Page 96, line 11, after ("water") insert ("sewage").
The noble Lord said: This is a minor but necessary amendment. Its nature is such that I must choose my words with great care. Schedule 2 provides how the conveyance or grant of a lease under the right to buy shall have effect on rights of support, passage of water and so on. It is necessary to protect both the rights of the purchaser and the owners of neighbouring property in relation to easements and rights over the property being bought and over adjoining property. As drafted the schedule covers water, smoke or fumes but, alas, it does not deal with such easements and rights for

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the passage of sewage. This amendment is, therefore, necessary to ensure that they are included. I beg to move.
Lord MONSON Lord MONSON moved Amendment No. 56;
Page 98, line 17, leave out ("£10 per annum") and insert—
("£25 per annum for the first 25 years of the term
£50 per annum for the second 25 years of the term
£100 per annum for the third 25 years of the term
£200 per annum for the fourth 25 years of the term
£400 per annum for the final 25 years of the term").
The noble Lord said: I do not want to spend too much time on this amendment because we discussed a similar one at a previous sitting of the Committee, although it must be said that because of the lateness of the hour on that occasion the Committee was decidedly on the thin side. I pointed out then that, because of the absence of any provision which would allow local authorities to levy a service charge upon lessees where a local authority flat had been sold on a 125 year lease, it was imperative that the ground rent should be set at a figure which would both cover the local authority's minimum costs at the outset (and by that I mean the costs relating to insurance, maintenance of the structure and of the communal parts and administration) and additionally give the landlord authorities some minimal protection against inflation. I pointed out then that £10 would hardly cover the insurance premium alone, let alone the other items mentioned, and that a grant of at least £25 would be needed for this purpose, which would need to be maintained in real terms. That £25 of course was based on the most optimistic expectations of repair costs.
It seems an opportune moment to put right a wrong impression which I may have given to the noble Lord, Lord Bellwin. Whether because of the excitement of the moment or the lateness of the hour, I regret that I made a factual error in inadvertently moving a decimal point further to the left than it should have been by asserting that with inflation at 3 per cent. £10 would be worth only one quarter of a penny in 125 years' time. In fact, with inflation at 3 per cent. £10 would be
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worth fully 2p in 125 years' time; it would require inflation at almost 7 per cent. for the £10 to be reduced to one quarter of a penny. However, at 10 per cent. inflation the value of £10 would be reduced to one fifteen-hundredth of a penny and I am sure that most noble Lords would put their money on inflation being rather nearer 7 or even 10 per cent. than 3 per cent. over that period. The noble Lord, Lord Bellwin, agreed to look into this matter, but in, view of the extremely serious financial implications for local authorities if nothing is done I ask for his confirmation that the Government will take this point seriously before the next stage of the Bill. I beg to move.
Lord BELLWIN: When we were dealing with Amendment No. 16 I think I said then that so far as I was concerned I was also speaking to Amendment No. 56. I should like to reiterate one point which I think to some extent at least should assuage the fears of the noble Lord, Lord Monson; namely, that a service charge will be possible on sales and the right to buy. In any case, the Bill provides for the tenants of flats to buy a long lease under the right to buy rather than the freehold, and the reason for that is that, under the law as it stands, long leasehold sales offer the most convenient way of making arrangements for dealing with such matters as the provision of services and obligations to repair.
The existence of the ground rent is in fact an incidental element of arranging matters in this way. It is not designed to secure a continuing income for the ground landlord but merely to represent in a token way his continuing interest in the land. Therefore, I see no reason to make specific allowance for inflation, as the amendment would do, or to try to maintain the true value of the ground rent. However, I did say before, and I gladly repeat it, that the noble Lord made one or two quite fascinating points last time which I said we would look at carefully. I said that I felt sure there was a snag in it somewhere, but I did not spot it then and I have not spotted it now, but we shall no doubt be looking at it in due course.
Lord MONSON: I am most heartened by the noble Lord's assurance, but can he tell the Committee exactly where in the Bill, which clause or which schedule, the

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provision for local authorities to levy a service charge is to be found, because I have not been able to find it? Schedule 18 refers to service charges, but it has nothing to do with local authorities.
Lord BELLWIN: This is something on which I will undertake to come back to the noble Lord, as I will on the point he has raised. I think that is probably the best way to deal with it.
Lord MONSON: With that assurance, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 2, as amended, agreed to.
Clause 17 [Right to a mortgage—terms of mortgage deed]:
6.31 p.m.
Lord HYLTON Lord HYLTON moved Amendment No. 57:
Page 14, line 29, leave out from ("period") to ("and") in line 30.
The noble Lord said: I beg to move Amendment No. 57 and at the same time to speak to Amendment No. 58. These are both probing amendments and I am seeking to discover why an extension of the mortgage period is considered necessary, how it will be done by the mortgagee, and if it can be done by the mortgagee why it cannot also be done by the mortgagor, for instance, if interest rates rise and the person with the mortgage wishes to extend the period. I should also like to ask why at all points it is written into the Bill that all mortgages must start off on a 25-year term, neither more nor less. I should have thought it might have suited some fairly young purchasers to begin with a slightly longer term. The Bill does not seem to give any flexiblity in that respect.
I come on to Amendment No. 58. I should like to ask why the Secretary of State should need to have power to vary the provisions of the Act. For whose benefit will he want to vary them and in what kind of ways might he wish to make variations?
Lord BELLWIN: These amendments would considerably reduce the flexibility
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which Clause 17 provides at present in the possible terms of the mortgage deed to be granted under the right to a mortgage. The first of the amendments would remove the facility for the mortgagee to extend the normal term of 25 years. The mortgagee may want to extend the terms of the mortgage, for example, to deal with the case where the mortgagor found at some time after buying that his long-term income prospects were reduced, or where interest rates rose and extension of the repayment period would prevent default. The amendment would remove the scope for mortgagees to act humanely in difficult circumstances. It would remove a power that there is no reason to expect to be abused by local authorities.
The second amendment would remove the provision which enables the Secretary of State to vary the terms specified in paragraphs (a) and (b). I believe this is important since it is quite conceivable that experience will show it to be appropriate to vary or add to the terms included in all deeds drawn up when tenants exercise the right to a mortgage. The noble Lord is worried that this may give the Secretary of State unfairly wide powers to impose variations in the terms of mortgage deeds on tenants. However, I believe his fears are unfounded. An order under Clause 17 would affect only deeds executed after it came into force, and a tenant would always, therefore, be aware of the terms of the mortgage deed he was being offered. There is no question of retrospection. I hope that this explanation satisfies the queries which my noble friend raises.
Baroness FISHER of REDNAL: Perhaps the noble Lord can explain this. Is there anything in Clause 17 which would be a change? If the tenant was going to make the purchase through a building society and not claiming the mortgage through the local authority, would it be a similar facility? In other words, is the Secretary of State really taking a similar line to what a building Society would be doing if it was offering the mortgage instead of the local authority?
Lord BELLWIN: To the best of my knowledge, I think the answer is, No.
Lord HYLTON: I am slightly surprised at the last "no" from my noble friend,

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because I gathered from his previous reply to my amendment that it was envisaged in the Bill that the lender—that is to say, the local authority—would take into account the interests of the borrower. Let me give an example. Supposing a borrower who is in work and earns a wage or salary becomes unemployed, then I would have expected from what the noble Lord said that the lender would perhaps charge interest only during a relatively short period of unemployment. Is this not the case?
Lord BELLWIN: I understood that the noble Baroness, Lady Fisher, was asking whether there would be a difference between the two, and it was to that that I said, "To the best of my knowledge, no".
Baroness FISHER of REDNAL: That was the question that I did ask.
Lord HYLTON: It may be that I misinterpreted things. I will certainly study what has been said very carefully. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 58 not moved.]
Clause 17 agreed to.
6.37 p.m.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 59:
After Clause 17, insert the following new clause:
"Exceptions to right to buy
( . The right to buy shall not be exercisable where the dwelling-house is:

(a) situated in a National Park; or

(b) situated in an area designated under section 87 of the National Parks and Access to the Countryside Act 1949 as an area of outstanding natural beauty; or

(c) situated in an area in Wales designated by an order of the Secretary of State as a rural area; or

(d) situated in the area of a Housing Authority where 25 per cent. or less of the housing stock is owned by that authority; or

(e) situated in a Housing Action Area within the meaning of the Housing Act 1974").

The noble Lord said: I beg to move the amendment standing in my name, and in order to avoid some doubt or concern of some noble Lords, the fact
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that on page 12 of the Marshalled List I put down an amendment to leave out Clause 18 was not because I thought that the present Clause 18 is not preferable to no clause at all, but that my clause, which I want to put in after Clause 17, is preferable to the limited rights of sale and pre-emption put into the Bill at Clause 18. This was discussed at some length on Thursday evening in a different context under Schedule 1.
The reason I want to pursue this is that I think it is of very great importance to a very large number of people who are concerned about the quality of life in rural areas and are concerned about the maintenance of a stock of property available for rent in areas of natural beauty or national parks. Therefore, I do not hesitate to rehearse the matter again to your Lordships, because I think there is a very serious danger indeed that the very small stock of local authority property in many parts of the country would, under the Government's provision in Clause 18, not be adequately protected against loss.
I think your Lordships hardly need to be told the prices which houses in national parks and areas of outstanding natural beauty fetch, which are quite outside the financial resources of many of the fairly lowly-paid people who work in national parks and areas of outstanding natural beauty. Your Lordships will have had plenty of experience, from reading the newspapers, of the bitterness and frustration that does exist, particularly in parts of Wales, about the second home problem, and indeed in other parts of the country, but perhaps in a less dramatic form.
I was in Wales at the weekend recovering from Thursday or possibly preparing myself for this week. It was quite apparent to me from going about parts of North Wales that there is very genuine concern—and I am sure that this is a concern which other noble Lords have experienced—about the very small available stock of council properties being sucked away and replaced with either second homes or by people living in them who have much higher incomes than the very badly paid people, particularly in areas of North Wales. Therefore, it seems to me that we should have a total ban on the sale of the stock in national parks and areas of outstanding beauty

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and areas designated in Wales as rural areas. Indeed, that takes care of paragraphs (a), (b) and (c) of my amendment.
Paragraph (d) of my amendment concerns a matter which I mentioned on Second Reading. There is in many areas such a small stock of rented housing accommodation in the public sector that even an occasional sale, even the odd selling off of one or two properties belonging to the local authority, might completely destroy the balance of many villages and small towns in the rural areas of this country. Again, it is a matter which has been drawn to my attention and which one sees almost every day of the week in the holiday season which is now upon us. Whole villages and small towns are being virtually populated by second home owners and people who do not spend most of their lives in the area and who certainly do not bring up their children in the area. If a housing authority with a very small stock of houses were to sell those houses it would completely destroy the very delicate balance of the neighbourhood. That accounts for paragraph (d).
Finally, I turn to paragraph (e), which is a rather different concept; namely, that in a housing action area the most important thing in my experience (and I have a fair amount of experience as a councillor, as a member of a housing association, and of housing action areas) is that if you cannot so organise the housing action area that the improvements can be carried out en masse and the people can be decanted temporarily into other accommodation before coming back; if you do not have control as it were, in the form of rented accommodation so that the housing association, local authority, or whatever body'it is, can decant the people temporarily and bring them back; if you have owner-occupiers in a housing action area then, under the present law, as I see it and from my experience of housing associations, you cannot take on an agency for an owner-occupier. Therefore, in a housing action area you would have, if the amendment is not passed, perhaps two dozen terraced houses all being improved and the odd one standing out which had not been improved, modernised or brought up to date. It would therefore take much of the value away from the housing action areas created by the Housing Act 1974
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which have been, to those involved in inner urban areas, of great value to the communities there. That is why I have added paragraph (e) to my amendment.
These are very important matters about which there has been a great deal of correspondence and discussion in the past months and in the other place. Therefore, I believe that, despite the discussions we had on Thursday, it is important that these matters should be debated again, and that the additional matters which I have added in paragraphs (d) and (e) should also be considered. I beg to move.
6.45 p.m.
Viscount GAGE: I was for many years President of the National Federation of Housing Associations. For that reason, and as I very rarely bother your Lordships, perhaps I may be allowed to make one or two general comments before coming to this particular amendment, although everything that I say will be connected with the amendment.
When I went around to different associations I found, among other things, that if, for example, there were 500 housing associations, 499 of them would be building houses efficiently and continuously. However, the most publicity that they were ever likely to receive was some reference in the local paper. Successful housing associations were not news. But, if one went wrong or if one did anything particularly dishonest, then that was news and it was well covered by the press, radio, television and so on. The result has been to cast doubt—particuarly in the minds of those people who do not know much about the matter—the whole housing movement. That is a great pity. I used to travel around and found that in nearly every case those engaged in building houses were very conscientious and straightforward. Indeed, they did build houses. A year ago they built 30,000, and this year, as my noble friend Lord Hylton said, that number had to be reduced. I think that they could build that number again. I think that they might well become a considerable supplier of rented accommodation and that might be, in the circumstances, somewhat important. Therefore, I feel that the Government and your Lordships would be right to give the housing associations the quite minor matters that are being requested in the amendments.

97
That is particularly true as regards the present amendment. As the noble Lord, Lord Evans, has said, there is a great danger of rented accommodation becoming increasingly difficult to find. I am a loyal supporter of the Government as regards the idea of the right to sell, but in these special areas of outstanding natural beauty and in national parks I do not know that it will produce a great impetus for either local authorities or individual private owners to build for rent. It might be done by housing associations. I think that there is a chance that rural housing associations might be formed to produce this very much needed extra rented accommodation.
The trouble, as has been mentioned, is that in these areas—and I live in one, so I know about them—it is very difficult to get any form of planning consent for any new building. I think that it has been overdone. We do not want to turn rural villages into rural museums; but it would be possible to build if housing associations were given half the chance. I know that my noble friend Lord Bellwin has said that the right to buy ought not to be restricted. However, I am thinking of the future. I am talking about housing associations that I hope will be formed and as regards which obviously no right to buy exists at all at present. People will go into them knowing very well what they are facing. At present there is about one housing association for agricultural labourers. It would be good if they could be encouraged in that way, and to that extent I entirely support the noble Lord, Lord Evans.
Lord GIBSON-WATT: I hope that my noble friend will forgive me if I do not follow him in his argument about housing associations. But I certainly would agree with the noble Lord, Lord Evans, that the matter we are discussing is a delicate one in the Principality. However, I would not advise your Lordships to agree to the amendment and I shall try to explain why.
In my view, the Government's Clause 18, as it now stands, is definitely preferable to the new clause as proposed. The effect of the new clause would be to exempt from the provisions and benefits of the Bill a large number of householders in national parks and the other areas specified
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by the noble Lord, Lord Evans. As far as Wales is concerned, the five categories cover a fairly high percentage of those now living in council houses in Wales.
In my view, this would not be fair to them. The limitations imposed on resale in Clause 18 of the Bill are, in my view, adequate to safeguard these houses from exploitation and being bought by "outsiders", if your Lordships will forgive the word. Certainly there is a fear of outside invasion of such properties, as the noble Lord, Lord Evans of Claughton, said. But the reasonable anxieties of people in Wales have been adequately met by the Government. A council house so bought will only be available for sale to someone who has either worked in the area for three years or who has his or her main place of residence in such an area. Another objection to the new clause, as I see it, is that it would not help the sales of council houses in designated rural areas in England. This is not an occasion when Wales needs legislation different from that in England. We all remember what the Welsh people said on 1st March 1979; they said "No", and I hope that your Lordships will say "No" to this amendment.
6.51 p.m.
Lord SANDFORDI should like to follow my noble friend for a number of reasons, but chiefly in this connection because he and I were joint chairmen of the committee which reviewed the national parks, and, as I mentioned to the Committee last Thursday, this topic of how to deal with housing to let in national parks cropped up over and over again. If I may say so, I thought that the noble Lord, Lord Evans of Claughton, made the case which he is now making very cogently last Thursday, at what I believe was the proper part of the Bill; namely, Schedule 1, which deals with the exceptions to the right to buy. I am afraid that I also thought that those of us who indicated our agreement with his concern but our difference with him about the way in which to meet it, also made our point cogently.
I very much agree with my noble friend that it is not appropriate to deprive large numbers of our people of what will become a very cherished right—this right to buy the council house in which one is living—

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in order to deal with the problem in national parks and the other areas mentioned in his amendment. I very much agree with my noble friend that the right way to deal with it is to give the local authority the power to recover the property after the right has been exercised and thus to maintain the housing stock.
I believe that the provisions in Clause 18 in respect of properties in rural areas deal with this matter correctly, as does the noble Lord's own amendment, Amendment No. 54, in respect of housing for the elderly. I do not see how he can consistently espouse an amendment, like Amendment No. 54, in respect of the elderly and at the same time twice seek to move an amendment which deals with it quite differently in respect of properties in rural areas. Therefore, having given this matter a second airing, I hope that the noble Lord will feel that he need not press it any further.
Lord HYLTON: From everything that has been said so far I cannot see any likelihood of my noble friend Lord Bellwin being able to accept this amendment. If I read it rightly, like my noble friend Lord Sandford, I am sure that he will rely very much on Clause 18. Therefore, I think that this is the appropriate moment for me to try to outline why I do not believe that Clause 18 will be good enough in all cases.
I accept that it may be sufficient in some cases, but I suggest that whether or not Clause 18 works will be very much a question of supply and demand for houses. I should like to give an instance from the Lake District National Park which covers a great part of Cumbria. Prices of houses within the national park boundaries are, I understand, twice as high as they are in the rest of the County of Cumbria. In any desirable area—whether it is a national park, an area of outstanding natural beauty or at the seaside—the pressure of demand will be highest where people want to have second homes and where they want to have retirement homes. That is the background that we need to have in mind in considering this amendment and this whole question.
In Clause 18 the Government rely on two possible strategies. The first is that
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of pre-emption and repurchase by the local authority of a house that has already been bought. We have not yet heard with any clarity how, in fact, this right of repurchase will work out in practice. How will the local authority bridge the gap—which may be a very large gap, a very big sum in monetary terms—between the initial sale price, which may often have been reduced both by discount and by the effects of the option scheme, and the full open market repurchase price after a period of five years or more? I suggest that this gap may be unbridgeable.
Then we come to the second strategy, which is the limitations on resale. Here, as far as I know, we have not yet had any definition of the criteria which the Secretary of State will take into account when defining rural areas. I should like to suggest that, again, even when we know the criteria, the whole question will be governed by supply and demand for houses in a particular area—it may be a very small area. If there is not much demand, there will be few purchasers qualified coming forward to buy when the first person wants to resell. If that is the case, we run the risk of doing an injustice to the vendor. If too many people qualified to buy come forward, then prices will rise and our object is, to some extent, defeated.
If all the council houses in a particular parish or district get sold off in the first place, when they come to be sold for the first time local people who have a need to live locally will have no chance of getting a house unless they happen to be rich enough to purchase at that time and in that place. If only half the previous stock of houses is sold, then those local people who can only rent will have a 50 per cent. chance compared with the chance they now have.
On Second Reading I thought that the right reverend Prelate the Bishop of Newcastle made an excellent plea for special treatment and, indeed, exemption from the right to buy for areas where the local authority at present owns less than 25 per cent. of the housing stock. That plea is taken up in paragraph (d) of the amendment of the noble Lord, Lord Evans. A great deal of play has been made of the number of bodies that are said to be satisfied. These include the Association of District Councils, with

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which my noble friend Lord Sandford is concerned, the NFU and perhaps even the Standing Conference on Rural Community Councils. But I wonder whether these bodies and the Government have thought through this question of supply and demand, which I submit will be quite critical. I should like to support the amendment.
Lord BELLWIN: First, I should like to deal with one or two of the points which the noble Lord, Lord Evans of Claughton, made. On the one hand, he said that the particular people living in many of these areas would not be able to buy. Then he called for a total ban on sales. With respect, I do not think that those two statements are consistent. If people will not be able to afford to buy, why have a ban on selling, on the right to buy? However, I suspect that, as always, what will happen is that there will be some who will want and some who will not want, either because they are not able or because they do not want. Then I should have to return to the point I made on the first day of the Committee stage when I said, All right, but what we are talking about is a right to buy". If they do not buy for any reason, then so be it; no one is making them buy.
This new clause would exclude from the right to buy all dwellings on whose resale a restriction could be imposed under Clause 18 of the Bill. Clause 18, as my noble friend Lord Gibson-Watt so rightly said—he hit the nail absolutely on the head when he talked about fairness to people and the likelihood of what will happen—allows certain safeguards to be imposed on sales under the right to buy in rural areas. These safeguards may be applied on dwelling-houses situated in national parks, areas of outstanding natural beauty and other rural areas designated as such by the Secretary of State.
There are two alternatives. First, where the landlord executing the conveyance or grant is a local authority, county council or the Development Board for Rural Wales, it may require a convenant in the conveyance or grant making it a condition of resale that the purchaser should have lived or worked for the previous three years in a region within which the national park, areas of outstanding natural
102
beauty or designated rural area wholly or partly falls. The Secretary of State has the power to designate these "catchment areas". When we reach Clause 18, I shall be bringing forward amendments to allow housing associations a similar discretion. I hope that that will perhaps be of comfort to my noble friend Lord Gage, who was understandably concerned about this matter but who I hope will feel happier when we come to those amendments.
As at present drafted, the Bill allows associations to include a covenant in the conveyance or grant to restrict resale by catchment area in this way only if the local authority within whose territory the dwelling is located requires it. Secondly, if the landlord is a local authority or the Development Board for Rural Wales, it may, subject to the consent of the Secretary of State, replace the restriction on resale by catchment area with a preemption condition giving it the right to buy back at market value if the purchasing tenant sells within 10 years. Again, we shall be proposing amendments later to give a similar alternative to all landlords. Housing associations, too, will need consent, but from the Housing Corporation rather than the Secretary of State.
In providing these safeguards on sales in rural areas we have struck a fair balance between the right of tenants, whether in the countryside or in a town, to buy their home, and the special, local circumstances with which some rural authorities have to deal. We simply cannot agree the exclusion from the right to buy of all those dwellings in the rural areas in which either pre-emption conditions or the restrictions on resale provided under Clause 18 could be imposed.
In the new clause the noble Lord, Lord Evans, also proposes that there should be no right to buy in the area of a local authority which owns less than 25 per cent. of the housing stock, or within housing action areas. Indeed, the point of 25 per cent. was touched on by my noble friend Lord Hylton. Twenty five per cent. is about the average proportion of the housing stock owned by local authorities. Before I say something about that figure, however, I should like to comment on the assumption that the noble Lord seems to be making that the sale of dwellings under the right to buy

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will have a significant adverse effect on the availability of dwellings for letting.
I am looking to see the exact words he used. He said that the sale of one or two houses could destroy the whole balance. I do not want to bring up again the debate we had earlier on this but I do not see that at all, because the people who buy them still go on living there. If they bought them, left the district, and they were then sold to outsiders coming in, then his point would be valid, but for the reasons we have repeated so many times already this is just not going to happen, and the safeguards coming under Clause 18 will make that even less likely to happen.
As to the new clause, it is interesting to note that of 366 local authorities which will be subject to the right to buy in England, 226 own less than 25 per cent. of the housing stock in their area. An exclusion such as the noble Lord proposes would therefore abolish the right to buy in almost two-thirds of the local authorities in England. I do not know whether the noble Lord is aware of this, but I feel I need say no more to show the Committee what an unacceptable effect this provision of the new clause would have.
The noble Lord, Lord Evans, then wanted to abolish the right to buy in housing action areas. But why does he assume that an owner-occupier would not want to improve his house in an housing action area?—especially as, under the proposals for grant, subsidies, and so on, we shall be making more facilities for grants available in housing action areas than has been the case hitherto. But even without that, so far as I am concerned, everything I have seen where sales have taken place, whether they be on council estates or especially in poorer areas or whatever, the people who buy their homes upgrade them and that in turn upgrades all those around them; just as, conversely, where you get an area where one or two people neglect their homes badly, then it tends to lower the standard in the area.
So, far from being concerned about sales in housing action areas, I would very much welcome them, perhaps almost as much as anywhere. That is aside entirely from the question of why we should
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disadvantage the people in the housing action areas. Why should they not have the same opportunities as people who may live in better areas? I am sure that that was not the intention of the noble Lord, Lord Evans, but that is what the effect of the amendment would be.
I do not think I can add much more without going over old ground again, and I am anxious not to do that. I listened carefully, as always, to the points made by my noble friend Lord Hylton, one or two of which I have touched upon. He is concerned about the effect of supply and demand, and that by itself is valid enough except that we would always come back at the end of the day to the point I keep making all the time—namely, what happens when a sale takes place. What happens to the accommodation? What is the effect upon it thereafter? As I have said so many times, selling does not have the adverse effect that some have intimated. I believe that, apart from giving the benefit which it certainly does to the purchaser and his whole family, it also has other benefits as regards the whole area in which the houses are placed. For those reasons, I feel that we could not accept the amendment.
Viscount GAGE: Does what the noble Lord is going to say about Clause 18 contain any suggestions as to who is to build new rented accommodation in these areas of outstanding natural beauty? I made a suggestion, but nobody else has made any suggestion as to who is going to provide new rented accommodation in these special areas.
Lord BELLWIN: It would be up to the authority in each case to decide whether or not it wished to make such provision. That would be its option, if it felt that that was what it should do. I would have to come back to say that there would be no need to do so in my view—I know it is not a view held by noble Lords opposite—for the simple reason that a sale had been made, because when a sale is made the house just does not disappear at all, but if it should be that an authority feels that it ought to build new, then of course that is for it to decide.
Lord HYLTON: Just for clarity, perhaps I may say to my noble friend that I entirely agree with him that there is not a

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problem when the tenant first buys from the local authority. The problems will undoubtedly arise when that tenant who has bought resells.
7.8 p.m.
Baroness BIRK: Like the noble Lord, Lord Evans, I personally preferred Amendments Nos. 10 and 11, which were unfortunately lost when we voted on them last Thursday. I think, however, that this amendment, although it may have certain defects, is something that the Government should look at. I would hope, perhaps not very hopefully, that the Government would take it back to look at it.
The rural areas—I do not know whether it was error or not—should apply to England and Wales. I think the amendment has only Wales. I imagine that the noble Lord thinks it should apply to both. On the housing action areas, there again I prefer the original amendment on housing stress areas, but there is a case for making an exception there, and also for the percentage of stock. None of these things is perfect, as the Minister pointed out, and no doubt will do so in the future, but one has to try and find the best sort of arrangement one can.
I underline the point made by other noble Lords who have spoken on this subject. The problem comes when a local authority sells a house, even if it has the opportunity to buy it back; in this case it has that opportunity for 10 years, which I tried unsuccessfully to secure in another context. As I understand it, under Clause 18 there is no recovery of the discount gained by the original purchaser, so it seems that local authorities will be in a position where, in the majority of cases, the pre-emptive right will mean nothing at all—what is the use of having a right if you cannot exercise it? If, as has been explained, it is more than likely that house prices will rise, particularly in rural areas, local authorities will not be able to afford to buy the houses if they are for sale, even with the longer period of 10 years in which to exercise the right.
I would remind the Minister—we tend to forget this when we debate these issues—that all these things are discretionary. The local authority does not have to buy
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back a house that is offered to it; and as I said, even if it wants to, I do not think it will be able to afford to do so. In the way this is framed—indeed, in the way the original amendment was framed—the local authority will make up its own mind about whether it will sell a house. There may be houses in rural areas which authorities will be happy to sell, and of course the same applies to houses for the elderly. What so many of us object to—this applies not only to noble Lords on these Benches—is the mandatory effect of the rule on local authorities, which means that their hands are completely tied so that they are unable to take any discretionary action.
I will not go over what was said last Thursday about the autonomy of local authorities. A great deal of feeling exists in the Committee on this issue, particularly in respect of rural areas, and the Government should consider the amendment afresh, despite its defects, and, as the Minister has promised to do in regard to the elderly, at a later stage introduce an amendment which would meet some of the concern that has been expressed by noble Lords in all parts of the Committee.
Lord BELLWIN: It is precisely because there exists in the Committee the feeling of which the noble Baroness, Lady Birk, spoke, on this as much as in other areas; precisely because representations have been made by people concerned with the matter, who put their case in the way they did; and precisely because there is concern and agreement about the problems involved, that we are introducing amendments to Clause 18 which were not there originally. When one puts all of this into the context of the whole scene of what the Government are seeking to do, noble Lords should feel satisfied that we have gone all the way down the line to meet the fears which were expressed, fears which in my view are no longer what they might have been at one time.
Lord EVANS of CLAUGHTON: I have much sympathy with the point put forward by the noble Viscount, Lord Gage, and I had incorporated in a later amendment—which, I am happy to see, has been overtaken by a Government amendment—a provision to extend opportunities for housing associations to build because, I suspect, that they are the

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most likely, under the present dispensations, to be letting in the future in any part of the country. We have debated this matter in a sense twice and I concede that my amendment is perhaps not the most beautifully drafted amendment ever devised by the hand of man and that the amendment in the name of the noble Baroness may be rather better. I also concede that the new Clause 18 is much better than no Clause 18. My point is that Clause 18 does not go far enough, for the reasons mentioned in most apposite and probing terms by the noble Lord, Lord Hylton.
The noble Lord, Lord Bellwin, did not deal with the point which is uppermost in my mind, which is that for the indigenous populations—I am sorry to use that phrase; if I call them "natives" that might be misunderstood—and the people living and working in the areas of national parks and the like are often, if not always, the people least able in income terms to be able ever to afford to buy a house but have to rely on the rented sector. I suspect that in one way or another—either through the local authority not being able to buy the house back or not choosing to exercise its option—the number of rented houses will be eroded to the point where the comparatively little rented accommodation that is at present available in rural areas will become absolutely nil. This is a matter of great concern to a large number of people in all parts of the Committee, as the noble Baroness said.
I will not go into the various points about housing action areas and so on. The one point I wish to reiterate about housing action areas, however, is that while grants may be available—the grants

CONTENTS

Amherst, E.

de Clifford, L.

Jacques, L.

Ardwick, L.

Denington, B.

Janner, L.

Aylestone, L.

Elwyn-Jones, L.

Kaldor, L.

Bacon, B.

Evans of Claughton, L.

Kilmarnock, L.

Banks, L. [Teller.]

Fisher of Rednal, B.

Llewelyn-Davies, L.

Barrington, V.

Gage, V.

Llewelyn-Davies of Hastoe, B.

Beswick, L.

Gaitskell, B.

Lloyd of Kilgerran, L.

Birk, B.

Gifford, L.

Longford, E.

Blease, L.

Goronwy-Roberts, L.

Lovell-Davis, L.

Boston of Faversham, L.

Gosford, E.

Maelor, L.

Brockway, L.

Greenwood of Rossendale, L.

Monson, L.

Bruce of Donington, L.

Hale, L.

Moyne, L.

Cledwyn of Penrhos, L.

Harris of Greenwich, L.

Noel-Baker, L.

Collison, L.

Hatch of Lusby, L.

Peart, L.

David, B.

Hutchinson of Lullington, L.

Phillips, B.

Davies of Leek, L.

Hylton, L.

Pitt of Hampstead, L.

Davies of Penrhys, L.

Irving of Dartford, L.

Plant, L.

are not, in my view, generous enough and I hope to move amendments about that later—the machinery is not available for people who are owner-occupiers to be moved out while their houses are being brought up to the standards of a housing action area. As for the comparison by the noble Lord, Lord Sandford, of an earlier amendment of mine designed to deal with the elderly, that is a quite different matter. There one was dealing with a class of people. Here we are dealing with a class or grouping or kind of house.
As for the rather horrendous statistic which the noble Lord, Lord Bellwin, gave, most local housing authorities—I think he said there were 226 which would be covered by my proposal—are comparatively small. The very big ones in the urban areas have the sort of proportion to which the noble Lord referred, but most of the housing authorities we are talking about are very small. I can only repeat the point I made, namely, that one can do a considerable amount of damage to the whole nature and concept of a small village community if even one or two houses are ripped out of the rented sector and put in the owner-occupied sector. This is my view, one which many others share, and while I appreciate that the Government feel they have gone as far as they can on this, I am not satisfied and I must press the amendment to a Division.
7.18 p.m.
On Question, Whether the said amendment (No. 59) shall be agreed to?
Their Lordships divided: Contents, 67; Non-Contents, 80.

Ponsonby of Shulbrede, L.

Stamp, L.

Underhill, L.

Rathcreedan, L.

Stewart of Alvechurch, B.

Wallace of Coslany, L.

Ross of Marnock, L.

Stewart of Fulham, L.

Wells-Pestell, L.

Seear, B. [Teller.]

Strabolgi, L.

Wigoder, L.

Segal, L.

Taylor of Mansfield, L.

Wynne-Jones, L.

Simon, V.

NOT-CONTENTS

Allerton, L.

Gisborough, L.

Nugent of Guildford, L.

Alport, L.

Gowrie, E.

Orkney, E.

Ampthill, L.

Greenway, L.

Orr-Ewing, L.

Avon, E.

Gridley, L.

Penrhyn, L.

Bellwin, L.

Grimston of Westbury, L.

Rawlinson of Ewell, L.

Belstead, L.

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

Redmayne, L.

Bessborough, E.

Reigate, L.

Blake, L.

Hanworth, V.

Remnant, L.

Brougham and Vaux, L.

Harmar-Nicholls, L.

Rochdale, V.

Camoys, L.

Hastings, L.

Sandford, L.

Cathcart, E.

Holderness, L.

Sandys, L. [Teller.]

Craigavon, V.

Home of the Hirsel, L.

Sempill, Ly.

Craigmyle, L.

Kemsley, V.

Sharples, B.

Cullen of Ashbourne, L.

Kilmany, L.

Soames, L. (L. President.)

Davidson, V.

Kimberley, E.

Spens, L.

De Freyne, L.

Kinloss, Ly.

Strathclyde, L.

Denham, L. [Teller.]

Long, V.

Strathcona and Mount Royal, L.

Derwent, L.

Lyell, L.

Digby, L.

Macleod of Borve, B.

Strathspey, L.

Drumalbyn, L.

Mancroft, L.

Swinfen, L.

Dundee, E.

Marley, L.

Trefgarne, L.

Ellenborough, L.

Montgomery of Alamein, V.

Trenchard, V.

Elles, B.

Mottistone, L.

Tryon, L.

Elliot of Harwood, B.

Mowbray and Stourton, L.

Vaux of Harrowden, L.

Fairfax of Cameron, L.

Murton of Lindisfarne, L.

Vickers, B.

Faithfull, B.

Newall, L.

Vivian, L.

Fortescue, E.

Northchurch, B.

Young, B.

Gibson-Watt, L.

Lord TREFGARNE: I beg to move that the House be now resumed.
House resumed.

TRANSPORT BILL
7.26 p.m.
Returned from the Commons on Friday last with one of the Lords' amendments agreed to with an amendment and with the remaining Lords amendments agreed to; the said amendment printed pursuant to Standing Order No. 47.
Lord BELLWIN: My Lords, I beg to move that the Commons amendment be now considered.
Moved, That the Commons amendment be now considered.—(Lord Bellwin.)

COMMONS AMENDMENT TO ONE OF THE LORDS AMENDMENTS
[The reference is to Bill 224 as first printed for the Lords. The Commons Amendment is printed in italics.]

LORDS AMENDMENT
Clause 48, page 46, line 4, leave out ("85") and insert ("80").
The Commons propose the following amendment: Leave out ("80") and insert ("75").
Lord BELLWIN: My Lords, I beg to move that the House do agree with the Commons in their amendment to the Lords amendment.
The Commons appear to be minded to be slightly more generous to the railway pension schemes than we were minded to be, but I see no reason to dissent, and I advise your Lordships to agree to the Commons amendment.
Moved, That the House doth agree with the Commons in their amendment to the Lords Amendment.—(Lord Bellwin.)
Lord UNDERHILL: My Lords, briefly, may I say how much we appreciate the amendment made in the Commons. This

111
is, I think, the third change, and presumably if there were more stages for this Bill, we should get back to the original 60 per cent. We have pleasure in supporting the amendment.

GAS BILL
7.28 p.m.
The Earl of GOWRIE: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3ª,—(The Earl of Gowrie.)
Lord IRVING of DARTFORD: My Lords, during the Committee stage of this Bill, the matter of energy price disadvantages between the United Kingdom and other countries was questioned by the noble Earl, Lord Gowrie, and I promised to return to this at this stage of the Bill. I did so because I believe that there is an unwillingness on the part of the Government to accept that energy prices generally, and gas prices in particular, in other countries are substantially lower than those in Britain. As I outlined to the House in my previous speech, the price disadvantage to United Kingdom industry, particularly to the paper and board industry, can be completely substantiated, and in many cases the lower energy prices in other countries result entirely from a deliberate policy of subsidisation. This is aimed at enabling these countries to compete more successfully in world markets.
While the noble Earl, Lord Gowrie, says that he understands that other countries will be forced to bring their prices in line eventually, there is no way in which this can happen in the short run, if at all. In the longer term, even if this action is taken, large sections of United Kingdom industry will have been forced to close, resulting partly from the unfair price differentials that I have mentioned.
Unless the Government recognise, and take action on, this and other key issues to which I referred in my earlier presentation to the House, then in my view the industrial base of the United Kingdom economy will slide slowly but surely into the North Sea, from where come our oil
112
and gas resources at the moment. I realise that there is very little chance of the House agreeing to any changes in this Bill now having its Third Reading, but can we please obtain the reassurance of the Government that this Bill, as presented, will not serve to encourage or allow industry to be further discriminated against, either in terms of supply or in terms of price, and that the Government will seek to review the overall policy of energy supply and price to industrial users, and in particular will ensure that energy prices charged to United Kingdom industry are not unnecessarily exploitive and are internationally competitive?
Lord WYNNE-JONES: My Lords, I would not wish for one moment to oppose the Third Reading of this Bill. As I said on Second Reading, this is a Bill which has to go through, although in my opinion it is a trivial Bill which, except for the fact that it is necessary to cope with the problems of the Gas Board, does nothing for the gas industry. My noble friend Lord Irving of Dartford has made, I think, some extremely telling points, both at the Committee stage and now, and I hope the Government will not let the matter rest where it is but will in the near future come forward with more clear and positive proposals for the gas industry, which is a very important industry in connection with some of the highly energy-intensive industries in this country. This is going to be vital.
I do not agree with the general attitude of the Government that gas is underpriced. I think the question of underpricing has nothing to do with its relation to the cost of other fuels. Otherwise, you would always say that the most expensive fuel sets the pace for everything else. My Lords, I hope that we shall allow this Bill to be read a third time.
7.32 p.m.
The Earl of GOWRIE: My Lords, I am grateful to both noble Lords for the succinctness with which they have made their points, although I have to say that I do not altogether agree with them. Furthermore, there seems to me to be a contradiction between the position of the noble Lord, Lord Wynne-Jones, who said that this Bill does nothing for the gas industry, and the position of his noble

113
friend Lord Irving, who said that this Bill does nothing, for industry. I think that if the position of the noble Lord, Lord Irving, is right, then the position for the gas industry need not be so bad. But in fact I think the real nub of the issue is not simply finding the dearest energy you can and gearing everything up to it; it is really that it is impossible to consider gas prices logically without reference to prices of oil, the two sources of supply and the two kinds of energy service that they provide being so similar. One fuel can substitute for another in so many cases, and as oil prices have risen sharply over the past year or more so gas prices have followed.
On the point of unfair competition with British industry, which the noble Lord, Lord Irving, with great credit to him, has consistently put in this House on this Bill, while I will concede to him that there are varying degrees of lag between different countries adapting their gas prices to their oil prices, adapt they must, because the revenue loss or conservation loss to the countries concerned will be far too great if they do not. In fact, we are seeing signs all over the Western economies of gas prices coming in line with oil prices.
A significant exception which the noble Lord may have in mind in this context is, as I understand it, the case of some of the Dutch; but, as your Lordships know, the Dutch are much the largest gas suppliers on the continental mainland, and there, I think, the difficulty from their point of view is that they are an honourable nation and they have already signed contracts with price notations in the contracts which they would dearly like to put up but cannot until the contracts come to an end. But I think the noble Lord will find that the contracts will come to an end with sufficient speed for British industry not to be at the price disadvantage that he is so worried about.
I agree with him that at a time when British industry is facing very considerable difficulties generally, we must be constantly vigilant of anything which would put British industry at additonal disadvantage; and I will undertake to the noble Lord to monitor (with him, if he wishes, and in response to anything he cares to ask me) how this price disadvantage may beworking out over the next months and year,
114
because obviously we would be concerned about that.
Finally, I want to emphasise that the Bill does not represent any new departure of pricing policy on the part of the Government. We have already taken action aimed at correcting the present under-pricing in the domestic sector, and I must say to the noble Lord, Lord Wynne-Jones, that in relation to oil prices it is, of course, technically underpricing. So far as the price to the industrial sector is concerned, succeeding Governments have endorsed the British Gas Corporation's policy of charging prices broadly related to those of the competing oil product. My Lords, this Bill merely removes an impediment to the implementation of that policy, and that is why I ask your Lordships to give it a Third Reading.
On Question, Bill read 3ª, and passed.
Lord TREFGARNE: My Lords, I beg to move that the House do now adjourn during pleasure until 8.30 p.m.
[The Sitting was suspended from 7.36 to 8.30 p.m.]

ROYAL ASSENT
The DEPUTY SPEAKER (Lord Nugent of Guildford): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts and Measure:

Port of London (Financial Assistance) Act,

Licensed Premises (Exclusion of Certain Persons) Act,

Industry Act,

Transport Act,

Sea Fish Industry Act,

New Towns Act,

Gas Act,

British Railways (Castlefield) Act,

Bangor Market Act,

Wesley's Chapel, City Road Act,

Diocese in Europe Measure.

HOUSING BILL
8.32 p.m.
House again in Committee.
Clause 18 [Dwelling-houses in National Parks and areas of outstanding natural beauty, etc.]:
Lord HYLTON Lord HYLTON moved Amendment No. 60:
Page 14, line 43, after ("beauty") insert ("or a green belt designated under the Town and Country Planning Acts,").
The noble Lord said: The purpose of this amendment is to extend to council houses lying within green belts the same protection that those within national parks and areas of outstanding natural beauty already enjoy under the Bill. I realise that green belts cover quite a substantial area, but I submit that they are just as much in need of protection as the picturesque parts of Britain lying within the defined parks and other special areas. I have personal experience of two particular green belts, one being the Greater London green belt in Northern Surrey, in the area of the North Downs, and the other the green belt between the cities of Bath and Bristol.
Anyone who knows those areas will know how extremely grateful we are for them and what good effect they have. In the case of Bath and Bristol, they have prevented these two cities from coalescing and, in the case of North Surrey, the existence of the green belt has preserved the North Downs in something approaching their former natural state. Nevertheless, grateful as we may be, we have to recognise that these green belts are subject to tremendous pressures. Although they are still rural there are hundreds if not thousands or millions of people now in the cities who would like to live in them if they possibly could. Therefore, all development within these belts has been most severely restricted and just about the only possible kind of houses that can be built within a green belt are cottages, bungalows or farmhouses tightly limited and restricted to agricultural use.
This is what makes me believe that there will be very great problems resulting if the present council houses lying within those green belts are sold, passed on and
116
passed on; and there is little or nothing remaining in the way of rented accommodation to satisfy the needs of those families and people from the villages of the present green belts who will be unable to buy and who must rely perforce on some provision of rented housing. I beg to move.
Lord BELLWIN: At first sight, green belts may seem to be obvious candidates for inclusion in the right-to-buy scheme for safeguarding rural areas. But I trust that on further reflection my noble friend will agree that the automatic application of these safeguards to green belts would not be right. The primary purpose of a green belt is to check the spread of an adjoining urban area. Thus, though a green belt may be a rural area, the reason for having it differs markedly from the reason for making an area a national park or an area of outstanding natural beauty. There, the intention is to protect the area itself. That is why some tracts of land fall both within areas of outstanding natural beauty and within green belts.
There is another difference; a national park or an area of outstanding natural beauty takes in the whole of a locality, including any small towns and villages in the vicinity. Frequently, green belts are drawn so that they leave out land already developed. A green belt might well not take in many local council estates. These would not, therefore, be brought into the safeguard. That means that from a practical point of view green belts arc not a very helpful way of determining the areas where there should be a special safeguard under the right-to-buy scheme.
As the Bill stands, Clause 18 empowers the Secretary of State to designate rural areas other than national parks and areas of outstanding natural beauty in which the rural safeguards will also apply. If it was right to make those safeguards apply in a particular green belt, because of the special circumstances within its boundaries, it would be open to the Secretary of State to designate that green belt or part of it as a rural area under Clause 18. I hope, on that basis, my noble friend will withdraw his amendment.
Lord HYLTON: I am grateful for what my noble friend Lord Bellwin has said, particularly about the possibility of the

117
Secretary of State defining a rural area within some or all of a green belt. Can I draw something further from him tonight? Can he give us some indication of the sort of criteria that the Secretary of State will be using when he goes about defining rural areas in need of protection? While I am on my feet, may I say that I think the protection that will be most helpful within a green belt will be that giving powers of pre-emption and repurchase to the local authority?
Lord BELLWIN: I fear that on this cannot be as specific as my noble friend would like. When looking at this amendment and talking about it, we touched on the point that he had just raised as to what might be the basis and so on. To be helpful, I would say it is something we have talked about. I cannot now give him any more information. I doubt that I shall be able to be specific but if I can get something that I think would assist him, then I undertake to do so; but I would ask that he does not hold me to this. I will see what might be done.
Lord HYLTON: I am again very grateful. Since no one else in the Committee appears to be in support of this amendment, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
8.40 p.m.
Baroness BIRK Baroness BIRK moved Amendment No. 61:
Page 14, line 43, at end insert ("the local authority with the consent of").
The noble Baroness said: This is quite a small amendment designed to bring the local authority into not just the planning but the designation decision again so that the local authority is very closely concerned with the rural area. It is all so vague at the moment that even if it does nothing more than draw out some clarification and elucidation of how the rural areas are going to be designated, that will be helpful. There should be some local consultation and discussions. What it means is that the Secretary of State would designate an area but in consultation with the local authority. I beg to move.
Lord EVANS of CLAUGHTON: I hope that the Government will be willing
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to give serious consideration to this point. I and other noble Lords have mentioned this throughout Second Reading and the Committee stage. Local authorities over the years are being more and more emasculated, and more and more responsibilities are taken away from them. I would have thought that this was an area where the local authorities' views and proposals would have been of importance; and—perhaps even more important—that the local authorities themselves would feel that they were involved in this kind of proposal. As the clause stands at present, the local authority has no direct involvement at all. I would have thought that was contrary to the best practices for local government. I hope that this amendment will be taken seriously and considered by the Government.
Lord HATCH of LUSBY: I realise that there has been a lot of debate during this Committee stage on the question of rural areas. I believe that it is something which more than anything else unites the different sides of the Committee. I speak to this amendment specifically because Clause 18 deals in chief with the rural areas. I want to ask the Minister to address himself to one or two issues that are raised, although they have been touched on before. I do not want to raise the issue of principle. As the noble Lord, Lord Evans, has indicated, this is an issue of principle which we have debated before. I assure the Minister that I had no intention of trying to give him a lecture on local government, and I do not intend to do so tonight.
However, when I spoke in the Committee stage last Thursday he referred to my remarks as apparently heralding Armageddon. I am sure that there are many noble Lords on both sides of the Committee, from all parties, who do not regard it as necessarily Armageddon but would regard it as a great disaster if the local communities in the rural and semi-rural areas of this country were to be undermined. That is what we have all been showing concern about.
The noble Lord, Lord Bellwin, has made many references to Leeds during the course of Second Reading and the Committee stage. I also was brought up in Yorkshire; but we did not regard Leeds as Yorkshire. It was an island of somewhat soulless commercialism that did not seem

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to fit in with the rest of the county. I wonder whether the noble Lord has had the occasion—I am sure he has—of moving around in places like the Worth Valley. I give that as one instance—one of many. If he will bear with me for a minute he will see the point. Take two small villages, as I would call them. I am not sure whether he would technically call them towns. Oakworth and Haworth are both villages which have a number of council estates. In Oakworth there are 89 council houses; in Haworth there are 105. I should like him to address himself to this. He may say that a part of one of the major council estates in Haworth is in a conservation area. I am not sure—and I have no means of being sure—whether that would be protected under the terms of the Bill as it now reads.
These communities are fundamental to the continued existence of the village life which is a centre for rural life. Are they rural or are they urban? I know that the noble Lord cannot give a specific answer tonight, as he has indicated to his noble friend Lord Hylton. But I am sure that he will also appreciate that there is a great deal of concern for these pockets of village life that one can find all over the country—I am giving two specific instances—on which not just the village but also a large area of countryside around depends. They are drawing more and more people in. For their preservation they need essentially a solid core of publicly-rented accommodation for council workers, lorry drivers and a whole variety of agricultural workers and workers in a very wide area. This is the way in which our village life has made a vibrant contribution to our national heritage.
If in Haworth the Government are going to tell the council, "You have to sell or offer for sale your council houses" what is going to happen to them? Surely, it is obvious. Many of those houses will very quickly pass into the hands of the Americans. An American who wants to have a house in this country in an ancient, cultural locality, with all the glamour of living in Bronte land, will certainly look to a place like Haworth.
I will give another instance. Maybe the noble Lord has extended his travels in Yorkshire to the east of Leeds as well
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as to the west. Take the village of Robin Hood's Bay. It only has two council houses—admittedly they are divided into flats. A mile behind Robin Hood's Bay, in the village of Filingthorpe, there are 59 council houses. This is not a rural area as I can understand any definition of it. It is a collection of people living together in a small town. Surely it is obvious that the value of a House in Filingthorpe, a mile away from Robin Hood's Bay, will be of immense value once it is on the market. All I am asking the Minister is whether he can tell us or give us some indication, or will he come back to us on Report stage and tell us, how the Secretary of State is going to allocate those areas where there are going to be exemptions from the general rule of sale?
As I have already told him, I have little confidence in the 10-year rule but, given that rule, will the kind of places I have mentioned to him, especially in regard to his local knowledge, be designated as rural areas, or will they be excluded from the rural categorisation and deemed to be town areas? If the latter is the case, then this Bill is doing even more damage to rural village life, of which so many noble Lords have spoken with so much affection and which has played such a deep and profound role in the history of this country.
8.51 p.m.
Lord BELLWIN: The noble Baroness has made it clear that she considers that, where further rural areas are to be designated under Clause 18(1) of the Bill, it is the local authority which should have the power to make the designation. With a view perhaps to modifying her proposal in such a way as to make it acceptable to the Government, she has proposed that in making its orders the local authority should have the consent of the Secretary of State.
Clause 18 of the Bill was amended in another place so as to open the way to the application of the special safeguards on the sale of council houses in rural areas to be attached not only in national parks and areas of outstanding natural beauty, but also in additional areas to be so designated by the Secretary of State. When these provisions were being discussed in the Standing Committee which

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considered the Bill, my honourable friend the Minister for Housing and Construction made it clear that he considered that the decision whether or not to impose the special conditions in cases where they were possible was for the landlord. I am sure that there will be unanimity on that point.
My honourable friend went further, however. He made it clear that it was quite open to local authorities to take the initiative in seeking designation of additional rural areas for the purposes of Clause 18. I am sure that there will be unanimity on that point also. After all, a local authority will know more than anyone else about local circumstances.
So the question boils down to the narrow one of whether the local authority, with the consent of the Secretary of State (as in the amendment) or the Secretary of State himself (as drafted in the Bill) should make the actual order. There are, in my view, three good reasons why it should be the Secretary of State himself. The first is that this is the only way of being sure that desirable consistency is maintained in the policy. Without it, the local authority might designate part of an area which fell within its boundaries while a neighbouring authority failed to designate its own part of the same area. That hardly seems to me to be a sensible state of affairs.
The second reason is one of administrative convenience—not, I hasten to emphasise, the convenience of the Secretary of State, who will have to make the necessary orders, but of those with an interest in this policy who will be able to see what areas have been designated simply by looking at the orders which may be made by the Secretary of State, rather than having to comb the country to find out. The third reason is constitutional. I would not make too much of it, but I do consider that it is right that orders of this kind should come under the scrutiny of Parliament. That will happen under the Bill as drafted, but it would not do so under the amendment proposed by the noble Baroness.
To come to the points made by the noble Lord, Lord Hatch, I doubt that his remarks would really have endeared himself too much to the people of Leeds, but that is something he would have to explain to them if ever he gets there,
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because if Leeds is not inside Yorkshire, I do not know where it is! I must confess that I am not really familiar with either Oakworth or Haworth. I know where they are but I know little more than that about them. Your Lordships will see that I am very ready to concede my lack of knowledge and I readily do so as regards these two (as I am sure they are) splendid places. The noble Lord said it would be a great disaster if local communities were undermined and, of course, who would argue as to that? But I do not believe that there is anything in this Bill which is going to so undermine them. He said that the Bill would do even more damage to rural and village life. I am sure he does not expect me to agree with him on that; nor do I.
I do not think there is a lot more I can say on this. How wide will the designations go? That has yet to be decided. I fear that although I am trying to be helpful I really cannot speculate as to that because I just do not know as yet, and therefore I cannot be more helpful. If I am able to be more specific by the time we come to Report stage, I assure the noble Lord that I shall do what I can, but I cannot undertake that that will be the case. Nevertheless, the point will be well borne in mind and possibly the noble Baroness may feel able to withdraw the amendment.
Lord BEAUMONT of WHITLEY: I do not really think that the first argument put forward by the noble Lord the Minister is very satisfactory: I mean the one about the inconsistency of decisions. There are times on this Bill when I listen to the Conservative Front Bench and I really think I am listening to the Labour Party at its worst. They are always for centralism. They always appear to want to take away any decision from the local sphere. Of course, if you give decisions to the local sphere, contesting decisions may be inconsistent. There may be things one would not want and they will be different in different parts of the country. They may even be, as the noble Lord said, different in very narrow areas close by each other; but that is one of the prices to pay for popular democracy, and that is one of the few good things that I thought the Conservative Party was putting forward at the last election and in its present philosophy. As we go through this Bill, more, more and more

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it is becoming a centralist Bill and a centralist philosophy they are putting forward, and it really does not stand up.
8.58 p.m.
Baroness BIRK: At least the noble Lord did not say it was the Labour Party at its best, so we must be thankful for small mercies! We are all at our worst sometimes, and the Labour Party does have its bad moments. Of course, the noble Lord is right: the extraordinary thing running right through the Bill is this almost authoritarian line from the centre from a party which all the time has been arguing, certainly during the period of the Labour Government, about the autonomy of the local authority.
Turning to the specific terms of the amendment, the Minister said it was quite right, and had been discussed in another place, that local authorities should take the initiative on some occasions in this area of suggesting the designation of a rural area. But nowhere in the Bill at the moment or, as far as I can see, in the schedules, is there anything which gives any indication of the local authorities playing any part.
I should like to ask the Minister, before withdrawing the amendment, how this is going to come about. It is all very well for this to be said in Standing Committee F, but I should not think that the readership of the minutes of that committee would make any publisher wealthy if they were on the market. Similarly, in this House we are also a rather closed group and there must be millions of people outside who will not know that this is so. Could the Minister indicate how this knowledge is going to get abroad? Are the local authorities going to be advised as to what means to use and, even more importantly, are the people living in the areas going to know of the decisions which are to be taken and which will, after all, affect their lives and the places where they live? It is very important, particularly if you are in what might be considered a marginal area, to know whether or not you are in a designated rural area. You may or you may not want to be, but it is very useful to know how things are going, and to whom you apply in order to be in the area and designated as you want to be. There seems to be very little information
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on this. Perhaps the Minister could enlighten us further about it.
Lord BELLWIN: I did say, did I not, at the end of my remarks that as it so happens—and I said it was right that it should be so—orders of this kind will come under the scrutiny of Parliament? I should have thought that that was about as good a way as any of ensuring that anything that was happening was brought to the notice of all concerned.
Baroness BIRK: I am sorry. We on this side of the Committee have been trying to keep the debate short, but this is a different point. It is important that it should come before Parliament, but this is an entirely different point from local involvement. I am asking the Minister how the local involvement is going to come about. I want to know how it is going to work in practice, not how theoretically the local authority can take the initiative. It is quite right that the local authorities should sometimes take the initiative. I am asking that. The one thing does not exclude the other. These are not mutually exclusive things.
Lord BELLWIN: I am not sure that I am quite following the point the noble Baroness is making. If an authority take an initiative there is little doubt that everyone within the area concerned will know that the initiative has been taken. It is not for me to tell the noble Baroness the various forms that the media use for that sort of purpose. These things are always very much a matter of local interest—more so these days than ever before, I should have thought. If, further, there is to be scrutiny by Parliament, that again widens it still further. I am not at all aware of any possible danger of anyone not knowing what is happening. If I am missing a point I will be glad to he corrected on it.
Baroness BIRK: I do not want to carry on the debate too long, Perhaps the Minister can write to me or come back and I will withdraw the amendment and wait for Report. I am asking at which point is the local authority brought in? The noble Lord said that the Secretary of State will make the order, and the noble Lord, Lord Beaumont, took up the point about consistency. I want to know how far the involvement of the local authority

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will be, at which point. There is no good taking an initiative if nobody takes any notice of the initiative one is taking, or if one is not called in on it, or if it does not come out at the end of the day and one does not really come out as a sort of equal partner in it. This is what I want to know. If the Minister cannot take it any further this evening—I think we have gone on enough about it at the moment—perhaps he will come back on Report; or in the meantime, perhaps he will write to me and tell me exactly what the process is. I am sure the noble Lord, Lord Evans, would be interested to know as well.
Lord BELLWIN: I really do try hard to he understanding and helpful. I cannot really see the point. The only thing I can suggest is that the noble Baroness might care to have a word with me afterwards, unless it is so late that neither of us is in the mood so to do. As soon as convenient I will try to ascertain for her that which she needs to know, if I am able so to do.
Lord ROSS of MARNOCK: I am sure the noble Lord will appreciate our difficulty here. Am I right in thinking that the tenants in these rural areas still to be specified will have the same right as any other tenant, and that as soon as the Bill is passed they will have the right to make an application to purchase their house? The landlord is the local authority. It is in a rural area. Will they know by that time as to whether or not the Government are specifying this as a rural area?
The tenant wants to know because there is going to be a limitation placed upon his holding that is not there for anyone else. There may be a covenant limiting him to do certain things. He will want to know. The local authority will want to know. But the initiative rests with the Government, and I should have thought that if the Government are going to maintain the rights of the Bill for everyone they must produce, before this Bill becomes law, their list of rural areas. It is all right in respect of the national parks and these other things; they are determined by statute. But there is nothing in this clause that says anything about the rural area. That is for the Government to produce. It is
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only fair to the local authority. Certainly it is only fair to the would-be purchaser that he should know what position he is in.
Lord BELLWIN: I am very pleased to hear expressed the concern the noble Lord has for the would-be purchaser. I have nothing to add to what I have said. It is open to an authority who are sufficiently interested or who want to do so to take an initiative with a view to having their area designated in this way; that is up to them. But the criteria, if one likes, where there is uncertainty is something which I have already said has yet to be decided. The individual areas have not yet been decided and certainly I have no intention of speculating on that at the present time.
Lord ROSS of MARNOCK: I am sure the noble Lord will appreciate this. The local authority, by statute, has got to reply to the would-be purchaser by a certain time. Can the Minister tell us how long it is to be? Suppose they accept this initiative and apply to the Government to declare a rural area. How long will it be before the Government, his department, replies and how much longer will it be before an order is passed through the House? Then the local authority will be in the dock because, according to statute, they have got to give a reply by a certain time. Is it two months?
Lord CLEDWYN of PENRHOS: The noble Lord is normally clear but he is less than clear and less than precise on this occasion. He said something rather strange a moment ago. As I understood him, he said it was up to the local authorities themselves to designate what is a rural area. If not, perhaps he would clarify that for the Committee. But if, indeed, it is up to the local authority, the housing authority, to designate what is a rural area within their district, what are the procedures to be? Would he be good enough to give the Committee guidance? What must they do? Are further orders to be produced? Are they to be affirmative or negative orders? Are they to come before Parliament? Before we go any further the noble Lord must give us a little more guidance as to exactly what he meant.
Lord BELLWIN: I do not recall saying that a local authority should themselves designate their area. If I did, I certainly did not mean to do so and I apologise for having said so. Only the record will show if I said that or not. What I thought I had said was that it would be up to an authority to take the initiative of applying to have their area so designated. I really do believe that that is what I said, but, if not, then of course I am sorry about that.
As to the other points that the noble Lord, Lord Ross, made, about who starts the thing going and when something takes place, I have already said a number of times that I cannot give the kind of detailed, specified information for which the noble Lord asks. The areas are yet to be decided. They will be decided, presumably, by the Secretary of State in conjunction with the authorities concerned, in one way or another. Whether the first initiative comes from the Secretary of State or from the authority in question is a matter which will evolve. I cannot give details, because I do not have them at the present time. But the tenants who are interested in buying in those areas—and that is really what the concern ought to be—will have every opportunity to get to where they want to be as regards buying, and as regards the information that they need.
But, conversely—and, surely, this is a point that has been made again and again today—the safeguard for the rural areas is equally vital. It will be clearly understood that it will be there. The people in those areas will, of course, have the right to buy, but they will be buying with the kind of pre-emptions, rights and so on that those in other areas will not have. Therefore, there is a case for saying that they will have the rights, but not to the same extent as others, and some may feel sympathy for them. I am sorry if that is not as clear as noble Lords might like, but however much I am pressed I cannot give more details, because it is not possible for me to do so at the present time.
Lord ROSS of MARNOCK: Can the noble Lord tell us when he will be able to give us the information? We have already passed that part of the Bill which says that a tenant has the right, he makes his application and the local authority
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must reply in, I think, two months. It is certainly two months in the Scottish Bill. I am speaking here because I have a listening brief to see that there is no unfairness done in certain of the more civilised parts of these islands.
But I know Government departments. The person makes his application to the local authority and they think, "This ought to be an area of special beauty". So he applies to the Government and only the Government can decide that. I want to know how long it will take them to make up their mind and to pass an order through Parliament, because the tenant will have no idea what is holding up the local authority. The local authority will not know whether this will be one of these special houses in respect of which they have to put in a special covenant, and that, also, will take time. If the noble Lord looks at the argument we had in relation to hog-tying a local authority in respect of the time involved in all this, he will find that the Government are quite wrong.
Lord HATCH of LUSBY: May I combine my point with that of the noble Lord, Lord Ross, so that the Minister can answer both? I have one very simple point of clarification. The noble Lord said that he could not go any further. I think that he can go a step further in this respect, that he has been referring to a local authority possibly applying for its area to become a rural area. Presumably, he is not suggesting that the local authority either is a rural area or is not a rural area. The parts of an area that come under a local authority could be rural, while other parts were not rural.
Lord BELLWIN: Of course, you can get a variation, but what we are talking about is the designation of a rural area for the purposes of this Bill. That is really where we are parting company. It is no good the noble Lord, Lord Ross, persisting. I cannot make out whether he is concerned about the interests of the landlord, the local authority, the tenant, Scotland or anywhere else. I cannot tell that at all from what he says. What I have said all along, and I repeat it now, is that if there is uncertainty about this and noble Lords want to know more about it, then I will gladly undertake, as I always do, to write and tell them the position as we

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then see it. But, so far as an undertaking is concerned, I am in no position to give one, nor can I even attempt to do so.
Baroness BIRK: Hoping that in the meantime we shall get some light, and taking into account the various questions that have been asked by my noble friends since I last spoke, I shall for the time being beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.13 p.m.
Lord HYLTON Lord HYLTON moved Amendment No. 62:
Page 14, line 44, leave out ("as a rural area").
The noble Lord said: In proposing this amendment, I am trying to be as helpful to the Government as I possibly can, as is my usual wont. I am even going against my natural inclinations in suggesting a much greater discretion for the Secretary of State than he has already taken. The object of this amendment is to enable the Secretary of State to designate any area which needs Clause 18 protection, and not just the rural areas.
I am thinking in particular of the seaside urban areas where it seems to me that there is a great danger of existing council houses being sold off and then used for such purposes as bed and breakfast or self-catering flats, thus removing them completely from availability to the local population. The noble Lord, Lord Hatch of Lusby, gave some interesting examples from Yorkshire of semi-rural/semi-urban areas—borderline areas, areas which could be argued to be one thing or which could be argued to be another.
From my own knowledge of the County of Somerset, I think there will be similar problems. We have the Somerset coast on the Bristol Channel; we have the cathedral city of Wells; we have the caves of Cheddar which draw many thousands of tourists to see them every year. These seem to be some of the uncertain, problematical kinds of areas where it would perhaps be as well for the Secretary of State to have wider powers than he now has. I hope I have said enough to make clear the purpose of this amendment. I beg to move.
Lord BELLWIN: We have already seen a number of amendments which would run a coach and horses through the Government's policy for a countrywide right to buy. With that purpose in mind, amendments have already been put down to exclude entirely or to place heavy restrictions upon the sale of elderly people's dwellings, of houses in rural areas, of houses in areas where the local authority owns less than a certain percentage of the housing stock, of housing in inner city areas, of housing in housing action areas, of housing in housing stress areas, of dwellings with more than a certain number of bedrooms, and so on. These are two more such amendments.
Those opposed to the right to buy take the view that if they cannot have a wide range of exclusions then the right to buy should be fettered and qualified in as many circumstances as possible. We are now dealing with further amendments of this kind which have been tabled regardless of the fact that one of the major planks upon which the Government were elected was to give the benefits of home ownership to as many public sector tenants as possible.
The case for all these amendments is based on the belief that the sale of public sector dwellings will cause the supply of housing available for reletting to dry up. I say yet again, for the "nth" time, and doubtless not for the last, that for the reasons which I have already given on a number of occasions this is just not what will happen, nor what happens in practice.
By now everybody knows that the Government have a clear commitment to giving the right to buy to council tenants. There is a small range of exclusions to the right to buy which we concluded to be absolutely necessary. There are of course the special arrangements for rural areas about which we are speaking. The need for this limited number of special provisions has been made clear from the outset —since before the general election.
These amendments would widen considerably the limitations on the right to buy. The first would enable my right honourable friend to designate any area he so wished as an area in which the safeguards of Clause 18 would apply. The second would provide what at first sight would be a more limited power to designate housing stress areas as well as rural areas

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for the application of the Clause 18 provisions. These amendments are not acceptable.
In practice, my right honourable friend would not wish to exercise either of the powers which the amendments would give him. It is a basic point and one which your Lordships may tire of hearing me make today and for the rest of the time that we discuss this Bill in Committee. But the Government believe that the pressures to which housing in rural areas is subjected are unique. That, and that alone, is why Clause 18 is in the Bill and that is why we shall continue to resist attempts to apply its provisions in areas which are not subjected to the same pressures.
Lord BEAUMONT of WHITLEY: I think that the noble Lord is not being entirely logical in his approach, quite apart from the fact that, if it was the "nth" time he said it, it must by definition be the last time, because you cannot have anything after infinity. However, that is a purely lighthearted, after dinner debating point.
The fact is that all that the noble Lord is asking for in this amendment is that the Secretary of State should have these particular powers. Admittedly, the noble Lord on the Conservative Front Bench is looking forward to a period when, since we do not have proportional representation in this country, another party will no doubt be in power—and probably the party opposite. He does not very much like the idea that the Secretary of State might then make the wrong kind of judgment. Presumably he is not mistrusting his own Secretary of State. Whatever happens, we in this country have the convention that when an Opposition gets into power it can, and it frequently does—and much too often it does under our present system—change the law.
I do not think it is really an answer that he is not prepared to give Secretaries of State this freedom in dealing with a question which has real force. Here I get away from all party points and all debating points because what the noble Lord, Lord Hylton, said has not yet been answered. His question concerned what is a rural area and the fact that so much depends on its feeding from local
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market towns, which may be rather more than market towns; it is very difficult to draw the line between what is a real rural area and what is not. Are we going to say either that the Secretary of State has powers to designate as a rural area things which quite obviously are not rural areas, or that he is totally inhibited from making these orders in areas which, although not rural, would quite clearly have exactly the same effect as if they had been rural areas—they would affect the whole question of what goes on in a rural area? I think that is a serious question to which the noble Lord should give an answer, quite apart from the preliminary one, which also was serious, but this is the main question to which we have not yet received an answer.
Lord BELLWIN: One can stand here and try to define a rural area but the fact is that I do not know of any definition, and I doubt whether there is one. In the past people have said that it is an area with a population of less than this or that: that is a rural area, but clearly we know of places in the heart of urban spots which are authorities of their own and, whatever else they may or may not be, no one I know would call them rural areas. Of course, I cannot give the kind of specific definition which the noble Lord would wish to have. I think we can only come back to the point which I made before, namely, that at the end of the day there are to be designations on the initiatives of one side or the other and within that the effects of Clause 18 will apply. Beyond that I do not know that I can be of help to my noble friend, and I fear that I am not able to accept these amendments.
Lord HYLTON: I am extremely grateful for the support I have had from the noble Lord, Lord Beaumont of Whitley. I see that I am up against the pure milk of party doctrine, and for that reason I must accept the situation as it is and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.23 p.m.
Lord HYLTON Lord HYLTON moved Amendment No. 63:
Page 14, line 44, after ("area") insert ("or a housing stress area",).
The noble Lord said: Here we move from rural areas to the heart of the biggest cities and perhaps most especially to the heart of London. I suspect that my noble friend the Minister, while being intimately acquainted with Leeds, perhaps does not really appreciate how extremely serious the London housing situation is, and has been ever since I had any experience of it back in the middle 'sixties.
Housing stress areas have been known about since 1965, since the famous report of the Milner-Holland Committee, which was a specifically London Committee. They have been mapped out, they have been plotted. We know the sort of problems winch arise within them, such as gross overcrowding, multiple occupation, bad physical conditions of houses, lack of amenities in the area surrounding the house or street, extreme need for repairs and sometimes also complete unfitness for occupation. It is to remedy such things that we so much need to have some local authority control. As the Milner-Holland Committee so forcefully argued, local authority control is required over what happens to a particular house and why we need to avoid complete loss of control by the local authority of a house which it used to own and which has been sold to the occupant.
I think I should perhaps also mention that newly rehabilitated houses—particularly those in housing action areas, which are normally small fractions of housing stress areas—which have been rehabilitated to a high standard, normally to a Parker-Morris standard, will become highly desirable places to buy. They will be prime targets I would say of the process that has come to be known by the rather ugly name of "gentrification". I do submit that we need not only control but also the maximum number of rented properties to be kept in five years' time, in ten years' time, in however long we need to keep them, and that is really why I am asking for this Section 18 protection, particularly the repurchase protection, and particularly for such things as have already been touched on earlier—for example, the decanting of people from one house to another while improvements take place. For these reasons I beg to move this amendment.
Viscount HANWORTH: Unemployment is something that is worrying us
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very much and one does feel that mobility of labour is one of the key solutions, and not a partial solution only, to this problem. If we are not going to have council rented properties in sufficient numbers mobility of labour would I think be severely penalised.
Lord SANDFORD: The only point I would make is this: we do in this House have extremely flexible rules of order and procedure. My noble friend has two or three times, or even four times, urged upon our Front Bench that exceptions should be made in the case of housing stress areas, and I have no objection to him making the point once. But to make it under a clause the rubric of which is "Dwelling-houses in National Parks", and to start off by asserting that he is concerned with inner cities, is really stretching our rules too far.
Lord BELLWIN: I am grateful to my noble friend Lord Sandford for what he has just said. I seem to be going round and round the same arguments all the time. I recognise that what my noble friend Lord Hylton is seeking is, if not the whole of the cake, at least part of it; if he cannot get the total exclusion at least can he get it to some extent within the pre-emption rights. A halfway house I think is what he is seeking. I fully understand the point he is making, but I would have to answer him properly by going over all the arguments again and again. There is the one about the effect that a sale does or does not have on the availability of the pool of dwellings to rent; clearly we have a difference between us, and so be it.
Another argument is that in fact if you do sell dwellings in these housing stress areas you do not lower the standard, you do exactly the opposite, you raise the standard. Another is if one is concerned about selling in these areas why are we worrying about people who, it is said, will never want to buy them because the areas are of the standard they are. We are going round and round and over the same arguments once again. I fear that in the interests of brevity, certainly not of discourtesy—as my noble friend will, I hope, agree—I would have to say that no, we cannot accept that we can take these amendments on board. We do not see that it helps the situation at all for us to deviate from the basic policy that we have

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laid down, in which we believe very sincerely and which we feel will not only help to bring about the situation that we have said so often we want to see, because of what happens when people buy and own their own homes, but will add to and bring up those very areas of housing stress with which my noble friend is concerned in this amendment.
Lord HYLTON: I think that I have said really all that I wanted to say in moving the amendment. I do not believe that there would be any purpose in dividing the Committee, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.32 p.m.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 64:
Page 14, line 44, leave out from ("and") to ("the") in line 1 on page 15, and insert ("it is executed by a local authority (as defined in section 49 of this Act), a county council, The Development Board for Rural Wales or a housing association ("the landlord")").
The noble Lord said: These amendments appear rather a formidable collection, but they have two quite simple aims. The first is to remove the need for housing associations to obtain the consent of the local authority before attaching the so-called "locality covenant" to a right to buy sale in any of the areas with which Clause 18 is concerned. The "locality covenant" imposes the condition set out in subsection (3), that a future purchaser should have lived or worked in the locality for three years or more. On reflection we felt that housing associations should generally be free to make up their own minds as to the desirability of imposing this condition; though doubtless they will wish to take into account the views of the local authority concerned which will itself be making right to buy sales, and may be attaching this condition.
The second aim of these amendments is to enable housing associations and county councils to attach pre-emption rights to sales in these areas. A number of those concerned with housing associations, including especially my noble friend Lord Lonsdale, have put it to us that housing associations should be given the same powers as local authorities to attach pre-emption rights. We have accepted
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their view, and the amendments accordingly enable housing associations to attach 10-year pre-emption rights, pre-emption being at the current market value of the dwelling. We have also given the same powers to county councils who will, for these purposes, be exercising their reserve powers as local housing authorities.
Because of these two changes of substance the same powers will be given to all landlords whose tenants in rural areas will have the right to buy. We have therefore taken the opportunity to simplify the drafting of the clause by making some other amendments. I commend them all to your Lordships. I beg to move.
Viscount GAGE: I think that we should be grateful to the Government for allowing housing associations these rights. It is a fairly complicated formula. I doubt whether it will ever persuade new housing associations to form themselves with the object of providing new accommodation for rent. That is a question which I keep on asking. I cannot find anybody who is able to answer it. Who is to supply new accommodation to let in rural areas, and particularly in the areas of outstanding natural beauty?
I have said that we do not want our rural villages to remain museum pieces; there must be somebody to supply some new accommodation for rent. I suppose that my noble friend Lord Bellwin will say that the council is the answer. It is a nice idea but I doubt, in the circumstances, whether—in view of the restricted powers of local authorities to spend money—we shall get much done. I wish the Government would consider giving special rights to new housing associations without any complicated formula attached to them. The associations might then start to provide this accommodation.
Lord MOWBRAY and STOURTON: I take the point made by my noble friend Lord Gage. I hope that it will not arise on this occasion, because we are taking into account what the housing associations want.
I was rather remiss in moving this amendment in that I failed to point out that what I had been speaking to also applies to Amendments Nos. 65, 66, 67, 69, 72, 73, 74 and 75. I apologise for not having mentioned that before. I hope

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that my noble friend Lord Gage will take on board the point that we are doing what we think is right for these areas at the request of the housing associations themselves.
The DEPUTY CHAIRMAN of COMMITTEES (Lord Alport): With your Lordships' permission, I shall take the next three amendments together.
9.36 p.m.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendments Nos. 65, 66 and 67:
Page 15, leave out lines 4 to 7.
Page 15 line 9, leave out ("local authority, county council or Board") and insert ("landlord").
Page 15, line 12, leave out ("local authority, county council or Board") and insert ("landlord").
Lord HYLTON Lord HYLTON moved Amendment No. 68:
Page 15, line 26, at end insert—
("or
(c) is a person whom the local authority considers to have a local housing need").
The noble Lord said: We now return to rural areas and in subsection (3) of this clause we have laid down in paragraphs (a) and (b) the sort of people who will be entitled to purchase when there is a limitation on transfer imposed by the local authority which originally owned the house. By means of my amendment I seek to add one more category. I venture to believe that this is rather an important amendment. I am trying to cover people who need to live in a particular place for family reasons or for some other special reason. For instance, it may be that a person needs to move to be near his or her elderly parents in order to look after them in their old age; perhaps a person has to move in order to care for a disabled person. Therefore, there is a whole category of social reasons.
There is another category as important but quite different and that comprises key workers and people able to fulfil particular industrial and commercial functions. In the villages it also includes such people as district nurses, home helps, school teachers and school caretakers. I believe
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that the local authority is the suitable body to reach a conclusion on who should qualify within the kind of categories that I have already mentioned. I hope that it will be agreed that this amendment goes some way towards improving the Bill. I beg to move.
Lord MOWBRAY and STOURTON: This amendment bears on one of the two safeguards which a landlord may impose when a tenant buys as of right in a national park, area of outstanding beauty or other designated rural area. Under the safeguard, where a purchaser or his successor in title wishes to resell he must obtain the consent of the landlord, but that consent is not to be withheld if the prospective purchaser had worked or lived in a local designated area for the preceding three years. The amendment would mean that the consent to sell should not be withheld, either, if the prospective purchaser is a person whom the local authority considers to have a local housing need. My noble friend instanced the case of a child wishing to live near his parents, or some such situation as that.
I think that on this occasion my noble friend will be pleased with what the Government are about to say. We do not think that amendment is necessary to bring about what my noble friend intends. The landlord may give his consent to resale of a house even if the prospective purchaser is not someone to whom the clause says he must consent. If the landlord judges that someone should be allowed to buy the house because he has a local housing need, even if he has not lived or worked locally, as the clause stands he can allow the purchase to go ahead. I trust that the noble Lord will agree that Clause 18 is already flexible enough in this respect and will therefore be able to withdraw his amendment.
Lord HYLTON: I am extremely reassurred by what my noble friend has said. I am delighted to hear that my amendment is not necessary because the power exists already within the hands of the local authority. I am glad to see him nodding his head to that. With the leave of the Committee, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The DEPUTY CHAIRMAN of COMMITTEES: Amendment No. 69. I must advise your Lordships that if this amendment is carried I shall not be able to put Amendment No. 70.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 69:
Page 15, leave out lines 27 and 28 and insert—
("(4) If the Secretary of State or, where the landlord is a housing association, the Housing Corporation, consents, the").
The noble Lord said: I have already spoken to this with Amendment No. 64. I beg to move.
[Amendment No. 70 not moved.]
9.41 p.m.
Lord HYLTON Lord HYLTON moved Amendment No. 71:
Page 15, line 31, leave out ("ten") and insert ("thirty").
The noble Lord said: I am glad to say that I think this is my final amendment on this clause. It concerns the period over which restrictions can be imposed. My submission is that 10 years, as is currently written into the Bill, is far too short a time. It is too short to give the opportunity for judging the effects of what will happen as a result of the restrictions and limitations laid down. I think I am right in saying that further legislation would be necessary in order to change that 10-year period, and that is why I suggest that from the start we should write into the Bill now a much longer period.
Let us look at what might happen in eight or nine years' time. If the Bill says 10 years is the period and after that there are no restrictions at all, it seems to me that there is a grave danger that a person who wants to sell will in fact hold on, and the sort of thing that they might do during the one or two years remaining of the restricted term is to let the house, for instance, as a holiday let or as a furnished let, or use it in some temporary way until they get clear of the restricted period. It is partly to avoid expedients of this kind that I propose a much longer period. I beg to move.
Lord BELLWIN: This amendment seeks to extend the pre-emption safeguard in
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rural areas from 10 to 30 years. But the condition is surely effective enough as it is. The ADC, who have lobbied most effectively on this matter of rural areas and safeguards for them, asked for a 10-year right of pre-emption, and that is what the clause gives. I cannot accept that what we have heard gives any new basis for extending this. The fact is that any pre-emption condition is a harsh imposition on the purchaser. Although the condition may not affect the purchase price the house may fetch, the purchaser does not have the home owner's usual freedom to sell to whom he pleases. He may wish very much to sell to a particular person.
One could go on about this but it is far too much, and I think that 10 years is surely long enough. Just think, for 10 years you have bought the house, with all that goes with that, but you may not dispose of it. I think that this is quite long enough, and I feel that we shall have to reject the amendment unless my noble friend feels able in the circumstances to withdraw it.
Lord HYLTON: May I ask my noble friend the Minister what he envisages actually happening after the expiry of the 10-year period?
Lord BELLWIN: That is not the point. We are here talking about the Government's intention to give a right to buy, with all that flows from that and all we have discussed at length about what a right to buy means.
The tenant has bought his home in which he has lived for certainly not less than three years. For the next 10 whole years he cannot dispose of it other than to the local authority. He certainly cannot sell it on, and presumably he would not wish to do so; he has bought it presumably only because he and his family have lived there for a long time and wish to go on doing so. As to what will happen after 10 years, who can say? It would depend on the individual circumstances in each case. Remember, too, that we are talking about rural areas where, we have been told—I am sure this is right—people wish to live as communities. I accept that. And they want to go on living as communities. Why, therefore, should these same people, whom we are told wish to live as communities, want at the end of

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10 years to break up that community atmosphere? I understand the point my noble friend is concerned about and I respect his view, but we could not possibly dream of moving beyond 10 years, least of all to 30 years.
Lord HYLTON: It goes without saying that I find my noble friend's reply extremely disappointing. It seems to me that after the 10-year period there will be a free-for-all, and it will be at its most vicious within the national parks and areas of outstanding beauty. Having said that, I have no wish to press the amendment, faced with the resolute opposition I meet, and accordingly I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.47 p.m
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendments Nos. 72, 73, 74 and 75 en bloc:
Page 15, line 35, leave out("local authority or Board") and insert ("landlord").
Page 15, line 41, leave out ("local authority or Board") and insert ("landlord").
Page 15,line 43, leave out from beginning to ("thinks") in line 44 and insert—
("(5) The consent of the Secretary of State or of the Housing Corporation under subsection (4) may be given subject to such conditions as he or, as the case may be, the Housing Corporation.").
Page 16, line 7, leave out ("local authority or Board") and insert ("landlord").
The noble Lord said: I spoke to these amendments with Amendment No. 64.
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I beg to move.
Lord BELLWIN Lord BELLWIN moved Amendment No. 75A:
Page 16, line 36, at end insert ("and for the purposes of this section the grant of an option enabling a person to call for a disposal falling within subsection (8) above shall be treated as such a disposal made to him and a consent to such a grant as a consent to a disposal made in pursuance of the option.").
The noble Lord said: I spoke to this with Amendment No. 28A. I beg to move.
On Question, Whether Clause 18, as amended, shall stand part of the Bill?
Lord GREENWOOD of ROSSENDALE: I am sure it will be the wish of all who have been or are involved in the voluntary housing movement to join with the noble Viscount, Lord Gage, in expressing to the Minister our appreciation of the confidence he has shown in the voluntary housing movement. That will be a tremendous fillip to those working in the movement, and I am sure we all wish to express our thanks.
Lord BELLWIN: I am most grateful to the noble Lord.
Clauses 19 to 21 agreed to.
Clause 22 [Secretary of State's power to intervene]:
9.49 p.m.
Baroness BIRK Baroness BIRK moved Amendment No. 76:
Page 18, line 1, after ("so") insert ("and of his reasons for doing so").
The noble Baroness said: This amendment deals with the core of the clause, which gives the Secretary of State unprecedented powers to interfere with local government. We believe it is only right that before he exercises those powers he should be obliged to give some sort of justification for their use. Surely that is in accordance with the ordinary principles of justice. Let us review the powers, which we consider are unacceptable, that the clause gives the Secretary of State. First, the Secretary of State can, after serving his notice, go beyond even the powers that Parliament is being asked to give in order to allow the right to buy. He can do that by virtue of subsection (7), under which he may require the taking of steps different from those the landlord would have been required to take.
The Secretary of State can then require the landlord to produce any document or supply any information, under subsection (5), and he can require officers of the council to do so even if they are not instructed to do so by their employers. He can take over on behalf of a council its mortgage payments and refuse to return the money he obtains to the council whose property was sold, except at his pleasure. That comes under subsection (4). By virtue of Clause 23 the Secretary of State can actually transfer to the tenant the ownership of property built and paid for in the main by local councils. Finally, the Secretary of State can charge the council such sums as he may determine for the cost of compulsorily seizing and selling its property over its head. That is under subsection (9).
What conditions are laid down for the exercise of such powers?—powers which any Conservative Government would condemn as monstrous if applied to private property rather than to that held in the public trust. The only condition is that the Secretary of State himself shall believe that the right to buy "may have difficulty" in being exercised "effectively and expeditiously".
Such a vaguely worded clause, with absolutely no checks on the decision of the Secretary of State, is a fundamental attack on the principle of local autonomy. In fact, it is another attack on the principle of local councils managing their own property, and I urge the Government to accept this modest and moderate amendment to what is a most objectionable clause. In other words, if such huge powers are taken by the Secretary of State, he should at least give his reasons. The amendment proposes the insertion of the words
"and of his reasons for doing so",
and I believe goes to the heart of the whole clause. I beg to move.
9.53 p.m.
Lord GIFFORD: I wish to follow my noble friend in supporting the amendment, which stands in my name, too, and to add a point about the importance of the arguments for giving reasons before central Government step in in the draconian way in which they can under the clause. I believe two principles are involved. There is the principle of natural justice, which dictates that wherever any person or body is to be subject to severe penalties, he or they should be entitled to know why that is happening, and should have the opportunity to make representations upon the reasons that are given and, if such are mistaken or erroneous, to be able to say so in good time. The second principle is the principle that the people of the area whose authority is being taken over in this way should have the right to know why that is happening.
My noble friend has spelled out the very considerable powers which are granted by the clause: the power to receive mortgage moneys; the power to give orders to local authority staff; and the power to exact the costs of the exercise, upon assumptions which are wholly undetermined and vague, thus putting a burden on the ratepayers. It would be possible to do all that in what I suggest would be the most indecent haste. There is no provision for consultation, nor for advance notice being given. The axe falls, as it were, within 72 hours of the notice being put in the post. The authority is given no opportunity to answer, nor to give its views, before the notice is

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imposed. One is forgiven for thinking that that shows an advance intention for central Government to act as a steamroller against those authorities which are thought likely to be obstructive to this Part of the Bill.
It is interesting to compare what is being done in this Bill with what was done by a Conservative Government in what I think was the last Housing Act that they passed, the Housing Finance Act 1972. That Act included a power to require councils to put up the rents, and it vested in central Government a power to impose its own authority in default, if any authority was recalcitrant. It gave rise to the Clay Cross affair, which caused considerable heat. But in that Act there was an advance provision (and I should like to read it, if I may) as follows:
"It shall be the duty of the Secretary of State, before making an order, to give notice in writing to the authority concerned that he is considering whether to make such order, and to have regard to any representations made to him by the authority within one month of the notification".
That, I would suggest, is the sort of way to go about it; and if the Minister indicates that some sort of advance consultation procedure will be considered by his department, then I am sure we shall not insist upon this amendment to give reasons. But, alternatively, the need to give reasons would serve much the same effect.
Lord EVANS of CLAUGHTON: I do not make any apology for sounding once again like a Greek chorus in relation to these various amendments being moved concerning the erosion of the powers of local government, but this seems to me to be a very serious example of the cavalier way in which, in this Bill, the Government are treating local authorities. I feel very strongly that, as the noble Lord, Lord Gifford, and the noble Baroness, Lady Birk, said, the least that the Government should do is to consult local authorities when they are about to deprive them of part of their resources. It seems to me that the Government should remember that on the very self-same day on which they got their alleged mandate for this enormous Bill and the draconian measures that they have introduced, local council elections were being held in which people were elected as councillors on an entirely different mandate. They really should consider this very seriously, and should
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give very serious and long thought to what they may be doing to local government.
As I say, I make no apology for persistently complaining about that because I happen to have spent a quarter of a century in local government and I think that local government is extremely important to the health of this country, and that if we erode local government to a point we are well on the way to creating very much a centralised and undemocratic state. So, once again, I hope that the Minister will give serious consideration to accepting this very reasonable and very democratic amendment.
Lord BELLWIN: Before I come to the points that have been raised by noble Lords opposite on this amendment, I want to repeat an important point which has rightly been stressed by the Government throughout the proceedings on this Bill in another place. It is that the powers of the Secretary of State under Clause 22 are reserve powers. The Government hope and believe that local authorities, even if they are out of sympathy with the aims of the Bill, will make every genuine effort to carry out responsibly and conscientiously the statutory duties which it will impose on them. If they do so, then occasions on which the Secretary of State's powers under this clause need to be used will rarely, if ever, arise. I hope that your Lordships will keep this fact in mind while this clause is under discussion.
The amendment moved by the noble Baroness, Lady Birk, would require the Secretary of State to give, in any notice under subsection (1) of Clause 22, his reasons for using his powers under the clause. In fact, his justification for doing so would always be the same; and it is laid down in subsection (1) of the clause itself. A notice would he served because it appeared to the Secretary of State that the tenant or tenants in question had or might have difficulty in exercising the right to buy effectively and expeditiously. If your Lordships will bear with me, I shall explain why I believe that no landlord on whom a notice was served would be likely to be in doubt about the circumstances leading, to service in any particular case.

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It would have been necessary for the case to have been raised with the Secretary of State as one where the use of his powers under the clause might be appropriate. Where the possibility was pursued, there would he contact between the department and the local authority concerned, either about the circumstances of the individual case or of the broader class of cases within which it fell. The authority would he aware at that stage, if not earlier, of the factors which had led to the reference of the case or cases to the Secretary of State.
My honourable friend the Minister for Housing and Construction also undertook, when the clause was discussed in another place, that administrative steps would always be taken to forewarn the authority concerned where the service of a notice under Clause 22 was contemplated. By the time any notice came to be served, the local authority would have been made aware that such a step was contemplated, and why, and would have had an opportunity to tell the department of any relevant factors of which it felt the Secretary of State ought to be aware. Against this background, I cannot envisage that any authority will not know why the Secretary of State has served a notice.
To comment briefly on the observations made, the noble Lord, Lord Evans, said that this was a cavalier way to behave and Lord Gifford said that there was no provision for consultation. What I have said ought in practice to convince them that the point is well covered. The noble Lord, Lord Gifford, referred to Clay Cross. The fact that it was entirely on its own, out of all that arose from that Act, was a good sign. The fact that it was what it was, with all that it led to, and the fact that it was deplored by almost everybody that I met in local government, on all sides, augurs very well. The fact is there had been so many noises made, so much insistence that the legislation would not be carried out. I am sure this is one of the factors that have led to this whole position being what it is.
The fact is that I have to come back to saying—and I ask the Committee to
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bear with me repeating it—that this is such a fundamental part of the Government's policy that, if there is to be any prospect of any authority not going along with it, really avoiding the statutory obligations, the Government will have to have the power to intervene. This whole discussion at the moment is about the extent to which they have to give reasons and notice. The points I made are valid. No authority will in practice find, out of the blue, that the Government have served a notice on them about something they know not of. If they have been pursuing a policy of not complying with the legislation, in the remote chance that that would happen, they would know what they were doing. They would know that they would be open to receive the kind of notice we are talking about. If they have been, to the best of their knowledge, conforming to what is required under the Act, they need not have fears or anxieties about that. I do not think this is an amendment we can accept. I do not think that the fears fairly expressed by noble Lords have any validity. In practical terms, the need to give the kind of reasons in the way suggested will not arise. Those involved will know what is happening.
Lord GIFFORD: What the noble Lord is saying is an argument for this amendment. He is saying that in any event his Government would wish to give some kind of notice and to make clear their reasons. I would ask the noble Lord this: will he look at the various other provisions existing on the statute book for central Government to intervene in local authority affairs? I am quite sure that he will find the sort of provision written into the law, such as I have quoted from the Housing Finance Act 1972, which makes it the normal thing to serve some kind of notice or to request consultation before coming down finally and imposing these sanctions. If that is the practice, as I believe it is, before such reserve powers are used, then it ought to be written into the Bill and not left to the goodwill of central Government to come in when they want. At the least, the people of the area ought to know in greater detail than the Act sets out why these powers are being used, so that they can judge whether central Government or local government are right in their actions.
Lord BELLWIN: I am not at all convinced; at the same time I recognise the point of view being put forward. I cannot accept the amendment. I do not agree with it and I do not think that it is necessary, but I am prepared to do the very thing that the noble Lord suggested and talk to my colleagues about it. Beyond that I cannot go. That I will undertake to do.
Baroness BIRK: As the Minister has said that, I will withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 22 agreed to.
Clause 23 [Vesting Orders]:
10.5 p.m.
Lord BELLWIN Lord BELLWIN moved Amendments Nos. 77 to 84 en bloc:
Page 19, line 39, leave out subsection (2) and insert—
("(2) A vesting order shall have the like effect, except so far as it otherwise provides, as a conveyance or grant duly executed in pursuance of this Chapter, and, in particular, shall bind the landlord and the tenant and their successors in title to the same extent as if the covenants contained in it and expressed to be made on their behalf respectively had been entered into by them.")
Page 20, line 3, at end insert—
("(2A) If the dwelling-house in respect of which a vesting order is made is not registered land the vesting order shall contain a certificate stating that the freehold conveyed or grant made by it is subject only to such incumbrances, rights and interests as are stated elsewhere in the vesting order or summarised in the certificate.")
Page 20, line 7, at end insert
(" and for the purpose of the registration the Chief Land Registrar shall accept any such certificate as is mentioned in subsection (2A) above as sufficient evidence of the facts stated in it.")
Page 20,line 10, after ("him") insert ("(on payment of the appropriate fee)")
Page 20, line 13, at end insert ("and shall (notwithstanding section 112 of the Land Registration Act 1925) allow any person authorised by the Secretary of State to inspect and make copies of and extracts from any register or document which is in the custody of the Chief Land Registrar and relates to the dwelling-house.")
Page 20, line 14, leave out ("by reason of the operation of a vesting order") and insert ("in consequence of a registration under this section")
Page 20, line 17, after ("1925") insert ("by the Chief Land Registrar")
Page 20, line 19, after ("shall") insert ("instead")
The noble Lord said: May I move Amendments Nos. 77 to 84 en bloc. Clause 23 provides the Secretary of State with a means of completing transactions in relation to which he has used his powers of intervention under Clause 22. He is to be able to do this by means of a document to be known as a vesting order containing such provisions as he may determine. A vesting order will take the place of the conveyance of a freehold or grant of a lease in a normal transaction, because the landlord will not he executing the document.
Amendments Nos. 77, 78 and 79 are technical amendments designed to ensure that the system of land registration works in the same way for vesting orders as it does for conveyances or grants duly executed under Chapter I of the Bill. Amendments Nos. 82 to 84 are consequential on these amendments and Amendments Nos. 80 and 81 are designed to remove any doubts there may be about the Chief Land Registrar's power to charge for office copies supplied to the Secretary of State for the purposes of the right to buy and concerning inspection by persons authorised by the Secretary of State of any register relating to any dwelling-house subject to the right to buy.
The new subsection (2A) which would be inserted by Amendment No. 78 is consequential on a new subsection (2). It would apply where the title to the dwelling-house which was the subject of a vesting order was not registered. In such cases, the vesting order is to contain a certificate stating that the freehold conveyed or grant made by it is subject only to such encumbrances, rights and interests as are stated in the order or summarised in the certificate.
This amendment achieves two things. First, it gives a basis for registration of title to the dwelling-house comparable to the basis provided by a conventional conveyance or grant of a lease. This is necessary now that the vesting order no longer in itself vests title in the purchaser. Amendment No. 79 provides that the Chief Land Registrar shall accept the certificate as sufficient evidence of the facts stated in it. Secondly, it ensures that the purchaser receives a good title on registration and that the purchaser only takes the property subject to the encumbrances, rights and interests in the certificate or order.
Amendment No. 79 provides that he shall accept a certificate included in a vesting order under subsection (2A) as sufficient evidence of the facts stated in it. Amendment No. 80 is a minor amendment which simply ensures that the Chief Land Registrar will be entitled to his usual fee where he supplies the Secretary of State with office copies of relevant documents under subsection (4).
Amendment No. 81 is also minor and technical. There is a basic restriction in the Land Registration Act 1925 on who is permitted in inspect and take copies of documents held by the Land Registry. Normally, a third party must be authorised to do so by the registered proprietor. This is clearly not appropriate when an intervention has taken place under Clause 22. Amendment No. 81 accordingly assures the right of the Secretary of State or a person authorised by him to inspect and make copies of the register or documents in the custody of the Land Registrar.
Amendments Nos. 82, 83 and 84 are minor amendments to the indemnity provisions in subsection (5). Amendment No. 82 is a straightforward consequential of Amendment No. 77. Amendments Nos. 83 and 84 simply underline that any indemnity paid under Clause 23 is to be paid by the Secretary of State and not by the Chief Land Registrar as it would in any other case. I beg to move.
Clause 23, as amended, agreed to.
Clause 24 [Statutory Declarations]:
10.10 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 85:
Page 20, line 21, leave out ("may if it") and insert ("or the Secretary of State may, if the landlord or Secretary of State")
The noble Lord said: I beg to move this minor amendment. It is designed simply to place beyond any doubt the Secretary of State's ability to rely on a statutory declaration in the exercise of his powers under Clause 22, in the same way as a local authority is enabled to do by Clause 24
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as it is drafted. I hope that it is a power which we will never need to invoke. I beg to move.
Clause 25, as amended, agreed to.
Clause 25 agreed to.
Clause 26 [Interpretation of Chapter 1]:
On Question, Whether Clause 26 shall stand part of the Bill?
10.12 p.m.
Lord AIREDALE: This clause is the last clause in Chapter 1 of Part I. It is curious that whereas Chapter 2 of Part I and the rest of this Bill and most of most Bills have cross-headings above groups of sections, we find that Chapter 1 goes all the way through from the beginning of Clause 1 to the end of Clause 26 without a single italicised sub-heading. I know that italicised sub-headings are not part of the Bill but they are very helpful, and I should have thought that the draftsmen might have been able to assist readers by setting out these first 26 clauses in the customary way with some italicised cross-headings.
Lord BELLWIN: I thank the noble Lord for his comments. I am not quite sure as to what I can do to help, but I gladly undertake to take this away and see whether it would be helpful and possible to do this.
Clause 26 agreed to.
Clause 27 agreed to.
Schedule 3 [Tenancies which are not secure tenancies]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 86:
Page 100, line 8, at end insert—
(",unless it is a shared ownership tenancy.
(3) For the purposes of this paragraph a tenancy is a "shared ownership tenancy" if—

(a) it is granted by a housing association which, at the time of the grant, is registered under section 13 of the 1974 Act;

(b) it is granted at a premium which is calculated by reference to a percentage of the value of the dwelling-house or of the cost of providing it; and

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(c) at the time it is granted it complies with the requirements of the regulations then in force under section 132(4)(b) of this Act or, in the case of a tenancy granted before any such regulations have been brought into force, it complies with the first such regulations to be in force.").

The noble Lord said: This amendment is another technical amendment to ensure that leasehold schemes for the elderly—a form of housing association shared ownership scheme—are not caught by the tenants' charter. It is not, of course, intended that shared ownership schemes, either housing association or local authority, should fall within the scope of the charter, and all but leaseholds for the elderly are already excluded either by virtue of being long leases and falling within exclusion No. 1 or as co-owner-ships. Leasehold for the elderly, however, takes the form of a life lease terminable by notice upon the leaseholder's death, when it reverts to the housing association which has granted the lease. The leaseholder's estate benefits from the value of the lease but the property itself, which is sheltered accommodation, is guaranteed for continued use by elderly people. Such leases are likely to fall within sub-paragraph (2)(b) of the exclusion for long leases and will thus come within the charter. Since this is clearly inappropriate, the amendment specifically excludes from the charter housing association shared ownership schemes, which would otherwise be caught by sub-paragraph (2)(b). I trust that your Lordships will be able to accept this amendment.
Viscount GAGE: I do not understand the amendment, but I am very grateful to my noble friend.
10.15 p.m.
Viscount CRAIGAVON Viscount CRAIGAVON moved Amendment No. 87:
Page 100, line 19, at end insert ("except that in the case of a dwellinghouse held by a local authority other than under Part V of the Housing Act 1957 a tenancy is not a secure tenancy if the dwellinghouse was provided as a consequence of his contract of employment.").
The noble Viscount said: This amendment attempts to anticipate and forestall problems that could arise for local authorities under this Bill, as it now stands,
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in relation to security of tenure of residential staff within local authority institutions. The Association of Metropolitan Authorities, which supports this amendment, has received worried representations from many of its authorities of all political colours, among others from Islington, Hammersmith, Bexley, Hillingdon and Newcastle. My own borough of Kensington and Chelsea and the borough of Ealing are particularly affected.
The situation which they fear is that accommodation for staff which is now regarded as integral to an institution—by "an institution" I am talking about a children's home, an old people's home, or possibly a home for disturbed adolescents—could become filled with people who have nothing whatsoever to do with that institution. These people could be former employees who have decided to change jobs, their relatives or their immediate successors in the tenancy. These people would have no obligations or responsibilities to that institution and yet the law would have given them security of tenure within it. Not only is that an incongruous situation, but also that accommodation is then not available for benefit of social workers actually working in that institution. I cannot believe that anyone on any side of the Committee would desire that situation, nor that it is the conscious intention of the Government to allow it to arise.
Can I now justify why I say these problems will arise from the Bill as it now stands? The difficulty arises from the uncertainty of the wording in the Bill at page 100, line 19:
"…for the better performance of his duties".
When this is interpreted in the real world of local authority recruitment and practice a large grey area springs up related to the benefit of and necessity for residential accommodation for staff. Although I am giving examples in terms of the area of main concern—that is social work—this will also apply to other local authority employees such as park-keepers, cemetery attendants and so on, if they live in special housing related to their particular jobs. I should say that in my amendment I exclude what are normally referred to as council houses by mentioning Part V of the 1957 Housing Act.
To go back to the social workers and the grey area of interpretation, the

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difficult question is this. To what extent is it necessary or desirable for social workers to be residential within their institutions? In practice, local authorities have to be flexible in recruitment, and often offering accommodation is a considerable incentive. But also they are happy to accept a new recruit who lives nearby or who does not wish to be a resident in a very run-down area. Thus an original recruitment specification may leave open the necessity for residence. The authority are simply pleased to get a suitable candidate. If the eventually successful candidate does take up residence he will have very strong proof in the terms of his recruitment that the necessity for that residence is merely incidental and that his duties are in no significant way bettered by his residence.
There are many examples of such problems, but I should like to give just two more. I understand it is often the practice to frame the hours of work of a residential social worker in his contract of employment as ending at, say, 5 p.m., 5.30 p.m. or whatever. It is probably not a condition of service that he does anything after that time; technically he is off duty. But inevitably he will put in extra hours and also be available in times of illness, emergency or fire. But if he wanted to prove that his residence was incidental to his job he could point to his hours of work in his contract as being due to end at 5.30 p.m.
As a last example, there might be a modern children's home with, say, three self-contained staff flats. It would probably be agreed that the senior warden had to be in residence for the better performance of his duties. But the two resident junior wardens could, perhaps, point down the road to an older children's home of similar size which had only one staff residence, but two equivalent junior wardens living out, and they could claim that the fact of their own residence was thus incidental.
In all these examples and many more, staff who left the employment of the local authority would seem to have a strong case under the Bill as it now stands for establishing security of tenure in the middle of institutions. I say "in the middle of institutions", but uncertainty would be increased if the staff accommodation was adjacent to or in the same grounds
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as a main building. Sometimes, what I have referred to as an institution would simply be a large house with everyone living in close proximity.
In all these examples, it would seem totally inappropriate for a complete stranger to have security of tenure in the midst of what are often sensitive and difficult circumstances. This would also deprive the old, the young and often the disturbed and handicapped of vital residential staff. It would seem to me even more inappropriate if the right to buy obtained in such circumstances. Additionally, recruiting of replacement social workers would be hindered by the inability to offer residential accommodation. This ability to offer staff accommodation is vital in high-rent areas, particularly London.
This amendment seeks to cure the problems that I have outlined. It effectively substitutes, for the uncertain words "for the better performance of his duties" the clearer criterion of the residence being in "consequence of his contract of employment." This would give a local authority a modest degree of certainty that its institutional social services would not be hindered by chance secure tenancies arising randomly, in quite inappropriate circumstances. Local authorities would, nevertheless, be under a prima facie duty to rehouse any families and their children in the normal way, thus leaving residential accommodation within institutions for the proper and beneficial use for which it was intended.
Finally, I should say that I have concentrated on the problems of local authorities. I should think that similar problems occur in organisations mentioned in paragraph 2(1)(b) to (e) of Schedule 3. I hope, if the Government were able to take on board the general principle of my amendment, that they would be able to extend it to those other organisations. I also hope that the Government will accept that this part of the Bill, as it now stands, is in danger of placing even more strain on our hard-pressed local authorities, and that this small amendment to the Bill now will avoid considerable difficulties in the future. I beg to move.
10.23 p.m.
Lord EVANS of CLAUGHTON: Very briefly, I hope to add my support to the

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amendment moved by the noble Viscount. It is of very vital importance indeed that this lacuna in the wording of the schedule should be filled. I am sure that the noble Lord, Lord Bellwin, must have been very impressed by the ground put forward by the noble Viscount, which is one supported by the Association of Metropolitan Authorities, of which the noble Lord has no doubt had long and personal experience. I should have thought that this was a very important lacuna to be filled. It does not affect housing revenue account houses; it merely affects Part V houses. There could be some very embarrassing unintentional results if this amendment is not accepted, and I hope that it will be.
Lord SANDFORD: I should like to add my support to the noble Viscount's amendment, and to confirm that this amendment and the one that follows it are supported not only by the Association of Metropolitan Authorities and the London Borough Authorities, but the Association of District Councils. So it has the support of all three sets of housing authorities. That being so, I hope my noble friend will indicate that it has his sympathy and that he will, at least, consider it, if he cannot accept it straight away.
Lord HYLTON: It seems, from everything that has been said, that the noble Viscount has raised an extremely important point. I just wonder whether he should have drawn his amendment even wider to include voluntary bodies which employ residential social workers. I am thinking of bodies like Doctor Barnardo's Homes or the Church of England Children's Society. If my noble friend the Minister can reassure us that the voluntary bodies do not need the same protection as the statutory ones, that will be fine.
10.25 p.m.
Lord BELLWIN: The very last point touched upon by my noble friend Lord Hylton gives the clue to the reason why the Government cannot accept these amendments. When one starts to bring in one group of people, then one wants to bring in another and another and another, and the basic objectives of the Bill become undermined.
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The amendment seeks to widen one of the exclusions from security of tenure which have been carefully drawn so that no tenant is deprived of his security and other charter rights unnecessarily. Paragraph 2 of Schedule 3 excludes from security tenancies in dwellings occupied under a contract of employment which requires a tenant to live in that particular dwelling for the better performance of his duties. This is a deliberately tight test. It should cover employees such as caretakers of blocks of flats or wardens of sheltered housing schemes. In such cases, which fall within this exclusion, it is clearly important for the landlord to be able to get possession of the dwelling for the use of the next person to take the job.
If an employee genuinely needs to be resident, then this exclusion is, in our view, perfectly adequate for management's needs. If, however, there is no cause for a particular dwelling to be occupied, because of the demands of the job, by a person doing a certain job, then I can see no sufficient reason why the dwelling should not be available for letting under a secure tenancy. It is up to the employer to make up his mind about the particular job.
I realise that there are some dwellings situated within special establishments, such as old people's homes, where from time to time the deputy warden's flat, for example, may be let to somebody else working in the home because the deputy lives around the corner. I realise that it could be awkward if it came to be occupied on a secure tenancy by an employee who later ends his connection with the establishment or even with his landlord. In those circumstances, it must be up to the authority to consider carefully the terms on which they let the dwelling in the first place. Particular conditions as to noise and behaviour might, for example, be called for in a dwelling within an old person's home. They will also want carefully to consider whether such an employee's contract of employment should have something to say about the tenancy in case it really is necessary for the better performance of his duties. If it is not necessary but they are intent upon not leaving the fiat empty and on being able to gain repossession later, they might find it safer to let to somebody in one of the excluded categories of tenant, such as

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somebody moving into the area for job reasons—which might include another social worker. I am assuming that they cannot use it to accommodate a resident of the home itself.
I understand that problems may sometimes arise but I do not think that they are beyond the scope of intelligent management to deal with, and I do not think they justify a further substantial exclusion from security. In other words, what I am seeking to demonstrate is that there is considerable room for manoeuvre left for them by the Bill as it is drafted.
I turn now to the broader point touched upon by the noble Viscount: that dwellings are sometimes offered as an incentive to attract scarce staff in circumstances where their residence in a particular dwelling could not by any means be said to be essential to the job. It seems to me that in those cases, even more so, security of tenure ought not normally to be denied. Often such lettings are in Part V accommodation, so the amendment would not bite on them in any case, but if it did I should be obliged to oppose it, especially since the right to buy would then also be in question.
I hope that the noble Viscount will appreciate that we have gone very carefully into the sort of difficulties he foresees. We do not want to remove from security any more people than is really necessary. I hope that he will now accept that there is adequate provision in the Bill for the exclusion of tenants in genuine tied accommodation. There is a balance of advantage to be struck here between the management needs of local authorities as employers and the advantages to the tenant and his family of security of tenure and the other important rights of tenants. We believe that the right distinction to make is between those dwellings which are really inseparably linked with the job and the rest.
It is true, as the noble Lord, Lord Evans, said, that I had an association in the past with the Association of Metropolitan Authorities. Indeed 13 months ago I was vice-chairman of the association and I am cognisant of their many concerns and fears, not necessarily about this Bill but indeed about all legislation which Governments have tried to bring in over the years.
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I think it right that they should bring forth that which concerns them, in the same way as does my noble friend Lord Sandford on behalf of the ADC, but in this case we have really tried to consider the kind of problems which have been worrying them. I think that in fact the Bill gives adequate provision for them to be able to cover those aspects which worry them, and, with that in mind, I hope the noble Viscount may feel able not to pursue his amendment.
Baroness BIRK: The Minister will be surprised to hear that I consider the Government have got it right this time. It follows very much the lines of the Rent (Agriculture) Act, which, although it gave rise to misgivings in advance, in the end worked out very well. I think that it should be left as it is and I hope the noble Viscount will withdraw his amendment.
Viscount CRAIGAVON: I appreciate what the noble Lord, Lord Bellwin, has said. He said that he was striking a balance of advantage. I am wondering whether he realised what is in one of the balances. As I said earlier, this is a grey area, and he seems to rely on the fact that everyone will behave sensibly and will be perfectly reasonable. One would hope that would be so, but I have given three examples which would produce extremely awkward situations. I should have thought they were examples of the sort of difficulties which would face local authorities, and it seems to me that the noble Lord also relies on the courts interpreting in a common sense way the words "for the better performance of his duties".
If that were so we should all be all right, but what I think will happen is that the courts will be compelled to develop some sort of standard in which a lot of the cases, examples of which I have given, will slip through and there will be anomalies of these institutions being populated by complete strangers and outsiders, although admittedly that will take some time. That is a situation which I do not find acceptable, but I should like to read the noble Lord's words to see what comfort I can draw out of them, and possibly come back at the next stage if I do not feel satisfied. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10.34 p.m.
Baroness FAITHFULL Baroness FAITHFULL moved Amendment No. 88:
Page 100, line 28, at end insert—
(" (2) A tenancy is not a secure tenancy if the dwelling-house has been acquired for rehabilitation and the dwelling-house is used by the landlord, pending rehabilitation, as temporary housing accommodation.")
The noble Baroness said: This is a probing amendment which concerns two different but interrelated issues. The first issue concerns certain categories of people who do not qualify under this Bill for insecure tenancies, that is short-term tenancies. The second issue concerns short-life properties acquired ultimately not for development but for rehabilitation, and used temporarily for those in the certain categories.
The categories of people who do not qualify for insecure tenancies to which I refer are, for instance, single people, many of them young secretaries, teachers, shop assistants, bank clerks. Then there are the young married couples whose names are on the local authority waiting list but who may have to wait one, two or perhaps even three years. There are the young, or even older, people transferred by their firms to another place, who require simply short-term accommodation. Finally perhaps, as another example, there is the single woman who has been looking after her parents or parent, and who, when they die, then has to move out of her home; she needs time to look for permanent accommodation and in the meantime needs temporary accommodation.
These categories, particularly the young working people at the beginning of their career, cannot immediately afford the accommodation at present offered either on the open market or as lodgers with council houses. These are the people who are assisted by the housing associations as well as by local authorities in short-life, often substandard, property. If they are not allowed to qualify as insecure tenants under this Bill, then a housing association or a local authority is not going to be able to offer them short-life, substandard accommodation as there will be an obligation to rehouse them when the time comes to rehabilitate the house. The London and Quadrant Housing Trust yielded 2,500 lettings in five years; the Patchwork Housing Trust have
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1,000 such lettings. I have heard from the Fairhaven Trust and I am informed by the National Federation of Housing Associations of the very serious needs of these categories of people.
I am particularly concerned that, through lack of local authority and government financial support, hostels offering accommodation to the young working person are closing down. My noble friend Lady Vickers is particularly worried over this, as I know that three of her London hostels have just lately had to close down. These outstanding and sometimes small housing trusts running as voluntary organisations do much to help this category of person with their short-life, substandard property.
My second point concerns property which is short-life, often substandard property which the housing trusts have made minimally habitable, as the tenants are short-term. Under Schedule 3, paragraph 3, the definition of property acquired for development relates to Section 22 of the Town and Country Planning Act 1971, but—and this is the rub—does not include property scheduled to be improved and rehabilitated. The housing trusts and indeed local authorities have much property which is to be improved when finances allow. The Bill does not allow houses scheduled to be rehabilitated to be used for insecure tenants.
I know that the contention of the Minister's right honourable friend in another place was, during the debate in the other place, that the use of such properties for the categories stated would or might contravene the principle of the sale of council property, because the short-term insecure tenant might turn into a long-term insecure tenant, and the local authority or the housing trust might not seek to sell that property. This, I think, would not be the case, as both housing trusts and local authorities will ultimately seek to rehabilitate such properties for sale in order to bring in more money.
The noble Lord, Lord Greenwood, has congratulated housing trusts and housing associations. He has asked me to say that he had to leave to catch a train, but he supports this amendment. I beg to move.
Lord DAVIES of LEEK: In passing, I should like to say that I think this Committee should look at the amendment. I

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shall not make a long speech. However, with all due respect, planners seem to have gone mad in the city centres. If we take the industrial complex from the Mersey down to the Wash and then down to London, we can see that there are thousands and thousands of substandard houses that have been ploughed down and dumps are put upon the areas that are left. But with a little sense, many young people would be glad to go into those houses for a transitional period and be able to afford to pay a rent. Buying is a completely different issue. However, I think that this point should be noted. There is no need for me to expand on this matter because the entire Committee knows the nub of my argument.
Baroness DENINGTON: I should like to give the strongest possible support to every word that the noble Baroness, Lady Faithfull, has said. If these houses that have been acquired for rehabilitation are made secure tenancies, they will not be used at all—they will be boarded-up. The boarding-up will be broken down because people can always break it down. Those houses will be vandalised and occupied by squatters. However, if the amendment is carried they will be used, as the noble Baroness has explained, for short-term lettings and as soon as the authorities can get round to it financially, and their plans are approved, they will rehabilitate these houses instead of tearing them down. If they are vandalised and vandalised over months, they will have to be torn down because they will be finished. We do not want all of our old houses torn down—they are part of our communities. I hope that your Lordships will very strongly support the amendment.
10.42 p.m.
Lord BELLWIN: I am most grateful to my noble friend Lady Faithfull for having given me notice of the points that she intended to raise. The amendment is on a theme which has been much worked over during the past few weeks in the course of proceedings on the Bill in another place. Its purpose is to exclude from security of tenure, and hence the right to buy, housing which has been acquired by the local authority, housing associations or other public sector landlords, and is being let temporarily by the
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landlord until they are ready to start works of rehabilitation. The amendment thus goes wider than exclusion 3, as at present drafted, since that requires the property to have been acquired for development as defined by Section 22 of the Town and Country Planning Act 1972.
I should perhaps make it clear that a considerable amount of acquired property designated by its owners for rehabilitation could be subject to the existing development exclusion. Where the rehabilitation will involve work which materially affects the external appearance of the building or converts, say, one dwelling to two, then that is likely to be development within the meaning of the planning Act, hence the exclusion. It is not necessary for planning permission to be expressly obtained in such circumstances.
If the work concerned comes within the scope of permitted development under the general development order, then the exclusion still applies. We cannot accept, however, that tenants of any acquired property due for rehabilitation, however minor that work, should be deprived of security of tenure and the right to buy perhaps for several years. That is why a tight and testable definition has been incorporated in paragraph 3.
Who knows what could be understood from the term "rehabilitation". There would surely be room for evasion here and I could not be as optimistic as my noble friend that this would not be so. If a lesser degree of rehabilitation is required, which does not constitute development, hut cannot be done without the dwelling being vacated, then a ground for possession is available to the landlord. It is a mandatory ground, but suitable alternative accommodation must be provided for the secure tenant who is displaced. That seems the best and most proper way to deal with such a case.
To turn to the points my noble friend has raised about categories of people who will not qualify for security of tenure because of the provisions of this schedule, I should like to explain to your Lordships that some of those mentioned could in fact be accommodated in tenancies without security. Paragraph 5 of this schedule covers workers who have to move to a new area. Tenancies granted to them while they seek a permanent home will

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remain insecure for a period of a year. Other groups who will he outside security are students given a letting to enable them to attend their course, and the homeless.
I should also like to make it quite clear, as there seems to have been confusion over the position in some quarters, that housing associations can benefit from the exclusion in paragraph 4 of this schedule. They can continue the schemes which, as I am sure my noble friend is aware, some housing associations run for the benefit of homeless people. They use short-life property that they have leased from a local authority, and thus give homeless people a better and more economical alternative to bed and breakfast accommodation while the appropriate inquiries are made.
The exclusion in paragraph 4 will cover lettings under such schemes even though the letting for the tenant is from the association and not from the local authority. It runs for a period of a year from the time when a person given accommodation pending investigations is notified of the local authority's decision on permanent rehousing liability. It would, of course, he possible, as an additional safeguard, for the local authority concerned to undertake to the association, at the time of leasing the properties to them, to deal with any permanent rehousing liability arising from its obligations under the Housing (Homeless Persons) Act or from tenants becoming secure by the passage of time.
Another category of letting, which will not be secure and which offers scope for using short-life property, are lettings to a corporate body, such as a health authority. Only individuals can be secure tenants. A health authority could, in turn, let to nurses.
I am most grateful to my noble friend for having put down this amendment and thereby giving me the opportunity to clarify some of the points which perhaps have been misunderstood or which have required further explanation. In turn, I should like to assure her that we shall take away and read very carefully what she has said in case it may be that, despite what I have just said, we have missed some areas. I think that it is right that we should do so. I gladly undertake to do that, perhaps in the hope that my noble friend may feel able to withdraw the amendment.
Lord HYLTON: I really had hoped that this amendment was one that my noble friend the Minister could have accepted. I acknowledge that he has said that there are some categories of rehabilitation and some categories of temporary short-life tenant who will he able to continue to be temporarily housed, as they are at present. But it is very disappointing that it is not 100 per cent. For far too long there has been an extreme scandal of hoarded-up and bricked-up houses unable to be used during the long transitional periods which the complexity of rehabilitation necessarily, or apparently necessarily, involves. I hope that my noble friend Lady Faithfull will continue to press this point with the utmost vigour.
Baroness FAITHFULL: I thank the Minister for his reply. I have to say to him how deeply concerned I am about the young people who cannot find accommodation, who I think I am right in saying do not necessarily rank as homeless persons under the Housing (Homeless Persons) Act, and who very often drift to accommodation which is quite unsuitable for them and into bad ways. I shall not elaborate further. On the other hand, the Minister has given the assurance that he will look at this again and, therefore, I am grateful to him for that because I am sure that in conversation we shall find areas of agreement. Therefore, with his assurance, I beg leave to withdraw the amendment, with leave to bring it forward again at the Report stage.
Amendment, by leave, withdrawn.
10.50 p.m.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 89:
Page 101, line 49, at end insert (" and is of an approved hall of residence")
The noble Lord said: In moving this amendment may I also ask that we might consider Amendment No. 90 at the same time. I come here in a rather unexpected guise, speaking in this particular case for the National Union of Students. I know about the close connection of the noble Lord, Lord Bellwin, with the AMA; I do not know how close his connection is with the National Union of Students, except that his party seems to he doing fairly well among undergraduates at the

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moment, and therefore he may listen with sympathy to what I have to say.
I am here seeking to define the kind of accommodation which is excluded from security of tenure in the schedule's student accommodation. In an effort to do this, to the words on page 101 at line 49, are added,
" and is of an approved hall of residence".
That may sound ungrammatical, but it is correct if you consider it in relation to the rest of the subsection.
At page 102 again the definition is described as,
"a dwellinghouse which is let or normally let only to persons attending the educational establishment specified in the landlord's notice".
The idea here is that where students occupy accommodation in a hall of residence—and that is why it is defined—obviously and clearly they should not have the protection of security of tenure. But the National Union of Students is concerned that in some cases research students, or people of quite long-term connection with a university or other further education establishment, or using local authority public sector accommodation because of the fact that they are working in a university town or in a town where there is a college, would be excluded as the schedule now stands from any security of tenure at all.
What this amendment seeks to do in, I am afraid, a rather complex way is to define a hall of residence, and that therefore if someone is in a hall of residence they are not secure, and by that means to take outside Schedule 3 normal public sector accommodation which is not a hall of residence but happens to be occupied by, let us say, a mature student or a research student, or whatever, who is there as a tenant of the public authority and should therefore have the benefit of security of tenure. I beg to move.
Lord BELLWIN: It may be helpful if I explained the reason for the exclusion covering students. They are a group of people whose need for housing in a particular place is by its very nature temporary. The purpose behind the exclusion is therefore to give a certain degree of flexibility to landlords, and at the same time to help students by encouraging public sector landlords to let to them
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houses or flats from their normal stock which may be temporarily available or, for example, not suitable for families. I am thinking here of short-life property awaiting rehabilitation, or dwellings on high-rise estates which are difficult to let to other applicants. The Bill was amended in another place to allow lettings to be made under this exclusion before commencement. (This provision now appears as paragraph 68 of Schedule 23). If students are allowed to stay on after the end of their course, they will become secure tenants six months later. And the procedure for prior notification that the tenancy is excluded means they are sure of their status.
I hope your Lordships will agree that we cannot, against this background, accept the amendment; it would destroy the point of what I believe is a useful provision in the Bill, by restricting it to halls of residence, which in many cases would not be secure accommodation anyway, and to only those houses in the ordinary stock normally let to students at the establishment concerned. I am not sure whether this is what the noble Lord intends. If not, he may feel able to withdraw the amendment. I listened with interest and with sympathy to the points he made. He may not feel as I always do, but perhaps he will take my assurance on this point. In any event, I fear I cannot help him further.
Lord EVANS of CLAUGHTON: I understand, even at this comparatively early hour—I was going to say "late hour"—what the Minister is saying, although it seems he has certain double standards because he was giving a quite different answer on the previous amendment to the noble Baroness, Lady Faith-full, about temporary housing accommodation in areas pending rehabilitation. Apparently he is not prepared to look in the same way in relation to student accommodation. I was seeking to define more tightly what a hall of residence or student accommodation was. I shall read at leisure what the noble Lord said to see if I understood it and, perhaps more important, to see whether brighter minds than mine, including the National Union of Students, understood. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 90 not moved.]
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON had given notice of his intention to move Amendment No. 92:
Page 102, line 38, at end insert—
("Rural Housing
l3. A tenancy is not a secure tenancy if the dwelling house is situated in a National Park, or an area designated under Section 87 of the National Parks and Access to the Countryside Acts 1949 as an area of outstanding natural beauty, or an area designated by order of the Secretary of State as a rural area, and the landlord is a local authority (as defined in Section 49 of this Act), a County Council or the Development Board for Rural Wales or a registered housing association.").
The noble Lord said: Having taken to heart some remarks made by noble Lords earlier, I think I should—to use a rather inelegant phrase—be flogging a dead horse were I to proceed with this amendment, so I will not do so.
[Amendment No. 92 not moved.]
10.57 p.m.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 93:
Page 102, line 38, at end insert—
("Housing for Key Workers
13. A tenancy is not a secure tenancy if the dwelling house is provided by a registered housing association the objects of which include the provision of accommodation for persons engaged in specified employment and (a) it was granted to a person in connection with such employment; and (b) the landlord notified the tenant at the time the tenancy was granted that the accommodation was granted for employment reasons; (c) the property is situated in a Development Area or Special Development Area.").
The noble Lord said: I move this amendment with a little more optimism than I did some of my earlier ones, especially after the many speeches from noble Lords, and particularly from the noble Lord, Lord Harmar-Nicholls, who said how important he regarded the question of the mobility of labour. From my experience of local government, we have always, in the local authorities of which I have been and still am a member, set aside housing for key workers, particularly since the local authority of which I am a member is in a special development area. In such areas you want to be sure that if a new factory is being built, a new enterprise is being started or a new computer set-up is being established, you can, if you do not have the skilled labour in your own area—and that is one of the great tragedies of some special development areas—tell the
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builders or whoever may be developing the scheme that they can have a guarantee for key workers who will be there, by the nature of their employment, on a temporary basis until that particular job is finished. I should have thought this proposal would be one of the best ways of ensuring and enshrining the importance of the mobility of labour, namely by excepting key workers from the provisions, and that is why I say I move this amendment with more optimism than was the case with some of my previous amendments.
Lord BELLWIN: Despite the hour, I do not feel like a dead horse. I appreciate the noble Lord's intention in seeking to exclude from the tenants' charter tenancies granted by industrial key workers housing associations who are providing housing as a means of encouraging employment in assisted areas, which is indeed a very valuable function. However, I believe that the fifth exclusion in Schedule 3—namely, temporary accommodation for persons seeking employment—already caters for such cases. Under that exclusion, people moving to an area for job reasons and needing somewhere to live in the short-term while looking for a permanent house will be excluded from the tenants' charter for one year. If they are still in occupation at the end of that year, they will obtain security under the provisions of the Bill. I believe that that is right, since it will allow landlords flexibility in providing short-term accommodation for newcomers moving for job reasons, without creating a second class of tenant who will be permanently without security of tenure.
I am afraid that I cannot accept the wider exclusion proposed in the amendment, although I appreciate that it is restricted to certain geographical areas and to certain types of landlord. I do not think that we have any reason to deny tenants, who are in all other respects ordinary permanent housing association tenants, the tenants' charter rights simply because of their landlord's constitution and the area in which they happen to live.
Lord EVANS of CLAUGHTON: I am not as sanguine as the noble Lord, Lord Bellwin, about paragraph 5 on page 100, though I am somewhat reassured by it. I only hope that in fact it works in the way that he suggests, because I feel very strongly that we must do all we can to

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ensure that in regard to key workers, particularly in development or special development areas, there is mobility of labour. The noble Lord, Lord Harmar-Nicholls, made quite a point about this. I am willing to have another look at paragraph 5 and, with some reluctance, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 3, as amended, agreed to.
Clauses 28 to 32 agreed to.
Clause 33 [Grounds and orders for possession]:
11.2 p.m.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 94:
Page 25, line 18, leave out ("but the grounds so specified may be altered or added to with the leave of the court.").
The noble Lord said: This amendment seeks to limit the basis of the local authority's rights in altering a summons for possession of rented property. Any members of your Lordships' Committee who have spent time as advocates in the courts will appreciate that when a tenant receives a notice to quit, followed by a summons, it is in the first instance, at least for any normal tenant who is not totally feckless, a fairly shocking and frightening experience. In addition, if possession is sought for a particular reason, presumably that reason is stated on the summons, so that the tenant can then remedy the particular breach of the tenancy agreement.
The notice may, for instance, be in respect of arrears of rent, which the tenant then puts right. Having paid the arrears, the tenant goes to court confident that he has remedied the breach to which the local authority, his landlord, is referring. The clause provides that the local authority can then change the grounds for seeking possession, after service of the notice. The tenant, who may not be as familiar as are lawyers with court procedures, and who may not be represented, finds, having remedied what he thinks to be the breach in relation to which possession is sought, that the landlord (the local authority) then substitutes an entirely new ground for seeking possession.
Even members of your Lordships' Committee would be caught unawares if such a thing were imposed upon them. One might be prepared to defend proceedings brought in connection with arrears of rent on the basis that the situation had been remedied. One might think that one had the complete answer, only to find that, without warning, the landlord had changed the grounds after service of the notice.
I appreciate that the noble Lord, Lord Bellwin, may say that we can leave this to the discretion of the court, and I am sure that in most cases we could. But it is not good enough to have to rely upon the discretion of the court. The county court judge may be having an off day. He may have missed the point. The tenant may be so worried that he is unable to express himself.
Only in very exceptional circumstances, if at all, should a local authority which is in the position of having a considerable number of well-qualified officials, be permitted to impose upon a tenant, who is in a very disadvantageous position, an entirely new set of grounds for possession after the summons has been served on him. I think it is totally contrary to natural justice, totally contrary to the basic principles of British justice, and is something which your Lordships should seek to exclude by means of the amendment I now beg to move.
Lord BELLWIN: Your Lordships have referred to the discussion of this amendment in another place. I have listened to what has been said, but I am afraid I can only agree with what my honourable friend said on that occasion. He said that this provision is a sensible one. It allows a landlord, with the leave of the court (yes, indeed, I did pick up the point, as the noble Lord, Lord Evans, suggested I might)—and I stress the words "with the leave of the court"—to add to or alter the ground for possession specified in the notice which a landlord seeking possession will have to serve on the tenant under Clause 32. If this were not possible, the landlord would have to go through the process of serving a notice seeking possession a second time, thus adding to his workload and risking a delay of the court hearing, even when it was clearly right that the court should consider the

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new circumstances with those already mentioned in the notice seeking possession.
The sort of situation where this provision might be used is where a tenant has been given a notice stating that possession is being sought under Ground 1 of Schedule 4 because he is in rent arrears. His conduct may then change so as to become a nuisance to neighbours, giving the landlord additional reason for seeking possession, under Ground 2 in Schedule 4. Clearly it would be right in such a case that these two issues should be considered together by the court. The provision that a new ground can be added or substituted only with the leave of the court protects the rights of the tenant. For example, the court could extend its protection by adjourning or postponing a case to give the tenant time to prepare his defence where a new factor has been introduced. This procedure will result in less delay and confusion than would an obligation for a landlord to serve a completely new notice whenever circumstances change.
I think, therefore, it would be wrong to remove this possibility from the Bill. There are perfectly adequate safeguards for the tenant; and although, this time, I undertake to read carefully what the noble Lord has said in case we are missing something here, I would ask him whether he feels able to withdraw the amendment.
Lord AIREDALE: Does the Minister not agree that, in the way that the clause is drafted, it is almost an invitation to the court to allow alteration? Because it is phrased in the affirmative:
"the grounds so specified may be altered … with the leave of the court".
Suppose it was put the other way, and read:
"and the grounds so specified may not be altered without the leave of the court",
would that not put it into the court's mind that an alteration would have to be a much more unusual state of affairs and would not be readily granted by the court? If the clause were phrased in that way, would that not better meet the intention of Parliament?
Lord BELLWIN: I am not sure whether that is the case. I suspect the noble Lord may well have a point there, and that is why I felt, based on what the noble Lord, Lord Evans, had said before, that we
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should read what he said very carefully. I shall now add to that what the noble Lord opposite has just said.
Lord EVANS of CLAUGHTON: I am grateful for the consideration given. My basic concern is that bureaucratic convenience is coming before the basic rights of tenants. It seems to me that, if you are being "done" (as they would say) for arrears of rent, you may suddenly find, because, perhaps, you have set up a disorderly house in order to pay the rent, that you are being got at on an entirely different ground of nuisance, which is perhaps what is in the noble Lord's mind. I should have thought that it would have been fairer to have worded it in the way that my noble friend suggests, but, in view of the fact that the noble Lord has said that he will consider this—because I think there are real points about the liberty of the individual and the liberty and rights of the disadvantaged small man against the big authorities, to which I hope he will give some serious consideration—I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord GIFFORD Lord GIFFORD moved Amendment No. 95:
Page 25, line 25, leave out ("13") and insert ("14").
The noble Lord said: I wish to move Amendment No. 95 and to consider with it Amendment No. 97, as the two go together. The general purpose of these amendments is to introduce a new ground to the Bill upon which a court can order possession of a secure tenancy in circumstances where there has been a family break-up and it is desired to use the accommodation to accommodate the family and the children of the partnership and not the tenant who may be left on his own, but to allow him to be provided with other accommodation.
It would he as well to consider the existing practice of local authorities. Again and again, when there has been a family break-up, the situation arises that the woman and the children have to leave the home. It may be that they are driven out by actual violence; it may be that they leave because the situation within the home has become intolerable; and in the women's refuges which do such valuable work up and down the country they find a shelter. But where a council tenancy

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is involved, what happens is that the local authority frequently will transfer the tenancy if, for instance, it is in the name of the man, as is often the case, into the name of the woman so that she can go back into the tenancy with her family and the man can be provided with separate accommodation.
The effect of the Bill is that that flexibility which the local authorities have is taken away, because the Bill makes the tenant a secure tenant—and, in principle, of course, I support that fully—but that means, if it is a man (and I say a man, because that is generally the case, although it would work the other way), that there would be power in the divorce court when the matter finally gets there to make an order transferring the secure tenancy from the man to the woman. But that comes very late on, often after months of litigation, with the family accommodated in very bad conditions. Often, in the meantime, the local authority will have been under a duty in any case to find accommodation for the mother and the children who will be homeless within the meaning of the Homeless Persons Act. So the authority will be housing both units in a family-size accommodation and, when it comes to the divorce, possibly there will not be any point in transferring the tenancy from one to the other.
In the situation where the parties are not married, the law gives even less protection. There is the limited protection of the Domestic Violence Act when there has been actual violence, where the spouse who has been abused can be put back for a temporary period within the home; but there is no provision in the law for a tenancy to be transferred from one partner to a relationship to the other if they are not married. Therefore, the father (if it is the father) will have the secure tenancy and the right to buy of accommodation, which in many cases will in any event be too large.
The purpose of this amendment is to restore the flexibility which local authorities now possess. It envisages two situations: first, where the local authority, or the landlord authority, needs to rehouse the partner who is out of occupation and her children back in the matrimonial home; secondly, where the local authority already
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has rehoused the partner and the children who were out of occupation to take back the matrimonial home to be used for a family. We know how scarce family accommodation is in many local authorities. The spouse or partner against whom the order of possession would be made would, under this amendment, be given suitable alternative accommodation and there would be the proviso that it was reasonable to make the order.
This amendment has the support of a spectrum of women's organisations: the National Women's Aid Federation; the Women and Housing Organisation; and the Rights of Women Organisation. I make no apology for stressing the wide support that this amendment has among those organisations because it is those organisations who have to deal with the agonies and hardships which take place when families break up and there is no accommodation, and particularly when women and children have to be housed in emergency accommodation.
We need the present flexibility which allows local authorities to restore the unity of a home which is broken up, to restore the children of the family (who suffer greatly in these situations) speedily to the home which they have had to leave. I beg to move.
Baroness FAITHFULL: I understand what the noble Lord, Lord Gifford, has said in principle. I have experienced the terrible situation of a woman leaving a home on a constructive desertion clause and I, as director of social services, have had to find her accommodation when I have felt she had every right to the house that she had left.
What I am not clear about is what would happen if every local authority does as, for instance, my own authority does, which is to grant the tenancy jointly to the married couple or the two people living together. My difficulties always were that the man had the tenancy of the house, and because of that the woman and children had to leave. I seek help on this. Would the situation be altered if the tenancy was offered jointly to both husband and wife so it was not always the wife and children who had to leave in the case of constructive desertion?
11.18 p.m.
Lord BELLWIN: The principle behind this amendment is that, on the break-up of a family, public sector landlords should be able to evict the tenant partner in order to reinstate the other, or because the other partner has been rehoused elsewhere. I recognise that there is widespread support for the idea that the spouse of a partner with responsibility for dependants should generally be the one to be given preference if occupation of the family home is in dispute. However, there is a considerable objection to the notion (as embodied in this amendment) that the landlord should be able to make a decision about this before questions of custody and property have been considered by the appropriate court at the time of divorce or legal separation. We have legislation in this country governing the matter of rights to the matrimonial home on divorce, and this is extended to secure tenancies by the Bill itself. I can see no case for giving either local authorities or other public sector landlords the opportunity to make a prior judgment about this in the context of managing their housing stock.
I am of course aware that a similar ground has been included in the Scottish Bill. That is because there is as yet no equivalent to our matrimonial homes legislation in Scotland. It is also the case that in England and Wales the matrimonial homes legislation, other than certain provisions of the Domestic Violence and Matrimonial Proceedings Act, does not apply to people who are cohabiting. That argues against, in our view, amendments which would treat cohabitees in the same way as a separated spouse for the purposes of this particular provision.
If a landlord chose to use the ground for possession proposed in the amendment, and I am sure it would sometimes be put under considerable pressure to do so, it would also be under an obligation to provide suitable alternative accommodation for the displaced partner. Again, we do not accept that this further duty is appropriate. If the landlord and the parties concerned can agree voluntarily to settle the matter in this way, and the accommodation is available, then of course that is up to them; but I do not believe it should be a further obligation on the landlord.
Finally, it has also been suggested that
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the proposed ground would simply enable landlords to do in future what they are perfectly entitled to do already. That is true, but it is only because public sector landlords and their tenants have not so far been subject to any statutory rules about the tenant's security. It is a very different matter, when such rules exist, to incorporate in them what amounts to a specific power to decide between competing claims which ought to be settled elsewhere. I do not think these landlords on the whole want that responsibility; nor does it properly belong with them. I therefore feel we are not able to accept this amendment.
Lord GIFFORD: May I first take up the point which the noble Baroness, Lady Faithfull, made. The position is better when the spouses or partners are joint tenants because then, at least, they have rights at law and can go to a court to get some kind of order which determines who should be able to occupy the home; and it is principally the cases where the tenancy is only in the name of one partner, who still in many authorities is the breadwinner, or the man, and the woman has a number of rights in equity but very few at law.
I found the answer of the noble Lord, Lord Bellwin, very unsatisfactory indeed. There is a kind of madness you get into if you pursue the logic of a good idea too far. Local authorities at the moment make a number of very sound, compassionate decisions, about which I have heard very little dispute or quarrel, when, in the early days of a separation, they have to try to help to restore a family and children to the matrimonial home by the use of the power they now have to transfer the tenancy.
With the new Bill, however, there are two kinds of very common situation which simply are not made by the legislation to which the noble Lord referred. He mentioned the Matrimonial Causes Act, where property can be transferred and custody of the children awarded; but if a husband resolutely wishes to stay in the matrimonial home, perhaps because it is becoming a valuable asset and he wants to have the right to buy, then it may take a year or two before the question of custody is decided. True, if there is violence there are the emergency provisions, as it were, under the Domestic

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Violence and Matrimonial Proceedings Act; but if there is no violence the wife and children will be homeless and will be a charge on the local authority and will have to be re-housed. So the local authority will have two family-sized units of accommodation to house both parties to one marriage for a long period, at the end of which there probably will be no point in transferring the old tenancy.
Secondly, where cohabitees who are not married are concerned, that will inevitably be the situation because no court has the power to make a transfer of property order where there is not a marriage. I do not intend to press this amendment tonight, but I am not satisfied and would wish, having considered the Minister's reply and consulted with the organisations I have referred to, to raise this matter again on Report. With that, I beg leave to withdraw this amendment.
Amendment, by leave. withdrawn.
On Question, Whether Clause 33 shall stand part of the Bill?
Lord HYLTON: The noble Lord has raised a very important point on his last amendment. I would just like to ask my noble friend the Minister whether there was any consultation with local authorities before the Bill was put in its present form.
Lord BELLWIN: There has been so much consultation down the line that I cannot tell my noble friend if every single aspect was covered in this way. I should be very surprised if it was not, but I cannot tell my noble friend precisely that it was. I should be surprised if it was not.
Clause 33 agreed to.
Schedule 4 [Grounds for possession of dwelling-houses let under secure tenancies]:
11.26 p.m.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 96:
Page 105, leave out lines 6 to 15.
The noble Lord said: This amendment seeks to remove Ground 13 for obtaining possession. I understand very fully, from many years' involvement in the housing problems of a fairly inner urban area, how exasperating it is when one has the situation that this ground envisages of a
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family where probably there have been quite a large number of children, one of the spouses has died and usually the widow is left, perhaps in a three-bedroomed house, and the local authority seek to re-house her into more appropriate accommodation. It may be a widower but it is usually a widow. The tenant concerned, because of sentiment, family reasons, memories, all kinds of intangible but very important sentimental reasons, does not wish to leave the house. This, again, is bureaucratically inconvenient, but the fact of the matter is that I personally would not wish to be associated with legislation which could force people under those circumstances to give up their house.
I am all in favour of the local authority using all kinds of reasonable persuasion, but quite frankly I would be utterly appalled—I say that in a measured way—however many protections there are for the tenant concerned, as set out in Ground 13, if we were to use the authority of the courts to remove a person from a house where they had lived most of their married life, had brought up their children and presumably now have already suffered enough through the loss of their partner. I believe in persuasion; I do not believe in compulsion and that is why I move this amendment. I beg to move.
Baroness BIRK: Very briefly, because it is very late, I want to support the noble Lord, Lord Evans, in his amendment, because I also feel very strongly about this matter for the reasons he has explained. I feel that by all means one should try to persuade, to make available attractive alternative accommodation, but if at the end of the day the person—I do not think there can be very many such persons—says, "No, I want to remain where I am", then I think it really becomes very inhuman and uncompassionate if one does not accede to their wish.
Lord BELLWIN: None of us would want to see an elderly person moved from their life-long home against their wishes, solely because of under-occupation. That is why we have not included in the Bill a general ground for possession based on under-occupation. To have done so would have been inconsistent with our general aim to give public sector tenants security in the dwelling which is their home.

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But here, as in other parts of the Bill, we have had to balance tenants' reasonable expectations against management needs. We noticed from the response to our consultation document that local authorities were particularly concerned about potential under-occupation by single successors in family dwellings. We felt it right to make a limited concession in the circumstances outlined in the Bill. Ground 13 cannot be used against the spouse of a deceased tenant who succeeds to the tenancy. Widows and widowers will not be subject to being moved against their will, because of under-occupation. It can only he used between six and 12 months after the previous tenant's death. This avoids both the possibility of distress being caused in the period immediately following a bereavement, and the risk of constant worry to a tenant that this ground might be used against him at such future date.
If the tenant is not the spouse of a former tenant and the landlord takes action at the appropriate time, there is the additional safeguard that the court might not make an order for possession unless it considers it reasonable to do so. Clause 33 specifies this. Clause 33 also requires that suitable alternative accommodation must be provided. This will be judged against the criteria in Part II of Schedule 4. I believe that in very many cases a successor tenant would be willing to move voluntarily to smaller accommodation, if this is sensible as a matter of housing management. However, we need to give landlords freedom to make the best possible use of their stock where a much-needed family house is occupied by, say, a young, single person. There are safeguards when this ground is used, and widows and widowers are not exposed to it at all.
I think that the provision is a useful part of the Bill and we cannot accept the amendment, or the attempt thereby to remove it; having said which, the point which was made by the noble Baroness, Lady Birk, was an interesting one. She said that she wondered how much of a matter this really was in practice. I do not know. From my own experience going back some years, I should think that, surprisingly, it is probably a much larger problem than may be realised. I certainly cannot accept the amendment, but what I should like to do for my own
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interest, all else apart, is to try to see whether there are any statistics or information as regards the likely extent of this. If it should prove that the noble Baroness is more right than I think may be the case, then I will speak to my colleagues about it. That is probably the most I can do tonight.
Lord EVANS of CLAUGHTON: I accept the position that the noble Lord takes. I feel extremely strongly and very deeply about this problem. However, in the circumstances, I shall beg leave to withdraw the amendment at this stage, but with the proviso that unless I can be very much more satisfied than I am now, I shall certainly raise it at a later stage.
Amendment, by leave, withdrawn.
[Amendment No. 97 not moved.]
Schedule 4 agreed to.
Clause 34 [Subletting and lodgers]:
11.34 p.m.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 98:
Page 25, line 37, leave out ("persons who are members of his family") and insert ("any persons").
The noble Lord said: In moving this amendment perhaps I may also include Amendments Nos. 99 and 102 in my introduction. Quite simply, the Government have said that in the tenants' charter they want to simplify things—to reduce bureaucracy, to make things easier generally for tenants and, in every way possible, to make the life of a local authority tenant an easier and less bureaucratically controlled one—a sentiment with which we on these Benches would totally agree. Therefore, it seems to us that tenants should have the absolute right, within the limits set by legislation about overcrowding, which obviously would apply, to take in lodgers without having to get the consent of the landlord.
I cannot see any reason at all, because there is adequate protection under the legislation about overcrowding, why limits should be set on tenants' freedom to take in lodgers. They are not protected, they are not secure tenants; so, if the Government are really concerned about expanding freedom in the public sector, why not give some real freedom and allow tenants to

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take in lodgers at will, within the provisions of the overcrowding legislation? That is the reason why I move this amendment. I beg to move.
11.35 p.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, HOME OFFICE (Lord Belstead): I am not entirely sure that the Government spokesman on these amendments, and on the amendments which we are now coming to, will be able to shed very much light compared with his colleagues on the Government Bench. But at least this spokesman can spread a little happiness because I have great pleasure in accepting the amendment moved by the noble Lord.
Lord EVANS of CLAUGHTON: I am rendered completely speechless. I hope the noble Lord will address us more often. I thank him.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 99:
Page 25, line 43, leave out from ("house") to end of line 45.
Clause 34, as amended, agreed to.
Clause 35 [Provisions as to consents required by section 34]:
Baroness VICKERS Baroness VICKERS moved Amendment No. 100:
Page 26, line 11, after ("of") insert ("Part IV of").
The noble Baroness said: I beg to move the amendment standing in my name. At the same time, perhaps I may speak to Amendment No. 101.
This amendment will not cost any money or involve any extra staff. The statutory overcrowding standard enforceable by local authorities is virtually unchanged since the Housing Act, 1935. All rooms used normally as living rooms or bedrooms are included in calculating the "permitted number" in any dwelling-house. Children under 10 are counted as half a unit, and those under one are omitted from the calculations. This standard therefore implies that a house
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is properly occupied if the family needs can be met by using every available space, except a bathroom, water closet or the kitchen, as bedroom accommodation. Only when occupation exceeds this level can a local authority take steps to abate overcrowding by legal action. I should mention that the lowest amount of space that they are allowed is 50 square feet plus—nothing below that figure.
I suggest that this standard is obviously too low and bears too little relationship to current problems. Modern houses are very often designed on an open plan and with through rooms. The assessment of overcrowding should be on a bedroom standard, and all children, regardless of age, should be counted as one unit. I understand that this will have little overall effect on the housing situation, because the problem is comparatively small. It is, however, critical to those people affected who are living in these overcrowded conditions.
Therefore I suggest that each property should be looked at as a whole, having regard to the bedroom standard and the minimum space available for cooking, dining and living. Therefore, Table 1 of the annex to Schedule 6 to the Housing Act 1957 should be amended as follows:
"Annex Table 1 Where a house consists of—

(a) One room

2 persons,

(b) two rooms

3,

(c) three rooms

4,

(d) four rooms

6,

(e) five rooms

8, with an additional 2 in respect of each room in excess of five".

May I say to my noble friend who is to answer that the situation cannot be rectified unless this amendment is accepted, which I hope he will be kind enough to do, so that he does not have to use that horrible word "resist". I beg to move.
Lord BELSTEAD: I entirely understand, from the clear explanation which my noble friend has given, the intentions which lie behind her two amendments. However, my noble friend mentioned that the date upon which the housing standards had been set down was now many years ago. I do not think that just for that reason they are necessarily out of date.
I should like to remind the Committee that the existing standards are deliberately

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basic. If they are contravened, the results are drastic. The landlord is guilty of an offence. The excess residents lose their security of tenure and homelessness may well result. We should need to consult widely and consider carefully before concluding that a change is desirable.
I hope that my noble friend will not think that I am not agreeing with the amendment because of a mere technicality when I say that I remain to be convinced that it would be right to alter overcrowding standards which are of general application to both public and private sector tenants in this clause, which is of limited application only to consents for subletting by public sector tenants.
There is just one other matter which I should like to put to my noble friend. Although the noble Baroness has explained her amendments very clearly, in fact they have not been written down on the Marshalled List. What I mean by that is that my noble friend has really tabled what in effect are two paving amendments, but has not actually put down the new standards which she would like to see. I seriously say that if a major step of this sort were to be taken the Committee would want to see in print the new standards which my noble friend seeks to secure. On these grounds I ask my noble friend to withdraw this amendment. I do not think this is the right place for such a new provision to be written into legislation, and at any rate I hope my noble friend will not mind my saying that what my final words add up to is that the amendments are defective.
Baroness VICKERS: I thank my noble friend the Minister for his reply. I should like to think about this to see whether I can produce some better figures for him and bring something forward at Report stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 101 not moved.]
11.42 p.m.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 102:
Page 26, line 16, leave out ("lodger or").
The noble Lord said: I think all I need to do is to move this amendment formally
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because it fits in with the other two amendments. I beg to move.
Clause 35, as amended, agreed to.
Clause 36 agreed to.
Clause 37 [Reimbursement of cost of tenant's improvements]:
On Question, Whether Clause 37 shall stand part of the Bill?
The Earl of KINNOULL: I am afraid I have given no notice to my noble friend on this point but I think it is important; it concerns reimbursement for improvements done by tenants to their houses. Under subsection (1)(c) the reimbursement would only occur where the improvement was begun not earlier than the commencement of this part of the Act. In the past that has often led to problems and I think it would do so here because there might be a perfectly sensible improvement for which the council had given their written approval; it might have been started a day before and therefore would not qualify because this Part of the Act had not come into force. I wonder whether my noble friend could look at this point to see whether it would be possible to alleviate the problem.
Lord BELSTEAD: Speaking without notice, I know that the Department of the Environment will look closely at what my noble friend has said, but as I think he will know better than I do, with his knowledge of legislation, there has to be some point at which legislation comes into effect and this particular point has been held to be the right point so far as this legislation is concerned. Unless one chooses a different point at which this particular clause comes into effect (and, if my noble friend will not mind my saying so, I am not persuaded of the need for that), or unless there was some graduated way in which one could make the clause come into effect—and certainly I am not persuaded that that is possible then I do not think that what my noble friend is asking for would be possible. I simply say that now to prevent unnecessary communication between my noble friend and the department. If what I have said is correct I think probably there will be no further communication with my noble friend, who may like to consider whether to table an amendment at Report stage. lf,

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on the other hand, what I said is wrong, I will undertake that a letter will come to my noble friend.
Clause 37 agreed to.
Clauses 38 to 40 agreed to.
Clause 41 [Meaning of "landlord authority "and" housing management"]:
11.45 p.m.
Baroness FAITHFULL Baroness FAITHFULL moved Amendment No. 103:
Page 30, line 43, at end insert—
("(6) Local authority housing authorities shall compile a list of unoccupied Council property; such list shall be laid before the Housing Committee once a quarter; and the Housing Committee shall have an obligation to consider the use of such property.").
The noble Baroness said: I have very little expectation that this amendment will be accepted and perhaps I understand that. Nevertheless the situation in the country is so serious that I think it warrants that this matter should be brought before your Lordships. I move this amendment on two counts: first, from my own personal experience some years ago, when I toured the city where I worked and made a list of all the empty properties not being used. I then conferred with the housing manager, and the housing manager and I approached our council. All the houses standing empty awaiting either rehabilitation or redevelopment were put into use, even minimal use, and we cut down the expenditure we spent on homeless families in putting them into bed and breakfast, which in any case is highly unsatisfactory; secondly, we were able to house a number of people as licensees for a time, until they could find permanent accommodation.
Secondly, having looked at the figures of the number of estimated properties standing empty, I am given to understand, although I have not counted them myself, that in the inner London boroughs there are 23,450 dwellings standing empty. This position obtains not only in London. I have, for instance, the figures for Corby, 1,077; Naseby, 2,247; Birmingham, 4,862. These are considerable figures when one considers the numbers of homeless in this country. Therefore, it has struck me, and I have wondered, whether it would not be better if the local authorities adopted what is, I believe, the procedure in Bristol
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and other local authorities, whereby a list of empty properties should be submitted to the housing committee on a quarterly basis and the housing committee has an obligation to consider the use of such property. If this phrase were incorporated in the Bill, any local authority not using or considering property could perhaps be taken to court for not doing so. This seems a hard measure, but I think it is perhaps an indictment of our country that with so many homeless people we have so many properties in our housing stock standing empty. I beg to move.
The Earl of KINNOULL: I should like briefly to support my noble friend very strongly. I do not think this would be laying too great a hardship on the housing management of any local council. I do not think any housing committee should be without this information anyway, and the inhabitants of any area should feel that the committee has this information available. I do not think it is too arduous a job. I believe my noble friend is absolutely correct in saying there is severe hardship, and I would welcome this duty being laid on councils.
Lord HYLTON: Having asked a number of questions about the use of bed and breakfast accommodation to house homeless families and having raised this matter in debates, I should very much like to support my noble friend in her amendment. I am very glad she mentioned Bristol because it is to the city's credit that it was the first in the whole of Great Britain to start to resist the slave trade, and much more recently it is to the credit of Bristol that it was one of the first publicly to publish its points scheme for housing allocations. I am delighted that it was also in the van on the matter of empty properties. I should like to support the amendment as strongly as I possibly can.
Lord BELSTEAD: I am not surprised that two of my noble friends have joined with my noble friend Lady Faithfull in speaking to this amendment, because in listening to previous amendments this evening I realised that the matter of empty properties is something which has exercised the concern of members of the Committee. I should like to say, first, that I would hope that local authorities will review systematically and regularly their vacancy

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levels and take appropriate action. I should like to reply to my noble friend by indicating briefly what, as the Government see it, is actually being done to try to encourage local authorities to undertake reviews.
Local authorities are encouraged to undertake reviews by the inclusion in housing investment programme returns of a series of questions about vacant properties. Authorities have to tell the Department of the Environment each year how many vacant properties are to be found in the private and public sectors; and to specify for the public sector how long those properties have been vacant and whether they are available for letting or undergoing renovation. At national level we hope that the Office of Population Censuses and Surveys will be publishing next month a report on their vacant property survey. My colleagues at the Department of the Environment will be considering in the light of that report what further Government action might be appropriate.
I would not like to give the impression to the Committee this evening that the Department of the Environment has not given advice about all this. The Department of the Environment Circular 76 of 1977 entitled Better use of Vacant and Under-occupied Housing contains a number of detailed practical suggestions about ways in which vacancy rates might be reduced. For example, local authorities are asked to consider the possibilities for licensing short-life properties to housing associations and other responsible voluntary bodies.
As your Lordships may know, the Department of the Environment has a Housing Services Advisory Unit whose object is to promote good practice in the public sector housing. They invite themselves to local authority areas. They have visited about a third of the housing areas already and one of the very first questions which this unit always asks when it pays a visit is about the empty housing in the area.
I should like to conclude what I wish to say by referring to what my noble friend Lord Kinnoull said. He put it to the Committee that it would not be onerous to accept the amendment. Indeed, I do not think that it would be, but if I may say so I think that it would get the
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statute book into difficulties because, instead of proceeding by advice and by agreement, one would be laying a statutory duty upon authorities concerning unoccupied properties, and as soon as one does that one runs into problems. I shall mention one, and one only.
The last part of this amendment—the requirement that local authorities consider the use of vacant properties—would, in fact, one finds when one looks at it closely, add nothing to existing legislation. Section 91 of the Housing Act 1957, already imposes a duty on local authorities to consider housing conditions in their district and the needs of the district with respect to the provision of further housing accommodation. For a local authority to assess the need for more accommodation in its area it would clearly need to assess the adequacy and the use of its existing stock.
We are left, therefore, with the requirement in the amendment to compile lists and to lay these, at quarterly intervals, before the housing committee. That is a very much narrower objective than the objective which my noble friend Lady Faithful, started with when moving her amendment. Therefore, on grounds that I think that it is difficult—at least difficult in the wording of the amendment which my noble friend has put forward—to achieve what she is seeking to achieve; and on the grounds that I would very much prefer, particularly in the light of what I have said to the Committee this evening, to continue to try to progress by agreement and by persuasion between local and central Government, I hope that my noble friend will not feel the need to press the amendment.
Baroness FAITHFULL: Having listened to all that, I wonder why there is a single empty property in this country. If all this enormous procedure is going forward and if the Department of the Environment is informed, how come that there are many houses in many streets—and the figures that I have given tonight bear this out—boarded up? There must be something wrong with every house so that it cannot be used. However, I understand the difficulties, having been in local government myself, and, feeling better as a result of having aired this terrible problem, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 41 agreed to.
[Amendment No. 104 not moved.]
Clause 42 agreed to.
Clause 43 [Provision of information about housing allocation]:
11.55 p.m.
Lord DIGBY Lord DIGBY moved Amendment No. 105:
Page 32, line 23, leave out subsection (6).
The noble Lord said: This is a probing amendment to find out from the Government exactly what councils have to make available to an applicant. On the face of it, this subsection appears to say that one must tell an applicant tomorrow what he said today. I know that your Lordships need Hansard to tell you that, but I should not have thought it was necessary in the case of an applicant. I am wondering whether it is, in fact, the completed application form which must be shown to the applicant, and what worries me is that perhaps this would have to include such things as doctors' reports, which are provided on a confidential basis. If doctors think that their confidential reports are being reported back to the applicant, they might not co-operate so well in the future. I should be grateful if the Government could tell me what has to be provided to the applicant.
Lord BELSTEAD: I think that I can satisfy my noble friend in replying in this way. The only particulars of which details must be supplied by this subsection of the Bill are those which the applicant himself has provided. It would not be right for applicants to have the right to see reports supplied by doctors, which were mentioned by my noble friend, social workers or others which may have been given on a confidential basis to the housing authority. Authorities have pointed out during the consultation process on this Bill that such reports would cease if confidentiality were not assured. I think that if the Committee looks at the wording of this part of the Bill, it will see that my noble friend's apprehensions in this respect are groundless.
I should like to add one point. I cannot remember the exact words that my noble friend used, but in effect he was
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asking: would the file have to be produced and put under the nose of the person who was asking the question? The answer to that question is also "No". The wording of this clause requires a landlord to provide "details of the particulars". That does not mean that the actual file must be produced. Information would have to be extracted in order to answer a question being asked, but the answer which was given would not have to go further than that. I entirely understand the reasons why my noble friend has asked these questions, and I hope that the answers I have sought to give will provide him with satisfaction.
Lord DTGBY: I am most grateful to my noble friend for that very satisfactory answer. I think that it is worth getting it on the record, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 43 agreed to.
Clause 44 agreed to.
Clause 45 [Contributions towards the cost of transfers and exchanges]:
11.58 p.m.
Baroness DAVID Baroness DAVID moved Amendment No. 106:
Page 33, line 17, at end insert—
("(3) The Secretary of State may by order place a duty on groups of local authorities to participate in any arrangements facilitating moves of the kind outlined in subsection (1) above that have been agreed by the appropriate local authority association or local authority associations.
(4) The Secretary of State may only exercise the power provided by subsection (3) above following a request made by the local authority association or local authority associations concerned that he should exercise the power.").
The noble Baroness said: This amendment is about mobility, which has been mentioned several times in the Committee today. I am only sorry that the noble Lord, Lord Harmar-Nicholls, is not here to support me as I move this amendment. I think that it is generally agreed that it is a good thing for council tenants in one area to be able to move to another without surrendering their tenancy. This idea is supported by tenants' rights organisations such as Shelter, Age Concern, and by the CBI, which wrote to the Minister on the need for legislation. I should have thought

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this perhaps a reason for the Government to give their support.
The local authority associations are co-operating in drawing up a voluntary scheme. This work started to head off the Labour Government proposal to legislate on this and on residence qualifications. The fact that the associations agree on a scheme does not mean that all local authorities will operate it. Each housing authority will decide whether or not to join.
Two precedents can be quoted. The first is the inter-borough nomination scheme drawn up by the LBA and introduced in April 1978 to provide for mobility within London. Three boroughs—Barking, Hillingdon and Redbridge—still refuse to join. More significantly, no authority has made lettings to people from other boroughs on the agreed scale. Lettings have been running at about 1,300 a year instead of the target of 4,000.
Secondly, there is the Homeless Persons Act referral system for people with no local connection to be referred back to an area with which they have a connection. Although the disputes procedure for this has statutory backing, several authorities sought to reject the scheme drawn up by the local authority associations. There is the special London dimension. London has two mobility arrangements: the IBNS —the inter-borough nomination scheme—and the scheme for stock transferred from the GLC to the London boroughs. The latter is statutorily backed; a statutory order laid by the DoE on submission by the parties. Everyone agrees on the desirability of a merger, but the LBA has accepted that this can only be achieved by giving the joint scheme statutory backing.
The amendment allows for schemes to be drawn up by the local authority associations both nationally and on a regional basis. The schemes could be introduced voluntarily, but given statutory force if this became necessary. That statutory backing would arise only if the local authorities themselves requested it; that is, the local authority associations for the national scheme, or the majority of the authorities in the area for regional schemes.
This amendment seeks to reinforce the effectiveness of the voluntary arrangements the Secretary of State is discussing and
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developing with the local authority associations, rather than to introduce an inflexible statutory scheme based on particular types of move; that is, essential workers and the elderly, or a fixed percentage of lettings, which is what I think my noble friend Lady Denington is trying to do in her amendment. I hope she might look favourably on this one. This is an important matter, and I hope it will have a friendly reception from the Government. I beg to move.
Baroness DENINGTON: I shall speak to this amendment and then not move my own amendment. The matter we are discussing is of great importance to the nation. Industrial inability is vital. We are all concerned about the condition of industry in this country. If it cannot get its workers it cannot thrive. What we need to do is to get much more mobility. I have no doubt that we have all read of, and know of, workers who have come down from the North to the South because it is in the South that there are vacancies for skilled people that cannot be filled locally. They move down from the North. They get a job. They leave their families behind. They cannot get housed. In the end it is a tragedy. They move North again and go back on the dole. This is a dreadful thing for the family, for their standard of living and self-respect. It is cruel beyond words. It is bad nationally, and costly to the nation.
We know of elderly people. I myself have had over the years many cases like this, where the younger people—often the daughters—want to move near to elderly parents but cannot do so. I have known them travel three hours each way each day to look after an elderly parent. In such circumstances they cannot move to be near that elderly parent, and the old person is unable to move near their daughter or whatever other relative is willing to look after them. It is a crazy situation, because in the end the old person goes at great public expense into an old persons' home or into sheltered accommodation, but the latter is so scarce that usually they cannot get in. I therefore consider this to be a matter of considerable importance.
It is sometimes said that more private enterprise housing or more council tenants buying, and therefore having a house to

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sell, would enable people to move. That sounds reasonable, but it does not work cut that way. First of all, no worker who goes to a new area will consider buying straight away; he wants to know, first, if the job will suit him and if he will settle in the area. Until you feel sure you will put roots down you do not buy, at least for a year or two. There is also the gap between the price at which you can sell a house in the North of England and what you have to pay if you move to the South. The steep difference is another inhibitor against looking on house purchase, however it is done, as a solution. It works occasionally, but by and large not.
I have heard it suggested that the shortholds may help. They may, but nobody knows; indeed, nobody knows what will result from shortholds, and there are many Government supporters who are doubtful about what shortholds will achieve. So I do not think we should put too much trust in those from a national point of view. In the end, therefore, only the local authorities can help achieve the mobility that is essential. Why, then, do local authorities not do more? That is a very easy question to answer for those of us who have been in local government and in politics.
The South, where the jobs are, contains areas of great housing pressure with long waiting lists, and housing allocations are being cut. The waiting lists will therefore increase next year and beyond. Politically, councillors are not able to agree to house people coming into their areas from elsewhere, for they are under enormous political pressure because of the length of housing waiting lists. People resent others coming in, and at political surgeries and public meetings councillors would be under attack and be told, "You are letting strangers in. You are not looking after your own people". It is perfectly understandable, therefore, why councils do not co-operate with such a scheme.
That is why my amendment suggested that the Government should have the courage to say there must be a scheme, and then agree with authorities that a reasonable percentage—it could start as a small percentage—should be set aside for the purpose. I do not blame councils in this respect. It is not lack of goodwill on their part. It is due to the political
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pressures on them. We need the Government to have the courage to tell them, "This is the law. There must be national mobility. We shall see that mobility exists in the interests of the nation as a whole, so we are legislating accordingly and a small percentage will be available for that purpose". That is why I am asking for compulsion, as it were, which is against the general tenor of everything that has been said in this Chamber over the hours, but I do so arising out of my own experience and because I believe that it is needed.
12.10 a.m.
Lord SANDFORD: There is no doubt that the local authority associations do not like these two amendments leading to statutory mobility schemes, and the one that they like the least is that of the noble Baroness, Lady Denington, for the reasons that she has made quite clear. That makes all the more welcome the fact that she has swung her support behind the preceding amendment, which is much milder, and the provisions of which would not come into operation except at the request of the local authority associations. Despite what the local authority associations say, I think that this is the scheme to which the Government should give their greatest consideration.
Lord HYLTON: I should like to give general support to the intention behind both amendments, Nos. 106 and 107, without commenting on the merits of one against the other. I was very encouraged to hear the noble Baroness, Lady Denington, mention the gap in house prices as between the North of England and the South of England. This has acted as an obstacle to mobility for quite a long time, and may well continue to do so for many more years.
I was also delighted to note that at the end of Amendment No. 107 people of pensionable age are particularly singled out as frequently needing to move for social reasons. I should like to add another category of person who needs to move for social reasons. I have previously mentioned this point in your Lordships' Chamber, and I make no apology for returning to it. I refer to parents in one-parent families. I am thinking of widowed, divorced, and separated people, and their

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children. Often they need to move from an area because they have lost the support of their partner. They are very easily exposed to loneliness and often they need to go to another part of the country where they have relatives or friends upon whom they can depend. I hope that the Government will very seriously take this point into consideration and will be able to give us a rather positive reply on either of the amendments, or both.
Lord BELSTEAD: The noble Baroness, Lady David, in moving her amendment (Amendment No. 106) asked whether the Government would give a friendly reply. That amendment, and the succeeding amendment of the noble Baroness, Lady Denington, give me the opportunity to explain very briefly what the Government are doing by way of response to the objectives of both amendments.
In another place on 6th March my honourable friend the Minister for Housing, Mr. Stanley, announced the voluntary national mobility scheme, which has been worked out between his department and local authority associations. Briefly, the scheme provides, first, that each housing authority will make available a number of lettings annually for people who need to move into its area from within the same county area. The number of these lettings will be such as to balance in relation to people moving out to other areas within the same county.
Secondly, each district council, the London boroughs—which I stress in particular, in view of the remarks of the noble Baroness, Lady David, about the inner London boroughs scheme—and the GLC will make 1 per cent. of their lettings available for people moving into their area from another area. This will be in addition to their existing arrangements.
Thirdly, my honourable friend said that he hoped to extend the scheme to housing associations and to the new towns. Finally, he said (in Committee in another place) that the provisions of Clause 45 will be available to assist the operation of the scheme. The details of that, I know, are still being worked out (and I have to use that expression in replying to these amendments) but is it not worth while giving this scheme a chance to get going? It has the advantage, I understand, of being unanimously
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approved by the AMA, the London Boroughs Association and the Association of District Councils. It is a scheme which was welcomed by Mr. Kaufman, for the Opposition, in Committee in another place, as being what he called "a jolly good pudding". He welcomed it wholeheartedly and unreservedly.
Incidentally, there are just two more quick points which I would make. Whereas I think there is so much which is good in the scheme put forward in the amendment moved by the noble Baroness, Lady Denington, one of the things which, if I may say so, her amendment does not provide for, I think, is what happens to the person who simply wants to move because it is essential for him or her, or for their families, but that person cannot necessarily be said to be an essential worker? Under the scheme of my honourable friend the Minister for Housing, people of that kind will fall within the scope of the scheme.
In addition to that, although the idea, I understand, is for my honourable friend's scheme to start on a manual basis—in other words, not on a computerised basis— of course the idea is that the scheme will be put on to a computer as soon as possible; and in the jargon words of which I often have a suspicion but which in this particular case all your Lordships, who have got much more experience of local government than I have, will be the first to tell me, this is absolutely crucial. If somebody wants to move from one part of the country to another and the scheme is computerised, they really will he able to know whether there is a house in Aberystwyth, or anywhere else, if they happen to live on Teesside. So, in view of the information which I have attempted to give your Lordships, I ask that perhaps both noble Baronesses might rethink their amendments and as to whether they would want to press them, because there is this voluntary scheme and I believe that it can add very much to the mobility of labour which we all so much desire.
Baroness DAVID: I think that in fact I knew quite a lot of what the noble Lord the Minister has been kind enough to tell us. I cannot say that I have all that faith in a voluntary scheme. I think that if we wait to see whether it will work, it will he too late to get some statutory underpinning

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into this Bill, which is what I think we should aim at ensuring. I will read very carefully what the Minister has said, but I think I shall very likely come back on Report because I should like to get this statutory backing to the scheme. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 107 not moved.]
Clause 45 agreed to.
12.18 a.m.
Baroness DAVID Baroness DAVID moved Amendment No. 108:
After Clause 45, insert the following new clause:
"Restriction on residential requirements
( .—(1) In considering whether an applicant for local authority housing is entitled to be admitted to a housing list, a council shall take no account of the age of the applicant provided that he is over the age of 18 years.
(2) In the allocation of local authority housing, a council shall take no account of the length of time for which an applicant has resided in its area nor of the age of the applicant provided that he is over the age of 18 years, nor of the income of the applicant and his family.
(3) Where an applicant—

(a) is employed in the area of the local authority; or

(b) has been offered employment in the area of the local authority; or

(c) wishes to move into the area of the local authority and the local authority is satisfied that his purpose in doing so is to seek employment; or

(d) is over 60 years of age and wishes to move into the area of the local authority to be near a younger relative; or

(e) has special social or medical reasons for requiring to be housed within the area of the local authority,

admission to a housing list shall not depend on the fact that the applicant is resident in the area.
(4) Where a local authority has rules which give priority to applicants on its housing list it shall apply those rules to an applicant to whom subsection (3) above applies no less favourably than it applies them to a tenant of the local authority whose housing needs are similar to those of the applicant and who is seeking a transfer to another dwelling-house belonging to the local authority.
(5) In the allocation of local authority housing, a council shall not impose a requirement that an application must have remained in force for a minimum period before the applicant is eligible for the allocation of housing.
(6) In considering an application for admission to a housing list and in the allocation of local authority housing, a council shall take no
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account of any outstanding liability (for payment of rent or otherwise) attributable to the tenancy of any dwelling-house of which the applicant is not, and was not when the liability accrued, a tenant.
(7) In this section "housing list" means a list of applicants for local authority housing which is kept by a council in connection with allocation of housing").
The noble Baroness said: The aim of this amendment is to abolish residential requirements, and it really goes very closely with the previous amendment that I moved, the one on mobility. As I said before, it is widely recognised that there is a greater need for mobility and access to the council housing sector. Successive Government reports have argued for a reduction in residence requirements, most noticeably the Cullingworth Report, a very well known report on council housing, published in 1969, which said:
"We hold it to be fundamental that no one should be precluded from applying for, or being considered for, a council tenancy on any grounds whatsoever".
There are two basic reasons for this stance: first, that only by open lists can an accurate assessment of relative needs be made; secondly, there is now a clear need in the public sector for greater mobility between councils. A Centre for Environmental Studies article, CES Review No. 4, has shown that council tenants have only half the chance of an owner-occupier of moving between authorities. As most long-distance mobility is job mobility—this is according to the general household survey—it is understandable why both the CBI and the Economist support it. An editorial in the Economist of 20th October 1979 said:
"No single measure of Government policy is more important or requires more toughening than Mr. Heseltine's Housing Bill. Longevity should no longer determine status on council waiting lists. The sale of some desirable council houses is not the answer".
The LBA, Conservative-controlled, has also recommended to its members that they abolish residential requirements. This is because their mobility scheme is considerably weakened if different periods of eligibility apply to different areas. The same point applies to the national mobility scheme. Restrictive qualifications will remain for single people or owner-occupiers and those groups will be ineligible for the mobility scheme, for the national mobility scheme with its 1 per cent. quota of lettings will provide only some 2,000 a year.
Far more mobility could be created by eliminating residence requirements which arc still in force for one-third of all councils. On neither eligibility nor mobility is there any evidence that the Government's reliance on voluntary persuasion will be effective with that minority of more parochial councils. Previous Governments have tried the same approach and failed. Ten years after the Culling-worth Report recommended the abolition of residential requirements another Government report, Allocation of Council Housing, by the Housing Services Advisory Unit, made the same recommendation and admitted that little progress had been made—a point which was confirmed by a Shelter survey which showed that exactly the same proportion of councils, one-third, still had restrictive residence requirements in 1978 as they had in 1968. One-fifth also refused to register single people under retirement age despite the fact that today over half the households in the country are made up of just one or two people. Subsection (6) of the new clause concerns not considering arrears when allocating housing. That particularly applies when there has been a marriage break-up. I think my noble friend Lord Gifford will speak about that, so I shall not do so.
The Minister could learn from his colleagues in Scotland, where Ministers have introduced measures to end residence requirements for eligibility of single people as well. If he were to do this, he would have the accolade of his friends in the Confederation of British Industry who recently wrote to the Minister expressing their concern that the measures in the Scottish Bill to encourage job mobility by opening waiting lists have not appeared in the English Bill. He would also earn the gratitude of many young, single or mobile people in England who are eager to learn why the Minister believes that they should have a chance of a council tenancy in Scotland but not in England. I shall be interested to hear why this identical clause has been accepted in the Scottish Bill. I hope very much that it will be accepted here. We know that Scotsmen like to come to England but I still feel that we should have this enlightened and rather advanced clause in our Bill. I beg to move.
Lord GIFFORD: May I add a quick word about a particular part of the
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proposed amendment; that is, the proposed new subsection (6), which introduces a different point from that raised by my noble friend Lady David and could, if the main burden of what she said is not accepted—although I hope it will be—be the subject of an amendment of its own. That particular subsection proposes that the local authority, in granting a council tenancy or putting someone on the list, cannot take account of a liability for previous arrears of rent which is not the applicant's responsibility. This is a very real problem in cases where there has been a marriage break-up and where we are again in the situation where there is a single tenant liable for the arrears—again normally the man—who leaves owing arrears, perhaps without the knowledge of the wife, who believes that they are being paid. When the question comes up, "Will you grant me a tenancy of the same dwelling?" the local authority—and many local authorities do this—says, "Yes, if you will take over responsibility for the arrears which your husband has mounted up". That is quite unfair. If a local authority wants to apportion a joint responsibility for the payment of rent to two spouses or two partners, then a joint tenancy can be created and the two spouses know where the legal liability is. If it is on one only, it should not be held as an in terrorem threat over a woman who has no option but to accept it to saddle her with a debt which is not of her making at a time when she is least able to bear it.
12.26 a.m.
Lord BELSTEAD: I hope that the noble Baroness will not think I am being discourteous if in answer to quite a long and detailed amendment, which has a lot of meat in it, I reply fairly briefly. I do so in the context of the new mobility housing scheme which I sought to explain on the previous amendment. This scheme would for instance cover the cases which are set out in subsection (3) of this amendment.
Secondly, may I say in reply to the amendment that this new clause would remove a great deal of the freedom which local authorities enjoy at the moment to give a reasonable degree of preference to local people in the allocation of their housing. It would oblige them to take on their lists people from outside their

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area who meet criteria which would cause a great deal of debate if they were to be put into statute. For instance, I am thinking of the criterion of someone wishing to move to seek employment. Another criterion I see in the amendment is for special social or medical reasons.
The noble Baroness asked: "Why can you do this in Scotland but not in England?" The answer is simple: one is not comparing like with like. For instance, there is an infinitely higher proportion of public housing stock in Scotland—nearly double—compared with England and Wales. Both the noble Baroness and the noble Lord, Lord Gifford, have put forward the point which is encapsulated in subsection (6) of the amendment. I do not dissent from the seriousness of the point which the noble Lord explained. But this is a matter, I am advised, that in two instances the local Ombudsman has considered and about which he reached strongly critical conclusions. Apart from that, there is the direct local response that these critical reports have invoked. There have been two documents issued by the Department of the Environment: a circular on the housing of one-parent families and a report from the Housing Services Advisory Group explaining why arrears should not be treated as disqualification for housing in the sad circumstances of the break-up of a family.
With that weight of advice which is being given, if one wanted to legislate one would want further and compelling evidence. Although the noble Lord has given his strong views to the Committee, I do not think there has been a great weight of statistics on this point in support of the amendment. Therefore I do not disagree with the general case which the noble Lord has been putting forward on this point, but I hesitate—and I know my honourable friend the Minister of Housing hesitates—before actually legislating on the matter.
May I come hack on this amendment to my original point in answer to the noble Baroness? It would be exceedingly difficult to enforce most of the provisions to be found in this amendment. I beg the Committee to consider the desirability of trying to proceed in these matters by agreement and by consent. It is with
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that objective that my honourable friend's national mobility scheme is being worked out.
Lord HYLTON: I must say I am somewhat disappointed to hear the reply of my noble friend on the Front Bench, in that he was not able to be a little more forth-coming at least towards the spirit behind this amendment. Local authorities have been saying for many, many years that it is quite impossible to abolish residential qualifications. I should like to quote the example of one which has done so and succeeded: that is the London Borough of Hammersmith. You would think that was a very difficult place in which to get away with it, owing to housing stress and everything else; but it was done, and the housing manager in question has written an article about it in the journal of the Institute of Housing, describing how it went through. I hope the Government will study that article and that others will take courage from it, so that we shall get some progress. It is high time.
Baroness DAVID: Again, I am not very happy with the reply I have received from the Minister. I am sorry they have not taken a more advanced and imaginative approach to this. I think voluntary co-operation is fine if you can get it, but there are always bound to he some councils who do not co-operate and that spoils the whole scheme. Certain parts of the amendment have been criticised more than others, so I should like to withdraw it for the time being and probably bring back the amendment in a slightly different form, perhaps with some cuts, and hope that it might be better received on Report. So I would ask leave to withdraw it.
Lord GIFFORD: Before my noble friend sits down and the amendment is withdrawn, may I add just a word on what the noble Lord, Lord Belstead, said about the problem of arrears being foisted on to a spouse. He did, in a sense, throw out a challenge that if further and compelling evidence were provided he would—I hope I take his meaning—consider it and consider whether that threw up the need to embody what we agree to be a desirable idea in legislation. I believe the evidence to he there. There have been submitted to me a number of cases, but at this hour of night I do not intend to weary the Committee with them. However, I pro-

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pose to try to marshal the evidence that is available and submit it to him. I hope I take the spirit of his reply in this way: that the department will look at such evidence and be prepared to reconsider the matter if the evidence is forthcoming and is powerful.
Lord BELSTEAD: I am quite sure that my noble friend's department would do exactly what the noble Lord is asking, but it would be of course, as the noble Lord would he the first to understand, in the context of legislation which exists already to deal with rights in the matrimonial home—the Matrimonial Homes Act 1967, the Matrimonial Causes Act 1973 and the Domestic Violence and Matrimonial Proceedings Act 1976—all of which the noble Lord has referred to during the Committee proceedings this evening. These Acts give substantial protection to spouses in cases of family break-up and, of course, anything the noble Lord put forward would have to he looked at in the context of that existing legislation.
Amendment, by leave, withdrawn.
12.34 a.m.
Baroness BIRK Baroness BIRK moved Amendment No. 109:
After Clause 45, insert the following new clause:
"Distress for rent
( .—(1) No distress for the rent of any dwelling house let under a secure tenancy shall be levied except with the leave of the county court.
(2) Subsection (1) above does not apply to distress levied under section 137 of the County Courts Act 1959.").
The noble Baroness said: It is very late and perhaps it is right that we should be dealing with a distress clause. I intend to be very brief, mainly because my Chief Whip has appeared on the scene. Perhaps I might say quickly that to find that distress is still used, when it is really a feudal power, is quite amazing. The most important element of the feudal nature of distress is that tenants' goods can be seized without any prior warning or remedy for any amount of rent arrears. It is, in fact, the only kind of debt for which such draconian powers exist, and it is only council tenants against whom distress can be operated in this form.
Since 1920 the rent Acts have always included a limitation on the use of dis-
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tress. The legal profession itself has recognised how archaic this matter is. In 1966 the Law Commission's interim report on distress for rents recommended that distress without leave of court should be abolished. In 1969 the Payne Commission on the enforcement of judgment debt went even further and stated that only an accident of history entitles the landlord to exercise this right without first having to transfer his claim into a judgment debt.
For these reasons we conclude that distress in this connection should be abolished. In fact, the Government themselves recognised the incompatibility of having a tenants' charter giving security of tenure when distress was left untouched. The present Minister for Housing, speaking at a Shelter conference on 28th July 1979, said:
"I also intend to require that the leave of the court shall be sought before distress is levied on council tenants, thereby extending to them the same protection as in the private sector. I do not suggest that many local authorities have abused the use of bailiffs in any way, but there is a principle at stake here and I think it right that the public sector tenants also should have the protection of a court procedure before bailiffs appear on the doorstep".
That having been said, the Bill has appeared without any change in the law on distress. According to a recent survey, only one-third of local councils use distraint. Distraint can make the problem of rent arrears worse, because if a family's goods are sold at auction and they yield far less than their market value, then the family is left without any goods with which to furnish their flat or house and also without money for arrears.
This is such an anachronistic measure to retain in 1980 that I hope I do not have to press the Government very hard for them to say that they will deal with it in this Bill. I do not expect a complete answer tonight. I should like the Minister, at this late hour, to say—unless he says right away that this is what he intends to do, which would be fine and then we could finish with it—that he will certainly take this back and look at it, particularly in view of what the Minister for Housing said a year ago. I beg to move.
Lord GIFFORD: This is an enormously important amendment and I am afraid I do not apologise for prolonging the debate in speaking to it. We could alleviate a

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great deal of misery if we were to persuade the Government to accept this amendment tonight. To give an example of the human distress and suffering which this form of debt collection brings, may I take an example which is quoted in an excellent pamphlet produced by Shelter, called In Distress Over Rent? It quotes the case of a couple who were some £200 in arrears in rent and who had these goods seized: a three-piece suite; carpets; a fireside chair; four dining chairs; a dining table; a coffee table; a washing machine; a Hoover and a sewing machine. That raised c38.14. The bailiffs had to be paid, because private bailiffs are brought in with no sense of compassion at all. They were paid £20.63. So the whole exercise of stripping this family's home took £18 off the rent arrears. It really is quite horrific.
The fact that one-third of local authorities in the survey Shelter made were found to use this remedy is significant in two ways. First, this kind of sudden incursion into people's homes, which does not need any notice, is going on in an enormous number of local authority areas; but, secondly, the majority of local authorities do not find it necessary. Indeed, given the tenants' charter, there will be ample powers for the court to supervise the payment of arrears by suspended possession orders and outright possession orders, when the case is outrageous. There is no reason for not accepting this amendment and I look forward to its acceptance. I wonder what other answer there can be.
Lord BELSTEAD: There is every reason not to accept this amendment. The reason is that rent arrears stand, at the moment, at the scandalous total of £70 million. That is what is owed to local authority exchequers. On this ground alone, I should not have the slightest intention of accepting what I consider to he a totally ill-conceived amendment. In moving the amendment, the noble Baroness was good enough to say that she did not want too long an answer, and having perhaps been a little brusque in my first response, may I say that the noble Baroness is absolutely right. The present Government have changed their minds on this matter—I admit it openly.
We had intended to reproduce the clause which was in the Labour Government's
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Bill, which was, in essence, the same as this amendment, but we changed our minds for these reasons: first, because of the resistance of the local authorities; secondly, for the reason that I have given of the enormous amount of rent arrears which, taken over the last two years, appears to be a rising trend; and, thirdly, because of the grievance of those people who do pay their rent on a regular and faithful basis and the effect on them if an amendment of this kind was accepted. However, we do not intend to leave this difficult matter of rent arrears there, and my honourable friend the Minister for Housing gave an undertaking in another place that he would be continuing to look at other methods of recovering rent arrears, to see whether anything can be done to improve the position.
May I just end by registering what I believe is a note of agreement. Certainly, from my reading of what went on in another place, there was agreement on this point, that rent arrears cases need to be looked at case by case. Sometimes there has been just scandalous nonpayment, but sometimes there has been very great hardship. Sometimes it is clearly possible to recover the arrears, but sometimes it is not, for compassionate and human reasons, possible to get the money back. But the people who have to decide these things are the people at local level, the local authorities, and it is they who have brought the strongest pressure to bear in very strongly advising the Government that this amendment is misconceived. It really is for that final reason, more than any other, that I resist this amendment.
Lord PITT of HAMPSTEAD: I have listened to the debate and have not intervened, but I cannot refrain from intervening any more. I am very sorry to hear the answer the Government have given on this amendment. There is no reason why a local authority cannot go to court and get an order. All that is being asked for is that, instead of proceeding high-handedly and seizing goods—and local authorities are the only people who can do it—there is no reason why they cannot go to court like everybody else. I cannot see any reason why there should be any excuse given for local authorities insisting that they should have the right to be so high-handed.
Lord BELSTEAD: The answer to the noble Lord, Lord Pitt, lies in this extremely high figure which I quoted at the beginning—
Lord PITT of HAMPSTEAD: That is not relevant.
Lord BELSTEAD: But this is the way that local authorities see it. What they say to the Government is that, if this amendment were accepted, then the proceedings would be more protracted and the amount of rent arrears which would need to be recovered would be even greater than it is if there can be distraint immediately. That is the case which is put by the local authorities, and as they are the people who have to weigh up this very difficult matter at local level, I have to say to the noble Lord that the Government have to take very serious account of what is being said at local authority level.
Lord PITT of HAMPSTEAD: I shall not delay the Committee much longer, but did the Government take seriously the account which the noble Lord, Lord Gifford, has just given? People's goods—a large amount—were levied in order to pay a rent of £200, a process which in the end produced £18.
Baroness BIRK: I am not taking this to a vote tonight; it would be ridiculous at this hour. But I am not going to negative it, otherwise I cannot bring it back on Report. However, I really am desperately disappointed that the Government should follow this line. The argument put forward by the noble Lord—that it would upset other tenants who pay their rent—could be taken in aid of all sorts of savage punishments for all sorts of things because other people do not commit the same crimes. I do not think that is the approach which we should adopt. We have heard, and I have also said, that fewer than one third of local authorities use this particularly savage and, I think, quite barbarian measure.
I do not think any of the replies were satisfactory, and what my noble friends have said all adds up to the same point. The Minister agreed with me that the Government have changed their mind. At least they will have the chance to change their mind back again before
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Report and before we have the chance to put down further amendments.
The CHAIRMAN of COMMITTEES (Lord Aberdare): The noble Baroness wishes to withdraw the amendment?
Baroness BIRK: Yes.
Amendment, by leave, withdrawn.
Clause 46 agreed to.
Clause 47 agreed to.
Clause 48 [Exclusion of certain housing associations from Chapter II]:
Lord BELSTEAD Lord BELSTEAD moved Amendment No. 110:
Page 34, leave out from beginning of line 7 to end of line 17 and insert—
("(4) If a housing association which is a registered society has been a registered association but at any time after the commencement of this Part of this Act has ceased to be such an association it shall notify those of its tenants who thereby become secure tenants").
The noble Lord said: I beg to move Amendment No. 110, and, if I may, I shall speak also to Amendment No. 111. Under the clause as it stands at present, security of tenure will apply only to the tenants of such unregistered housing associations six months after the commencement of the Bill. This was intended to allow co-ownerships time to register with the Housing Corporation. However, the Government believe, now that co-ownerships are being given the power to sell, that we must have effective safeguards to protect tenants who do not choose to buy. Therefore this amendment removes the sixth-month period of grace before security of tenure applies, with the effect that tenants of unregistered co-ownerships, like other secure tenants, will receive protection from the commencement of the Bill. I beg to move.
Lord BELSTEAD Lord BELSTEAD moved Amendment No. 111:
Page 34, line 21, leave out ("the end of the period of 6 months or, as the case may be,").
Clause 48, as amended, agreed to.
House resumed.

LABORATORY ANIMALS PROTECTION BILL [H.L.]
Ordered, That a Message be sent to the Commons to request them to be pleased to return the Bill because Clause 13 is incorrect.
Returned from the Commons pursuant to the Message of this day.

  UN RESOLUTION ON APARTHEID
  UN RESOLUTION ON APARTHEID
  IMMIGRATION: NAVNIT AND RAJESH PATEL
  IMMIGRATION: NAVNIT AND RAJESH PATEL
  THE IMMIGRATION SERVICE INTELLIGENCE UNIT
  THE IMMIGRATION SERVICE INTELLIGENCE UNIT
  ILLEGAL IMMIGRATION: POLICE MANPOWER
  ILLEGAL IMMIGRATION: POLICE MANPOWER
  INCOMES: INDIRECT TAX PERCENTAGE
  INCOMES: INDIRECT TAX PERCENTAGE
  SEX EQUALITY IN EMPLOYMENT
  SEX EQUALITY IN EMPLOYMENT
  UN CONVENTION ON ELIMINATION OF SEX DISCRIMINATION
  UN CONVENTION ON ELIMINATION OF SEX DISCRIMINATION
  "THE WAR GAME": BBC BAN
  "THE WAR GAME": BBC BAN
  THE ARMY EQUIPMENT EXHIBITION: SALES
  THE ARMY EQUIPMENT EXHIBITION: SALES
  THE OFFICIAL REPORT: PRICE INCREASE
  THE OFFICIAL REPORT: PRICE INCREASE